New York Codes, Rules and Regulations
Title 20 - DEPARTMENT OF TAXATION AND FINANCE
Chapter IV - Sales And Use And Other Miscellaneous Taxes
Subchapter A - Sales And Use Taxes
Part 534 - Refunds And Credits
Section 534.10 - Refunds and credits for vessel operators engaged in local transit service

Universal Citation: 20 NY Comp Codes Rules and Regs ยง 534.10

Current through Register Vol. 46, No. 12, March 20, 2024

[Tax Law, § 1119(b)]

(a) Definitions.

(1) Vessel operator. For purposes of this section, a vessel operator is a person that operates a vessel used to provide local transit service in this State and that operates pursuant to a certificate of public convenience and necessity issued by the Commissioner of Transportation of this State or by a like officer or agency of the United States or pursuant to a contract, franchise, or consent between such person and a city in this State having a population of more than one million inhabitants, or any agency of such city.

(2) Vessel. For purposes of this section, a vessel is any type of watercraft with a seating capacity of more than 20 passengers that is used for the transportation on water of passengers for hire.

(3) Local transit service.
(i) For purposes of this section, local transit service means a mass transit service provided by a vessel operator in which passengers are carried by a vessel from one point in this State to another point in this State and in performance of which the vessel:
(a) regularly picks up and discharges such passengers as scheduled, or at their convenience, at designated piers, slips, docks, or other landings along waterways, as distinguished from buildings or similar facilities used as terminals or stations;

(b) picks up and discharges passengers at terminals or stations, the distance between which is not more than 75 miles (5,280 feet per mile), measured along the route traveled by the vessel; or

(c) picks up and discharges passengers as described in both clauses (a) and (b) of this subparagraph.

(ii) Local transit service does not include charter, contract, excursion, sight-seeing, or other passenger service.

Example 1:

A vessel operator uses vessels to provide mass transit service. The vessels pick up passengers from Terminal A and make scheduled landings at designated piers throughout the city to pick up and discharge passengers before returning to the terminal at the end of the day. The terminal and all of the landings are located in New York State. The vessels are operated in local transit service.

Example 2:

A vessel operator uses vessels to provide mass transit service. The vessels pick up passengers from Terminal A, proceed to Stations B and C, and continue to Terminal D. All of these facilities and all of the mileage are located in New York State. The distance along the route traveled from A to B is 80 miles, from B to C is 80 miles, and from C to D is 60 miles. Between Terminal A and Station B, the vessels pick up and discharge passengers at designated piers along the waterway. However, they do not do this between Stations B and C or between Station C and Terminal D. Between A and B and between C and D, these vessels are operated in local transit service. Between Stations B and C, however, the vessels are not operated in local transit service because they do not stop to pick up and discharge passengers and the facilities are more than 75 miles apart.

Example 3:

A vessel operator uses vessels to provide mass transit service. The vessels transport passengers to and from Terminals A and B. Terminal A is located in New York State. Terminal B is located outside of the State. There are no scheduled landings at which to pick up or discharge passengers between Terminal A and the State boundary. These vessels are not being operated in local transit service because they are not carrying passengers from one point in this State to another point in this State.

Example 4:

A vessel operator uses vessels to provide mass transit service. The vessels pick up passengers from Terminal A, proceed to Station B, and continue to Terminal C. Terminals A and C are located in New York State, and Station B is located outside of the State. The distance from Terminal A to Station B along the route traveled by the vessels is 20 miles, as is the distance from Station B to Terminal C. There are no scheduled landings made along the way. The vessels are operated in local transit service because the total distance traveled between Terminals A and C is less than 75 miles, even though the route from A to C includes some mileage outside of the State.

Example 5:

Assume the facts in Example 4, except that the distance between Terminal A and Station B and between Station B and Terminal C is each 40 miles. The vessels are not operating in local transit service because the total distance traveled between Terminals A and C is greater than 75 miles. The fact that the vessel operator carries passengers from Terminal A to Station B, a distance of 40 miles, does not qualify as local transit service because it is not between two points within New York State.

