Tax Law, § 1105(b)
(a)
Imposition.
(1) Section
1105 (b) of the Tax Law
imposes a tax on the receipts from every sale, except a sale for resale or a
sale specifically exempt under section
1115 (b)(i) and (ii) (c) or (e) of the Tax Law, of
(i) gas, electricity, refrigeration and
steam, and gas, electric, refrigeration and steam service of whatever nature;
and
(ii) telephony and telegraphy
and telephone and telegraph service of whatever nature, except interstate and
international telephony and telegraphy and telephone and telegraph service.
Cross reference:
Exemptions, see Part 528 of this Title.
(2) Although this tax is generally
known as the "consumer's utility tax," the intention of the statute is to tax
the enumerated sales and services whether or not rendered by a company subject
to regulation as a utility company. The words "of whatever nature" indicate
that a broad construction is to be given the terms describing the items taxed.
The inclusion of the word "service" indicates an intent to tax, under this
provision, items that are furnished as a continuous supply while the
vendor-vendee relationship exists.
(3) A charge for installing equipment, such
as transmission equipment, which a gas, electric, or telephone or telegraph
company makes, according to a tariff, to a real property developer is deemed to
be a charge for gas, electric, telephone or telegraph service. The charge may
be for reimbursement of the company's cost of doing the work itself, or for the
cost the company incurred in having a contractor perform the work.
(b)
Gas and gas
service.
(1) All types of gas service
and gas sold through pipes or mains, or in containers with a capacity of 100
pounds of gas or more, for heating, cooking, refrigerating or lighting purposes
by residential, commercial or industrial users are subject to the tax imposed
under subdivision (b) of section 1105 of the Tax Law.
(2) Where gas service or gas is sold and
delivered, in a truck from which the gas is transferred to a container on the
premises of the purchaser, such transaction is taxed as a sale in a bulk
container having a capacity of 100 or more pounds of gas subject to tax as in
paragraph (1) of this subdivision.
(3) Sales of gas in containers or cylinders
having a capacity of less than 100 pounds of gas are considered to be sales of
tangible personal property subject to tax under subdivision (a) of section
1105 of the Tax Law and not the sale of gas
service or gas for the purposes of this section.
Example 1:
A resident of a city purchases 50 cubic feet of natural gas
from a regulated company (public utility). The transaction is the purchase of a
gas service.
Example 2:
A dealer in LP gas visits a residence on a monthly basis,
and refills or replaces the cylinders. The charge that is made for the gas
consumed is for a gas service.
Example 3:
A dealer in LP gas sells 20 pound cylinders for use on
trailers, or by plumbers and also refills such cylinders. The receipts from all
such sales are receipts from the sale of tangible personal property.
Example 4:
A person purchases two 100 pound tanks of LP gas from a
non-regulated company. The transaction is the purchase of gas.
Example 5:
A welding shop purchases a tank of oxygen and a tank of
acetylene. The transaction is not the purchase of a gas service but is the
purchase of tangible personal property.
(c)
Refrigeration and refrigeration
service.
(1) The sale of air
conditioning is a sale of refrigeration service.
Example:
A lease provides that a landlord will furnish the tenant
with air conditioning service during normal business hours and further provides
for an additional charge, for air conditioning service during other hours at
$10 an hour. This additional charge is for the sale of refrigeration
service.
(2) The sale of
refrigerated storage or refrigerated transportation is not the sale of
refrigeration or refrigeration service. The taxability of such services is
governed by the provisions relating to storage and transportation.
(3) Refrigeration or refrigeration service
may not be purchased for resale by a vendor of refrigerated storage.
(d)
Telephony and
telegraphy; telephone and telegraph service.
(1) The provisions of section 1105 (b) of the Tax Law
with respect to telephony and telegraphy and telephone and telegraph service
impose a tax on receipts from intrastate communication by means of devices
employing the principles of telephony and telegraphy.
(2) The term
telephony and
telegraphy includes use or operation of any apparatus for transmission
of sound, sound reproduction or coded or other signals.
Example 1:
Dispatch services, commonly used by taxicab companies,
trucking firms and similar operations, which provide two-way voice
communication between a base location and mobile units or between mobile units
are considered telephony even though the base and mobile units are not
interconnected with a telephone system.
Example 2:
Paging service which is a one-way transmission of
communication by signal or voice or both signal and voice from a base unit to a
mobile unit is considered telephony.
Example 3:
Message switching services, transmitted to a computer over
lines leased from a communication carrier are telegraph services subject to the
tax imposed under section 1105 (b) of the Tax
Law.
Example 4:
Facsimile transmission services are telegraph services
subject to the tax imposed under section 1105 (b) of the Tax
Law.
Example 5:
The use of a teletypewriter is a telegraph service subject
to tax imposed under section 1105 (b) of the Tax
Law.
(3) The term
telephony and telegraphy, as used in this Subchapter, does not
include:
(i) cable television service, which
is the service of receiving and amplifying programs broadcast by television or
radio stations or any other programs originated by a cable television company
or by any other party, and distributing such programs by wire, cable, microwave
or other similar means, whether such means are owned or leased, to persons who
subscribe to such service. See New York State Cable Television
Association v. State Tax Commission, 59 AD 2d 81;
(ii) music service, which is the initiation
of musical programs, and the distribution of such programs by wire, cable or
other similar means, whether such means are owned or leased, to persons who
subscribe to such service.
(4) A service is not considered telegraphy or
telephony if either of these services is merely an incidental element of a
different or other service purchased by the customer.
Example 6:
A company offers its customers a protective service using a
central station alarm system, which transmits signals telegraphically. The
customer is purchasing a protective service.
(5) The tax on utility services applies to
every charge for any telephone and telegraph service. Among these charges are
monthly message rate and intrastate toll charges and charges for special
services, such as
installation, change of location, conference connections,
tie-lines, WATS lines and the furnishing of equipment.
Example 7:
A telephone company installs station apparatus, owned by
it, on the premises of a customer. The installation is a service taxable under
section 1105 (b) of the Tax
Law.
(6) Where a customer
has telephones at a single location connected to exchanges in different
localities, and a tie-line to a locality in which he is not located, the tax
rate applicable for each service is the tax rate in effect in the locality to
which the exchange is assigned.
Example 8:
A business located in Nassau County has two telephone
numbers, one with a Nassau exchange and one with a Queens exchange. This
enables his Queens customers to phone him toll free. Service on the Queens
exchange is considered to be purchased in Queens County even though the
telephone is physically located in Nassau County.
(e)
Sales for resale.
Purchases of utility services by a utility for resale as
such may be made without payment of the sales tax. The purchaser must furnish
the supplier of the utility to be resold with a resale certificate (Form
ST-120). When the utility services are resold by the purchaser he must collect
the sales tax on the receipts from his sales as imposed under section 1105 (b) of the Tax Law. A
purchase of a utility service which is not resold is subject to tax as a
purchase at retail.
Example:
A utility company purchases excess power from an industrial
organization or through a power pool for resale to its customers. Such purchase
may be made without payment of tax upon the presentation of a properly
completed resale certificate.
(f)
Computation of receipt.
Where a utility company bills a customer and indicates on
such bill the amount for the service and a late payment charge which may be
imposed because of the failure of the customer to pay such bill within a
specified period of time, the sales tax is computed on the amount billed
without consideration of the late payment charge. The late payment charge
constitutes a charge for interest and is not part of the sale price of the
service rendered. (See section
526.5[h]
of this Title.)
