The repaired fax machine is brought back for use in your business in New York. You owe use tax on the amount you paid to have the fax machine serviced. When you purchase taxable services outside New York and you use them in New York State you are required to pay use tax. Examples of these services include taxable information services and protective security and detective services. Example: Your New York State firm intends to expand its market for one of its products. You contract with an out-of-state survey group to provide you with certain information.
The service is a taxable information service. The report and data are sent to your New York office. No New York sales tax is collected by the survey group. You owe use tax on the amount you paid to the survey group for the report and data. Purchases made over the Internet, from catalogs, or by phone from businesses that are located outside of New York State. When you purchase taxable property or services over the Internet, from catalogs, or by phone without paying New York sales tax, and the seller delivers the property or services to you in New York by common carrier, you are required to pay use tax.
Example: You buy a computer through a retail Web site from a business that does not collect New York sales tax. It is delivered by a freight company to your business in New York State. You owe New York State and local use tax on the cost of the computer, including any charge for shipping and handling. When you purchase taxable property or services from an Indian reservation without paying New York sales tax, and you bring it or have it delivered to your business location in New York for use in your business, you are required to pay use tax.
Example: While on an Indian reservation, you purchase a fax machine to be used by your business. You bring the machine to your business location off the reservation.
You owe New York State and local use tax not collected by the seller on the cost of the fax machine. Note: Indian arts and crafts purchased on an Indian reservation are not taxable property. Purchases where the taxable property or services are used in a different local taxing jurisdiction than where they were purchased or where they were delivered.
Local sales tax rates vary from one jurisdiction city, county, etc. The amount of use tax you owe is generally determined by the rates in effect where your business uses the item or service.
Therefore, even though New York State and local sales tax may have been collected where you purchased an item or service, if the local tax was collected at a rate that is lower than the rate at the location where you use the item or service, you will owe the difference in use tax. Example: You purchase and pay sales tax on office equipment and supplies in a locality in New York State with a lower tax rate than the rate where your business uses the items. When you bring the equipment and supplies to your office, you will owe tax for the difference between the rate in the locality of the business location where you use the items and the rate in the locality where you purchased and took delivery of the equipment and supplies.
Example: A printer used in your business is in need of repair. You have it repaired at a shop in a locality in New York State that has a lower sales tax rate than the rate in the locality where your business uses the printer. You will owe tax for the difference between the rate in the locality where your business uses the printer and the rate in the locality where the printer was repaired. However, if the local tax was collected at a rate that is higher than the rate at the location where you use the item or service, you are not entitled to a refund of the difference.
When you purchase taxable property such as inventory or services without paying taxes because you intend to resell them, but you remove an item from inventory and use it, you are required to pay use tax. Example: You purchase a dozen desks for sale to your customers. You subsequently withdraw a desk from inventory to be used in your office. You owe use tax on the amount you paid for the desk.
Example: You own a lumber yard in New York State. You purchase, for resale, lumber from an out-of-state vendor who will deliver the lumber by common carrier. No tax is collected by the supplier. Upon delivery of the lumber, you withdraw enough lumber to build shelves to be used in a milling room. You owe use tax on the cost of the lumber used to build the shelves. Use of taxable property that is manufactured, processed, or assembled by the business.
When a manufacturer, processor, or assembler uses its product in New York State or incorporates the product into real property, it has made a taxable use of the property. This is so whether it was manufactured, processed, or assembled inside or outside of New York State. For information on calculating use tax in this case, see How to calculate use tax below.
Example: You own manufacturing facilities located in New York that produce furniture. Your company makes office furniture for its own use. You owe use tax on the furniture used in New York State. Use tax is generally not due on taxable property or services purchased by a business while it is a nonresident of New York State. However, the Tax Law was amended effective April 10, , to narrow the exclusion from use tax for purchases made by nonresident businesses. Use tax is now imposed when a nonresident business brings tangible personal property or a taxable service into New York State for use here unless the nonresident business has been doing business outside of New York for at least six months prior to the date that the property or service is brought into New York State.
Doing business means that the business is actively engaged in normal operating activities, such as hiring employees, having a payroll, and making routine purchases and sales. Merely being organized as a legal entity is not a sufficient indication of doing business absent other normal operating activities.
Example: X Corporation was formed in Delaware on January 15, X Corporation is a nonresident of New York State. A use tax return form may also be available on the New York Department of Revenue website for calculating and paying use tax. Use tax is a self-assessed tax with a very low public awareness rate, and as a result states have a very hard time enforcing use tax compliance.
