Current through Register Vol. 46, No. 12, March 20, 2024
(a)
Exemption.
(1) The sale of cartons, containers, and
wrapping and packaging materials and supplies, and components thereof for use
and consumption by a vendor in packaging or packing tangible personal property
for sale, and actually transferred by the vendor to the purchaser, is exempt
from sales and use tax.
Example 1:
A manufacturer sells goods in bulk and ships them in
corrugated cardboard cartons to a retailer. The retailer after using the
cartons as temporary storage and containers removes the goods and discards the
cartons. The cartons are not subject to tax.
Example 2:
Wax tissue paper is sold to a bakery which uses it to pick
cookies from a tray. The cookies and paper are then placed in bags or boxes.
The wax paper is taxable; but the bags and boxes are exempt from
tax.
(2) Cartons,
containers, and other packaging materials actually transferred to a customer in
conjunction with the performance of a service subject to tax under paragraphs
(1), (2), (3) and (5) of subdivision (c) of section
1105 of the Tax Law are excluded from sales
tax as purchased for resale. (See section
526.6[c]
of this Title.)
Example 3:
A watch repairman packs a watch in a box, with cushioning
material to return it to his customer. The box and packing material is not
taxable.
(b)
Definitions.
(1)
Packaging material includes, but is not limited to: bags,
barrels, baskets, binding, bottles, boxes, cans, carboys, cartons, cellophane,
coating and preservative materials, cores, crates, cylinders, drums, excelsior,
glue, gummed labels, gummed tape, kegs, lumber used for blocking, pails,
pallets, reels, sacks, spools, staples, strapping, string, tape, twine, wax
paper and wrapping paper actually transferred with the product to the
purchaser.
(2) The term
vendor in this section refers to any person who sells tangible
personal property whether manufacturer, wholesaler, retailer, processor or
assembler.
(3) The term
purchaser in this section refers to any person purchasing
tangible personal property from a vendor, whether or not he is the ultimate
consumer.
(4)
Actually
transferred means that the packaging material is physically
transferred to the purchaser, for whatever disposition the purchaser wishes.
Example 1:
A returnable soda bottle may be returned for a refund of
deposit or disposed of otherwise. Such a bottle is actually transferred to the
purchaser and may be purchased without payment of tax.
Example 2:
A keg of beer is required to be returned to the vendor
after its contents is used. This keg is not actually transferred to the
purchaser of the beer, and may not be purchased by the vendor without payment
of tax.
(c)
Taxable cartons, containers, and wrapping and packaging materials and
supplies.
(1) Returnable containers,
such as drums, barrels, or acid carboys, when purchased at retail by a person
who does not transfer ownership of the container, are subject to tax. Title to
the container remains in the seller when possession of the container is
transferred to one who purchases commodities contained therein and then returns
the container to the seller for refilling.
Example 1:
A chemical firm produces acid for use in various processes.
The acid is placed in carboys which are purchased by the firm for moving the
acid between plants. The carboys are taxable.
(2) Cartons or other packaging materials
purchased by a vendor for his own use or consumption are subject to
tax.
(3) Racks, trays or similar
devices used to facilitate delivery of the vendor's product if such devices are
not transferred with the product to the purchaser are subject to tax.
Example 2:
A baking company delivers bread to a grocer in wire trays.
After unloading, the delivery man takes the trays with him. The trays are
taxable to the baking company.
(4) Packaging materials used in connection
with rendition of exempt services are subject to tax.
Example 3:
A dry cleaner purchases rolls of plastic bags to package
clean garments. Such purchases are subject to tax.
Example 44:
Protective coverings used by carriers or movers are subject
to tax.
(d)
Cups, plates and other containers, purchased by restaurants and other
eating establishments for resale as containers.
(1) Cups, plates and containers for hot and
cold drinks purchased for resale as a container of food or drink of any nature
taxed under section
1105(d) of the Tax Law,
and actually transferred to the purchaser of such food or drink, are purchased
for resale and thus not subject to sales or use taxes.
(i) The following is a list, which is not
intended to be all-inclusive, of packaging materials which may be purchased
under the resale exclusion of the Tax Law:
(a) sandwich wrappers;
(b) cups and lids;
(c) food sleeves;
(d) disposable plates; and
(e) paper bags.
(2) Napkins, straws, stirrers,
plastic knives, forks, spoons and other similar items are not purchased for
resale as such, nor are they packaging materials or supplies or components
thereof. Purchases of these items by restaurants and similar establishments are
not purchases for resale nor exempted from tax by paragraph (19) of section
1115(a) of the Tax Law,
and are subject to tax.
Example 1:
A restaurant purchases napkins, straws and stirrers which
are made available to its customers. The purchase of these supply items is
subject to tax whether purchased for on- or off-premises consumption.
Example 2:
A food vending machine operator purchases stirrers and
napkins. Since these supplies do not become part of the products sold nor are
they used to package the product, they are subject to tax.
(e)
Exemption
certificates.
(1) A purchaser of
packaging material which qualifies for exemption or for the resale exclusion
may purchase the material without payment of tax by issuing an exempt use
certificate (ST-121) or a resale certificate to the vendor.
(2) A person who produces tangible personal
property for sale by farming may purchase packaging material without payment of
tax by issuing a farmer's exemption certificate (ST-125) to the
vendor.
(3) An exemption
certificate shall be given only by the original purchaser of cartons or other
packaging material.
Example:
A manufacturer purchases cartons and other packaging
materials from a supplier. The manufacturer's products are sold to a
distributor who resells them to a retailer. When the manufacturer purchases the
cartons and other packaging materials, which are transferred to the distributor
with the product, an exempt use certificate should be issued to the supplier
for the packaging materials. Subsequent sale and transfer of such packaging
materials to the distributor and retailer do not require any certificate with
respect to the packaging.