(4) Vessel hours. For purposes of this section, vessel hours means the number of hours that all vessels are operated by a vessel operator in the performance of local transit service, plus the number of idle hours used to reach the point at which such service begins and from the point at which such service terminates. Such hours include only those hours operated in this State.

(5) Total hours operated. For purposes of this section, total hours operated means the vessel hours computed pursuant to paragraph (4) of this subdivision, plus the number of hours used in charter, contract, excursion, sight-seeing, and all other passenger service, which hours are not included in the meaning of vessel hours. Such hours include only hours operated in this State.

(6) Local transit service percentage.
(i) For purposes of this section, the local transit service percentage is the proportion that the vessel operator's vessel hours occurring in local transit service in this State, as defined in paragraph (4) of this subdivision, bear to the vessel operator's total hours operated in this State, as defined in paragraph (5) of this subdivision, for the calendar year immediately preceding the end of the quarterly return period (i.e., the last day of February, May, August, or November) to which a refund or credit under this section relates.

(ii) Special computation. For the first four quarterly return periods of a vessel operator that is not engaged in local transit service in the preceding calendar year, such vessel operator shall compute its local transit service percentage by using the proportion that such operator's vessel hours in local transit service in this State in the first three months of such operation bear to the operator's total hours operated in this State in such period.

Example 6:

Under the facts of Example 4 set forth in paragraph (3) of this subdivision, the vessel operator operates its vessels for 15,000 hours. Of this number of hours: 4,000 hours are operated between Terminal A and Station B, of which 500 hours are operated outside of New York State; 4,000 hours are also operated between Station B and Terminal C, of which 500 hours are operated outside of the State; 3,500 hours are operated in charter services in New York State; and another 3,500 hours are operated in sight- seeing services in this State. The vessel hours in local transit service is 7,000 hours, which is composed of the 3,500 hours operated is this State between Terminal A and Station B (4,000 - 500) and the 3,500 hours operated in this State between Station B and Terminal C (4,000 - 500). Total hours operated is 14,000 hours, which is all of the hours operated except the 1,000 hours that were operated outside of the State. The local transit service percentage is 50 percent (the percentage that 7,000 vessel hours bear to 14,000 total hours operated).

(b) Refund or credit of taxes paid.

A vessel operator engaged in local transit service is allowed a refund or a credit of taxes paid on the sale to or use by the vessel operator of a vessel, as defined in this section, and of parts, equipment, lubricants, diesel motor fuel, maintenance, servicing, and repair purchased and used in the operation of any such vessel by the operator.

(c) Determination of the amount of refund or credit.

The refund or credit is determined in accordance with the following table:

If the local transit service percentage is: The refund or credit is:
Less than 10 percent None
10 percent 10 percent of the combined State and local taxes paid
Greater than 10 percent, but less than 70 percent 10 percent plus the product of 1.5 times each whole percent in excess of 10 percent of the combined State and local taxes paid
70 percent or more 100 percent of the combined State and local taxes paid

Example 7:

Under the facts of Example 6, as set forth in paragraph (a)(6) of this section, it was determined that the local transit service percentage of the vessel operator is 50 percent. The vessel operator is entitled to a refund or credit of 70 percent of the combined State and local taxes paid on items eligible for such refund or credit, computed as follows:

Initial 10% = 10%

+40% * 1.5 = 60%

Total

70% .......

(d) Application for refund or credit.

An application for refund or credit must be filed with the Department of Taxation and Finance and must cover a period of not less than three months. (For the administrative provisions on applying for a refund or credit, see section 534.2 of this Part.)

(e) Records to be maintained.

(1) A vessel operator must maintain records relating to its purchases and uses of all vessels and of all property and services described in subdivision (b) of this section. Each record must disclose:
(i) the vendor's name;

(ii) the invoice number;

(iii) the invoice date;

(iv) the amount of the purchase;

(v) the amount of the sales or use tax paid; and

(vi) a brief description of the item(s) or service(s) purchased.

(2) A vessel operator must also maintain records that disclose:
(i) vessel hours operated in local transit service in this State;

(ii) vessel hours operated in this State in charter, contract, excursion, sight-seeing, and other passenger service not included in vessel hours; and

(iii) total hours operated within the State.

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