Tax Law, § 1119(a)
(a)
Authorization.
Where a sales or compensating use tax has been correctly,
legally, and constitutionally imposed and paid on the purchase of tangible
personal property, a refund or credit of State and local taxes paid pursuant to
subdivision (a) of section 1105 or section 1110 of the Tax Law on the sale or use will
be allowed to the purchaser or user when, to the satisfaction of the Department
of Taxation and Finance, the purchaser shows that such tangible personal
property was used in one of the following manners:
(1) the tangible personal property was used
in the performance of a contract, and pursuant to such contract, was
incorporated into real property, as described in section
527.7
of this Title, located outside of New York State (see subdivision [b] of this
section);
(2) the tangible personal
property was purchased in bulk, or any portion thereof, stored in New York
State and not otherwise used in New York State by the purchaser or user, but
was reshipped to a point outside New York by such purchaser or user for use
outside of New York State (see subdivision [c] of this section);
(3) the tangible personal property was sold
to or used by a contractor or subcontractor solely in the performance of a
pre-existing lump sum or unit price construction contract (see subdivision [d]
of this section);
(4) the tangible
personal property was not purchased for resale, but its use in this State was
restricted to fabricating (including incorporating it into or assembling it
with other tangible personal property), processing, printing, or imprinting
such property, and such property was shipped outside of this State for use
outside of this State (see subdivision [e] of this section);
(5) drugs or medicine sold to or used by a
veterinarian if such drugs or medicine were:
(i) used by the veterinarian in rendering
services, exempt pursuant to section 1115 (f) of the Tax Law, to
livestock or poultry used in the production of tangible personal property by
farming; or
(ii) sold to a person
entitled to claim the farmer's exemption under section
1115 (a)(6) of the Tax Law
for use by such person on production livestock or poultry. (For farming
exemption, see section
528.7
of this Title);
(6) for
purposes of paragraphs (1), (2), and (4) of this subdivision, movement of the
property from one taxing locality in New York to another may also give rise to
a refund or credit of the local sales or use tax paid on the original
transaction. However, such movement may be subject to a use tax, depending upon
the nature of the subsequent use in the second locality.
(b)
Property incorporated into realty
outside of New York State.
(1) A
purchaser or user who has paid the tax on tangible personal property may claim
a refund or credit for such tax provided:
(i)
he incorporates the property into real property located outside of this State;
and
(ii) such incorporation is
pursuant to a contract.
Example:
A contractor purchases a quantity of lumber in New York
State to use for a construction contract in Vermont. At the time the contractor
purchases the lumber and accepts delivery in New York State he is liable for
sales tax. To the extent the lumber is incorporated into real property in
Vermont, a refund or credit of the sales tax paid by the contractor on such
lumber is allowable.
(iii)
If the tangible personal property is moved from New York County A to County B,
and it meets the conditions outlined in subparagraphs (i) and (ii) of this
paragraph, any County A local tax paid on the tangible personal property may be
claimed by the contractor as a refund or credit. However, any local
compensating use tax imposed by County B is due on the material.
(c)
Property
purchased in bulk and reshipped.
(1) A
refund or credit is allowable for tangible personal property, or any portion
thereof:
(i) which is purchased in
bulk;
(ii) which is stored and not
used by the purchaser or a user in New York State;
(iii) which is later reshipped by such
purchaser or user outside of New York State for use outside New York State;
and
(iv) provided the property is
reshipped as required within three years after the date the tax was payable to
the Department of Taxation and Finance and that application is made within
three years from the date the tax was payable to the Department of Taxation and
Finance.
(2)
(i) For the purpose of this subdivision only,
the phrase purchased in bulk means a single purchase from a
single vendor of items of the same kind of tangible personal property, of such
quantity that it would require storage of some part for future use.
(ii) For the purpose of this subdivision, the
phrase stored and not used means the placement of property in
storage for later withdrawal for shipment outside of the State or use outside
of the State.
(3) The
purchaser of tangible personal property who has paid sales or use tax thereon,
and who placed such property in storage to await reshipment outside of the
State for use outside of the State, is allowed a refund or credit of the tax
paid on the portion of the property so reshipped and used. If the tangible
personal property is stored in a locality that imposes a local sales tax and it
is later shipped to another point in New York State for use, the purchaser is
entitled to a refund or credit of the local tax, in the same manner as outlined
in this subdivision for the statewide sales tax. However, if the tangible
personal property is used by the purchaser or used in a New York State locality
imposing sales tax on the receipts from the sale of tangible personal property,
a tax for that locality is due.
Cross-reference:
Compensating Use Tax, see Part 531 of this
Subchapter.
Example 1:
A multi-location firm purchases a truckload of office forms
and stationery and stores it in a New York State warehouse. Applicable State
and local sales tax is paid by the purchaser. A portion of the forms and
stationery is later shipped to several of the firm's locations outside of New
York State. A credit or refund is allowable for the tax paid on that portion of
the forms and stationery shipped outside of New York State for use outside of
New York State.
