SN 97(7)
1997 New York State Legislation Affecting the Connecticut/New York Reciprocal Tax Program
PURPOSE: This Special Notice describes New York State legislation as it affects Connecticut based vendors participating in the Connecticut/New York Reciprocal Tax Program.
EFFECTIVE DATE: Effective for the weeks of September 1, 1997 through September 7, 1997, and September 1, 1998 through September 7, 1998. On December 1, 1999, the New York State sales and use tax exemption on clothing, the cost to the purchaser of which is less than $100, will become permanent.
STATUTORY AUTHORITY: Chapter 389 Laws of 1997, State of New York.
CERTAIN CLOTHING EXEMPT FROM NEW YORK STATE'S 4% SALES AND USE TAXES: The New York State Tax Law has been amended to provide for an exemption from New York State's 4% sales and use taxes on certain clothing with a cost of less than $100 during one week periods in 1997 and 1998. The exempt periods are defined as September 1 through September 7 in each of those years. On December 1, 1999, the exemption becomes permanent. Footwear is excluded from this exemption.
The exemption also applies to qualifying sales made by Connecticut-based vendors participating in the Connecticut/New York Reciprocal Tax Program. Participating vendors are required to report exempt sales on New York Schedule H (schedule for Connecticut and New York vendors' to report any sales exempt from New York State and local sales and use taxes) together with their usual monthly or quarterly sales and use tax returns.
Qualifying sales are also exempt from the 1/4% tax imposed by New York State in the Metropolitan Commuter Transportation District [MCTD]. The MCTD consists of the City of New York and Dutchess, Nasssau, Orange, Putnam, Rockland, Suffolk and Westchester counties. In addition, many, but not all, local tax jurisdictions in New York State have enacted the exemption for the same periods (see Counties or Cities).
NOTE: Connecticut's exemption from sales and use taxes on sales of clothing and footwear, the cost to the purchaser of which is less than $50, remains in effect. Connecticut sales and use taxes must be collected on qualifying items costing $50 or more.
ITEMS THAT QUALIFY FOR THE EXEMPTION: The New York State exemption applies to items of clothing worn on the body. The article of clothing must be sold for less than $100. The following items are also considered clothing and, therefore, are exempt from tax if they are sold for less than $100.
- Belt buckles, cloth headbands, head scarves and neckwear such as scarves and ties.
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Fabric, thread, yarn, buttons, etc. used to make or repair clothing. Any charge by the vendor for alterations must be included in determining whether the $100 limitation has been met.
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Monogramming of clothing prior to its sale is exempt where the monogramming is sold as part of the article. However, if the monogramming is done by a vendor for a separate charge, the charge for this service is not exempt. Monogramming includes application of decals, logos and like items (pictures, letters, etc.) by sewing, printing, imprinting, silk screening, etc.
ITEMS THAT DO NOT QUALIFY FOR THE EXEMPTION: The following items worn on the body are not clothing and are not exempt from tax:
- Footwear
- Jewelry, watches, etc.
- Equipment items such as tool belts, hard hats, bicycle, ski, and motorcycle helmets
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Goggles for skiing and swimming, cleated and spiked shoes, hockey, baseball and lacrosse masks, baseball gloves, fireplace mittens, and similar pieces of equipment (sporting or otherwise)
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Antique clothing purchased as collector items (Antique clothing is exempt provided it is purchased for human wear.)
- Doll clothes are taxable
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Where exempt clothing is sold together as a single unit along with taxable merchandise, the full price is subject to sales tax unless the price of the clothing is separately stated. For example, a store has a boxed gift set for sale that has French-cuffed dress shirt, cufflinks and a tie tack. The gift set is sold for a single price of $50. Although the shirt would otherwise be exempt during the one-week exemption period, the full price of the boxed gift set would be taxable because the cufflinks and tie tack are taxable and the selling price of the shirt is not separately stated.
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Handbags, handkerchiefs, umbrellas, watches and watchbands, and most other accessories. (However, belt buckles, cloth headbands, head scarves and neckwear such as scarves and ties are exempt.)
