N.Y. Comp. Codes R. & Regs. tit. 20 § 531.5

Current through Register Vol. 46, No. 50, December 11, 2024

Section 531.5 - Exemptions from the compensating use tax

Tax Law, §§ 1116 and 1118

(a) Since the compensating use tax complements and supplements the sales tax, no use tax will be imposed on the use of tangible personal property or services which have been or will be subject to the sales tax.

(b) The compensating use tax shall not be imposed on the use of:

(1) Property, by the purchaser thereof, within this State prior to August 1, 1965, the effective date of the tax.

(2) Property within this State when purchased by the user while a nonresident of this State, except when the property is, in the performance of a contract, incorporated into real property located in this State (a nonresident is any person who is not a resident as defined in section 526.15 of this Title).

Example 1:

A resident of Vermont purchased a television set in Vermont for his home in Vermont. At a later date he moves and takes up residency in New York State and uses the television set in this State. No use tax is due on the use of the television set in New York State.

Example 2:

A nonresident contractor with a business location in Vermont purchases tangible personal property in Vermont, which is incorporated in a building he is erecting in New York. He is required to pay a compensating use tax on his use of such property.

(3) Property or services the sale of which is exempt from the sales tax. (See Part 528 of this Title.)

(4) Property which is converted into or becomes a component part of a product produced for sale by the purchaser.

Example 3:

A manufacturer purchases leather for use in making shoes. When the leather becomes a component part of shoes which are for sale no use tax is due on the leather.

(5) Paper in the publication of newspapers or periodicals.

Example 4:

A newspaper publisher purchases 15 rolls of newsprint. When the newsprint is used in publishing the newspaper no use tax is due.

(6) Tangible personal property or services purchased by any organization which has qualified as an exempt organization under section 1116 of the Tax Law.

Example 5:

An organization exempt from the sales tax purchases lumber for its own use. No use tax is due.

(7) Tangible personal property sold, other than through a shop or store, by an organization exempt under section 1116(a)(4) (5) and (6) of the Tax Law.

(8) Services sold by organizations exempt under section 1116(a)(4) (5) and (6) of the Tax Law.

(9) Tangible personal property or services of a type not ordinarily sold by private persons, when sold by organizations exempt under section 1116(a)(1) (2) and (3) of the Tax Law.

Cross-reference:

See section 528.28 of this Title regarding exemption from tax for property donated by the manufacturer, processor or assembler of the property to an exempt organization.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 531.5