Only about 1. Government studies have shown that a large percentage of use tax payments are made as the result of an audit or under the threat of an audit. If unpaid use tax is discovered by a New York tax audit, significant underpayment fees and interest may apply.
Try our FREE income tax calculator. Because the lawn mower was used outside the state for more than six months, you would owe use tax based on the fair market value of the lawn mower at the time you brought it into New York State.
In this instance, a lower amount of tax may be due. The same six-month rule applies when computing local tax due. You may be eligible for a credit against your New York State use tax for the tax paid to another state or local jurisdiction if you paid state or local sales taxes on your purchase of property or services outside of New York State. Federal excise taxes, customs duties, and taxes and fees you paid in foreign countries are not allowed as a credit against any New York State or local sales or use tax that you owe.
If you request an automatic extension of time to file your New York State income tax return, you should pay any sales or use tax due as well as the income tax you may owe with your extension request.
You can submit your extension request online, by e-file, or by using one of these forms:. You must file your extension application on or before the due date for filing your income tax return generally April 15 or the first business day after April Sales tax forms : If you are not filing a New York State income tax return, or you elect not to pay your use tax with your income tax return, pay your use tax with:.
The tax is computed at the combined state and local rate in effect where you reside unless you are a resident of more than one locality. If you are a resident of more than one locality, the rate is generally based on the rate in effect where the property will be principally used or garaged.
Failure to pay tax you owe by the due date may result in the imposition of interest, penalties, or both. To determine the amount of penalty and interest due, you can use the online Penalty and Interest Calculator. The Tax Department conducts both routine and special audits to promote and ensure compliance. In addition, the U. Customs Service provides the Tax Department with information from customs declarations filed by New York State residents returning from overseas travel.
The Tax Department also obtains information on sales to New York State residents under information exchange agreements with other states. Note: A Tax Bulletin is an informational document designed to provide general guidance in simplified language on a topic of interest to taxpayers. It is accurate as of the date issued. However, taxpayers should be aware that subsequent changes in the Tax Law or its interpretation may affect the accuracy of a Tax Bulletin.
The information provided in this document does not cover every situation and is not intended to replace the law or change its meaning. Skip to main content. The following are common situations in which a New York State resident may owe use tax: purchases of taxable property or services made outside of New York State; purchases of taxable property or services made over the Internet, from catalogs, or by phone from businesses that are located outside of New York State; purchases of taxable property or services on an Indian reservation, except for those made in accordance with the Oneida Indian Nation agreement; or purchases where the taxable property or services are used in a different local taxing jurisdiction in the state from where they were purchased or where they were delivered.
This bulletin discusses how to calculate the use tax and how to report and pay the use tax. Examples of a permanent place of abode may include any of the following dwelling places in New York State: home, apartment, or room at a residence hall; armed forces housing; or trailer, mobile home, or houseboat.
Situations in which you owe use tax Below are explanations of common situations in which a New York State resident would owe use tax. Purchases of taxable property or services made outside of New York State You are required to pay use tax when you purchase taxable property from a seller who is located outside of New York and you use that property in New York.
Purchases made over the Internet, from catalogs, or by phone from businesses that are located outside of New York State You are required to pay use tax when you purchase taxable property or services over the Internet, from catalogs, or by phone without paying New York sales tax, and the seller delivers the property or services to you in New York.
Purchases of taxable property or services on an Indian reservation, except those made in accordance with the Oneida Indian Nation agreement You are required to pay use tax when you purchase taxable property or a taxable service from an Indian reservation without paying New York sales tax, and you bring it or have it delivered to you in New York.
Purchases where the taxable property or services are used in a different local taxing jurisdiction than where they were purchased or where they were delivered Local sales tax rates vary from one jurisdiction to another for example, city or county within New York State. Situation in which you do not owe use tax Use tax is generally not due on taxable property or services purchased while you were a nonresident of New York State that is, items purchased before you moved to New York State.
How to calculate use tax Use tax is generally due on the consideration given or contracted to be given for the property or service, or for the use of the property or service, including any charges by the seller to the user for shipping or handling.
It can include: money; bartered goods or services; assumption of liabilities; fees, rentals, royalties; charges that a purchaser, lessee, or licensee is required to pay such as a delivery charge ; and any other agreement for payment.
Methods used to calculate use tax There are two methods that individuals may use to calculate use tax: the sales and use tax chart and the exact calculation method. The tax rate is determined as follows: If taxable property or services are delivered to you in New York State, the tax is computed at the combined state and local rate in effect in the locality where the delivery occurs, regardless of where you reside.
The rate that applies is the rate in effect in that locality at time of delivery.
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