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Fabric, thread, yarn, buttons, etc. used to make or repair products other than wearing apparel
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Costumes and rented formal wear, as well as fabric, thread, yarn, buttons, etc. used to make or repair costumes or rented formal wear.
SPECIAL RULES THAT ONLY APPLY DURING THE ONE-WEEK EXEMPTION PERIOD: The following special rules are to be used only for purposes of determining whether a sale of clothing qualifies for the New York State sales and use tax exemption offered during the week of September 1, 1997 through September 7, 1997, and September 1, 1998 through September 7, 1998.
Delivery, shipping and handling charges: Reasonable charges by the vendor for delivery of eligible clothing items are not taken into account in determining if an item meets the $100 limitation. For example, if an article of clothing sells for $95 and the vendor charges $10 for delivery, the clothing and delivery charges are both exempt. However, when a vendor charges for delivery of clothing items that cost $100 or more, both the clothing and the delivery charges remain subject to tax.
Mail, telephone, Internet, e-mail and computer bulletin board orders: The exemption applies to all eligible clothing items ordered by mail or by telephone if the orders are accepted by the vendor during the week of exemption. The exemption will apply even though delivery might not be made during the exemption period. An order is accepted by the vendor when the vendor has taken an action to fill the order. Actions to fill an order include placing an "in-date" stamp on a mail order and assigning an "order number" to a telephone order.
This special rule also applies to orders for eligible clothing items using the Internet, E-Mail and computer bulletin boards.
Layaway sales: A layaway sale is a sale where merchandise is set aside for future delivery to a customer who makes a deposit and agrees to pay the balance of the purchase price over a period of time before the merchandise is delivered. If a vendor and a customer enter into a contract for a layaway sale of eligible clothing during the exemption period, the exemption will apply as long as the customer makes a deposit of 10% and the merchandise is segregated from other inventory. Charges made by a vendor for placing merchandise on layaway are included when determining if the $100 limitation has been met.
Custom and special orders: The vendor and customer must enter into a contract during the exemption period to have the custom or special order made for the customer in order for the clothing item to qualify for the exemption. An item qualifies for the exemption even though it will be delivered after the exemption period.
Rain checks: The exemption does not apply to clothing purchased after the one-week exemption period in either of 1997 or 1998, even though the purchaser uses a "rain check" that was issued during the one-week exemption period.
Exchanges: If an exempt item of clothing is returned to a vendor after the close of the one-week exemption period for an exchange, there will be no additional tax as long as the item is exchanged for a like item, such as a shirt for a shirt. However, where a customer returns an item and receives a credit or is allowed to purchase a different item, the appropriate sales tax applies to the sale of the newly purchased item. For example, if a customer buys a shirt during the exemption period and exchanges it the following month for a pair of pants, tax is due on the full price of the pants.
Coupons: Where a customer uses a manufacturer's coupon to pay for eligible clothing, the value of the coupon does not reduce the selling price for purposes of determining if the item is sold for less than $100.
Where a customer pays for eligible clothing using a store coupon, for which the store receives no reimbursement, the store coupon does reduce the selling price for the purpose of determining if the item is sold for less than $100.
NEW YORK SCHEDULE H FILING REQUIREMENTS: Vendors that file either monthly or quarterly returns must report the exemption on the New York Schedule H. This new schedule contains lines to report sales of clothing and footwear made during the exemption period for each locality (state, county and city) imposing taxes in New York. All sales of eligible clothing and footwear during that week must be separately reported for the locality in which the sales were made. Sales of eligible clothing and footwear must be reported, by locality, whether they are subject to local tax (because a city or county did not enact the exemption), or are totally exempt from state and local tax.
New York Schedule H will be mailed to all monthly filers of OP-284 for the month ending September 30 and quarterly filers of OP-284Q for the quarters ending September 30, in each year. This New York Schedule H must be completed and filed along with the respective return.
CITIES WHERE EXEMPTION APPLIES*
In the following localities clothing remains subject to tax at the rates indicated*:
SN 97(7)
Sales and Use Taxes
Issued: 8/29/97