Sales and use tax
A sales tax is an additional amount you pay based on a percentage of the selling price of a good or service that is purchased in New York. The rate of sales tax is based on where you live.
For example, if you buy a coffee pot for $20.00, and you live in an area with a total sales tax rate of 8%, the actual amount you pay would be $20.00 plus $1.60 ($20.00 X .08) in sales tax for a total of $21.60. As the person who bought the coffee pot, you do not have to file a return to report this sales tax, you pay it when you buy the coffee pot from whatever store you go to. However, the store is responsible for filing a sales tax return and sending your money to New York State.
Not everything is subject to sales tax. Everyday necessities like food and medicine typically are not taxable; however, sales and use tax is normally applied to:
- tangible personal property (unless specifically exempt);
- gas, electricity, refrigeration and steam, and telephone service;
- selected services;
- food and beverages sold by restaurants, taverns, and caterers;
- hotel occupancy; and
- certain admission charges and dues.
A use tax is similar to a sales tax, however, it is based on the fact that you purchased an item outside of New York State but will be using, storing, or consuming the item in New York State.
For example, if you buy a car across the border in Massachusetts, but you live and plan to use the car in New York, you will pay use tax on the car in New York.
A more common example is that you buy a sweater online from a store and they ship it to you but do not charge you sales tax. Since you are wearing and using the sweater in New York, you would owe use tax.
While there is a form to file use tax, Form ST-141, Individual Purchaser’s Periodic Report of Sales and Use Tax, it typically is not used unless the item is large, like a car. For the items you purchase online, you could report your use tax at the end of the year on your personal income tax return or use Form ST-140, Individual Purchaser’s Periodic Report of Sales and Use Tax.