We lumped these two cases together because they present pretty much identical facts, legal issues, and outcomes. Indeed, the opinion sections of each decision contain virtually identical structure and language. The issue in these cases was whether security services provided at real property construction projects were taxable.
The sales taxation of exotic dancing and transactions conducted in adult entertainment establishments has a long history before the Division of Tax Appeals and the New York courts. This case presents the most recent chapter.
This case examines the operation of New York’s resale exemption and the limits of the protection conferred by resale exemption certificates.
When it comes to sales tax, form matters. And in this case, the imprecise and somewhat contradictory evidence regarding the form of what should have been a nontaxable equity purchase caused the Judge to sustain a sizable sales tax bill.
The issue in this case is whether the sale of laser technology used to treat dermatological ailments and related services constituted a taxable lease of tangible property or the provision of a nontaxable service. Petitioner provided to its dermatologist customers an ultraviolet light excimer laser system that generated and delivered targeted ultraviolet light to treat various skin conditions. Petitioner did not characterize the transactions as leases, nor did the customers receive the lasers for a set amount of time. Rather, Petitioner “consigned” the lasers to its customers and charged for “treatment codes,” which allowed the lasers to be used and treatments to be administered.
Petitioner provided marketing analysis services that the Division viewed to be taxable information services. Specifically, Petitioner helped its customers measure their advertising effectiveness by (1) surveying consumers or internet users who had seen a particular advertisement and those who had not seen the ad, (2) comparing and analyzing the results, and (3) informing its clients as to how well the ad performed and what the clients could do to improve ad performance. At first blush, there seems to be significant similarity to the MarketShare Partners, LLC case we reviewed a few weeks ago. In that case, the taxpayer was a marketing analytics firm that enabled large companies to measure, predict, and improve the impact of their marketing spend. The ALJ concluded that the main service was a nontaxable marketing consulting service rather than a taxable information service. So we’d expect a similar result in this case, right? Not so fast . . .
A fight might be brewing over the Division’s longtime conclusion that IT monitoring services can constitute taxable protective services. Here, Petitioner offered managed and monitored security services, giving customers information to prevent, detect, respond to, and predict cyberattacks. The question in the case was whether these services constituted either taxable protective and detective services or taxable information services.
After weeks of being absent from TiNY (in part due to Chris Doyle’s encroachment on my territory), I’m back in a big way. The Division of Tax Appeals issued a whopper of a sales tax determination – 55 pages! It addresses one of the most perplexing issues in all of New York sales tax – the proper characterization of a technology product – is it a nontaxable service, taxable information, or taxable software? Let’s dive in.
The New York State Tax Department released new guidance last week in TSB-M-20(2)S addressing potential avenues for relief for those assessed as responsible persons for sales tax. This new TSB-M largely mirrors amendments to Tax Law § 1133(a) that were enacted as part of the budget legislation for fiscal 2018-2019 which we covered here and here. That legislation established statutory relief for certain limited partners and LLC members who were assessed and held jointly and severally liable for sales tax assessments solely by virtue of their interest in a partnership or LLC. To qualify for relief, eligible limited partners and LLC members must principally show that: (i) they were not under a duty to act for the LLC or partnership in complying with the requirements of the sales tax; and (ii) their ownership interest and the percentage of their distributive share of the profits and losses of the LLC or partnership are each less than 50%.
The NYS Department of Taxation and Finance issued a new advisory opinion today concluding that a contractor installing a new floor for a tenant at JFK Airport can purchase glue tax free because the glue becomes an “integral component part” of real property owned by an exempt entity. JFK Airport is owned by the Port Authority of New York and New Jersey.