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 534.5 - Refund or credit based on the use of tangible personal property in certain services or based on a retail sale by a contractor
Current through Register Vol. 46, No. 12, March 20, 2024
Tax Law, § 1119(c)
(a) Used in certain services.
A refund or credit is allowable to the purchaser of tangible personal property for any New York State or local sales or compensating use tax paid thereon where such tangible personal property is later used by such purchaser in the rendering of a service subject to sales tax under paragraph (1), (2), (3) or (5) of subdivision (c) of section 1105 of the Tax Law, or the compensating use tax under section 1110 of the Tax Law which is limited to:
However, a refund or credit of tax paid on tangible personal property by the purchaser rendering the services outlined in subparagraphs (i) through (iv) of paragraph (1) of this subdivision is only allowable where:
Example 1:
A retail merchant pays sales tax on its purchases of stationery for its own use. Part of the stationery is used to transmit credit information reports about customers to anyone desiring such information. The sale of the credit information reports is a taxable information service under section 1105(c)(1) of the Tax Law, and the retail merchant is entitled to a refund or credit for any tax paid on the stationery transferred to the purchaser of the reports.
Example 2:
Company A maintains a repair shop to service its own vehicles and pays sales tax on all repair parts purchased. Company A, as a convenience, agrees to repair a disabled vehicle of Company B for a charge. The repair of Company B's vehicle is a taxable service, under section 1105(c)(3) of the Tax Law, and Company A is entitled to a refund or credit for the tax it paid on repair parts which become a part of Company B's vehicle.
Example 3:
Corporation A maintains a large in-house printing unit. It agrees to do some printing, which is taxable under section 1105(c)(2) of the Tax Law, for firm B which will furnish the paper. In providing the printing service, Corporation A uses ink on which it paid tax. Corporation A may claim a refund or credit for the tax paid on the ink used in the taxable printing service.
Example 4:
A heating repairman paid tax on his purchase of parts to be used in servicing his customer's heating equipment. When he performs repair work subject to tax using such parts, he is entitled to a refund or credit of the tax he paid.
(b) Contractor retail sales.
A contractor, subcontractor or repairman who makes a retail sale of tangible personal property upon which tax was required to be paid when purchased by the contractor, subcontractor or repairman pursuant to the provisions of section 1101(b)(4) of the Tax Law may apply for a credit or refund of such tax.
Example 5:
Construction contractor A has surplus roofing shingles on which tax has been paid. Contractor B purchases the surplus shingles at retail from contractor A and pays sales tax. Contractor A is entitled to a refund or credit for the tax paid by him on the shingles sold to B.
(c) No refund or credit is allowable for tax paid on tangible personal property purchased by a person performing a nontaxable service.
Example 6:
A contractor enters into an agreement for interior floor cleaning and maintenance service for a period in excess of 30 days. Under section 1105(c)(5) of the Tax Law, there is no sales tax on interior cleaning and maintenance service performed on a regular contractual basis for a term of 30 days or more except window cleaning, rodent and pest control and trash removal services. Tangible personal property purchased, such as floor cleanser and polish, even though transferred in conjunction with the service, is taxable to the contractor, and no refund is allowable to him on such purchases.
(d) No refund or credit is allowable for tax paid on tangible personal property purchased by a person performing a taxable service where such person is the user of the property and such property is not transferred to the purchaser of the service in conjunction with the performance of the service subject to tax. For example, the transfer of such property through abandonment by the user at the site where the service was performed, or the transfer of such property to the purchaser of the service, as a means of disposition of such used property, is not deemed to be a transfer in conjunction with the rendering of a taxable service.
Example 7:
A house painter abandons his drop cloths on the job site. The drop cloths are not considered to be transferred in conjunction with the taxable service of painting the house even though the painter may separately bill the customer for supplies used in the performance of his contractual agreement. Consequently, a refund or credit for tax paid on the drop cloths is not allowable.
