How to determine sales tax amount due?
The sales tax is generally computed on the price you paid for an item or service, including any shipping or handling charges made by the seller.
However, there are two instances where a New York State resident’s tax due is not based on the purchase price of the item or service:
• If you used the item outside of New York for more than six months prior to bringing the item into New York, the amount subject to tax is the lesser of the purchase price or the fair market value at the time you bring the item into New York State.
• In the case of tangible personal property brought into New York State to be used in the performance of a contract for a period of less than six months, the amount subject to tax may, at the election of the user, be based on the fair rental value of the property for the period of its use within New York State, but only if the property is not completely consumed, or incorporated into real property, in New York State. In these instances, a lower amount of tax may be due. The same six-month rule applies for purposes of computing local tax due. The following examples illustrate how you would compute the amount of New York State use tax due on purchases made outside New York State, and subsequently brought to New York State for use.
Example: You send your stereo equipment to New Jersey to be repaired.
After being repaired, the equipment is shipped back to you. The vendor’s bill sets forth the charge for the repair service and also a charge for shipping. You must pay tax on the price you paid for the service, including the shipping charge.
Example: You are a New York State resident. In September you buy and register a boat in Florida. You use the boat in Florida and then bring it to New York State the following May and immediately title or register the boat in New York State at the Department of Motor Vehicles within 20 days of bringing the boat into the state. The Department of Motor Vehicles will collect the tax at that time. Tax may be computed based on the lower of cost or fair market value of the boat. If you do not title or register the boat at DMV then tax must be remitted directly to the Tax Department using Form ST-140, Individual Purchaser’s Annual Report of Sales and Use Tax.
Example: A New York State contractor performing a construction contract in New York State purchases a crane outside New York for $100,000 and brings it into New York for temporary (less than six months) use in the contract work. The crane has a fair rental value of $2,500 per month. The contractor is liable for the tax on the $100,000 purchase price unless the contractor elects to report the tax based on the fair rental value of $2,500 per month.
