August 24 2021

New York Expands Definition of Receipts for Sales and Use Tax Purposes

Source: IBFD Tax Research Platform News

New York has enacted legislation expanding its definition of receipts for sales and use tax purposes. The definition now includes consideration received by a vendor from third parties in certain circumstances (A01143-A / S06301). The new law is effective for sales occurring on or after 1 December 2021.

The newly enacted legislation provides that receipts shall include consideration received by the vendor from third parties under the following conditions:

  • the vendor receives consideration from a third party and the consideration is directly related to a rebate, discount or similar price reduction on the sale (except sales of motor vehicles);
  • the vendor has an obligation to pass the consideration through to the purchaser in the form of a price reduction;
  • the amount of the consideration to be paid by the third party is fixed and determinable by the vendor at the time of the sale of the property or service to the purchaser; and
  • one of the following criteria is met:
    • the purchaser presents to the vendor a coupon, certificate or other documentation to claim a price reduction granted by a third party, who will reimburse any vendor to whom the document is presented;
    • the purchaser presents identification as a member of a group or organization entitled to a price reduction (excluding the presentation of a customer loyalty or related rewards program card); or
    • the invoice received by the purchaser or a coupon, certificate or other documentation presented by the purchaser identifies the price reduction as third-party.

The New York Governor signed the bill into law on 20 August 2021.