Example 2:
A corporation purchases 150 desks from vendor A, and 60
typewriters from vendor B, and accepts delivery of all of these items in New
York State. Applicable sales tax is paid by the purchaser. It stores the items
in its warehouse, then ships 100 desks and 50 typewriters to a new office
located out-of-state for use there. The balance of the desks and typewriters
are used in New York locations. The corporation is entitled to a refund or
credit of tax paid on 100 desks and 50 typewriters after shipment outside the
State.
(d)
Property used in pre-existing lump sum or unit price construction
contracts.
(1) The phrase
pre-existing lump sum or unit price construction contract as
used in this subdivision means a contract for the construction of improvements
to real property under which the amount payable to the contractor or
subcontractor is fixed without regard to costs incurred by him in the
performance thereof, and which:
(i) was
irrevocably entered into prior to the date of the enactment of article 28 of
the Tax Law or the enactment of a law increasing the rate of tax imposed under
article 28 of the Tax Law or the imposition of a tax or an increased rate
authorized by article 29 of the Tax Law; or
(ii) resulted from the acceptance by a
governmental agency of a bid accompanied by a bond or other performance
guaranty which was irrevocably submitted prior to the date of enactment of a
law imposing a tax or increasing the rate of tax imposed under article 28 or
authorized by article 29 of the Tax Law.
(2)
(i) A
contractor or subcontractor who has paid sales tax on the purchase of tangible
personal property used solely in the performance of a pre-existing lump sum or
unit price construction contract may claim a refund or credit which will be
allowable within the following limitations:
(a) the refund or credit is limited to any
tax paid by the contractor or subcontractor which exceeds the tax which would
have been due at the time the contract was entered into or the bid submitted
had not article 28 been enacted or a tax authorized by article 29 been
imposed;
(b) where a tax rate,
State or local, is increased by the enactment of a law, local law, ordinance or
resolution the refund or credit is limited to any tax paid by the contractor or
subcontractor resulting from the increase in the tax rate, provided the statute
increasing the tax rate was enacted after the contract was entered into or the
bid submitted; or
(c) to qualify
for a credit or refund, the tangible personal property must be used in a
contract as described above within three years after the date the tax was
payable to the Department of Taxation and Finance, and application for the
credit or refund must be filed within three years after the date the tax was
payable to the Department of Taxation and Finance.
(ii) Tangible personal property eligible for
a credit or refund because it was used solely in the performance of a
pre-existing lump sum or unit price contract is not limited to materials
incorporated into the project, supplies consumed in construction and equipment
rentals are also included as long as their sole use involved the eligible
contract.
Taxes on telephone, electric, and other services are not
eligible for a credit or refund under this subdivision, therefore, the rate in
effect at the time of purchase is due without a right to a refund or credit of
tax paid.
Example:
On March 1, 1972 a contractor irrevocably enters into a
lump sum contract. On July 1, 1972 the locality in which the construction site
is located enacts a tax effective September 1, 1972. After September 1, 1972
the contractor pays the increased rate of tax on his purchases of materials,
rentals of equipment, storage of material, and electricity. The contractor is
eligible for a refund of the increase in tax on the purchase of materials and
the rental of equipment; but not the increased tax on the storage charge or the
electric service.
(e)
Property, the use of which is
restricted to fabricating, processing, printing, or imprinting.
(1) A purchaser who has paid the tax on the
tangible personal property may claim a refund or credit for such tax provided:
(i) the use of the tangible personal property
in New York is restricted to fabricating such property (including the
incorporation of it into or assembling it with other tangible personal
property), processing, printing, or imprinting such property;
(ii) such property is then shipped to a point
outside New York State for use outside the State; and
(iii) such property is so used within three
years from the date the tax was payable to the Department of Taxation and
Finance, and application for the credit or refund is filed within three years
after the date the tax was payable to the Department of Taxation and
Finance.
(2) The
fabricator, assembler, processor, printer, or imprinter may be either the
purchaser or a user distinct from the purchaser.
Example 1:
An Ohio corporation purchases a special paper and ink for
its corporate checks from a New York State vendor. The New York State vendor
delivers the paper and ink to a New York State printer who will print the
checks. When the paper and ink is delivered to the New York State printer the
Ohio corporation is deemed to have taken delivery of the property in New York
State and is liable for the sales tax on the paper and ink. When the checks are
shipped by the printer to Ohio, a refund or credit for the tax paid on the
paper and ink will be allowable.
Example 2:
A multi-location firm purchases equipment and has it
delivered to its New York State location. In New York State the firm's
employees assemble the equipment and ship the finished product to New Jersey
for installation. As delivery of the equipment occurs in New York State, the
firm is liable for New York State sales tax. When the finished product is
shipped to New Jersey, a refund or credit for the tax paid will be allowable
even though the purchaser of the tangible personal property in this instance is
both the assembler and ultimate user.
Example 3:
A company purchases 20,000 advertising circulars which are
delivered by the printer to a firm in New York State that will address and mail
them. The printer charges and collects the New York State sales tax. A refund
or credit will be allowed on that portion of the circulars which are mailed to
addresses outside of New York State.
Cross-reference:
Also see Administrative Provisions, section
534.2
of this Part for the method of applying for a refund or
credit.
(f)
Drugs or medicine used by veterinarians in rendering certain services to
livestock and poultry used in production, or sold to farmers for such
use.
A veterinarian may apply for a credit or refund of sales
tax paid on his purchase of drugs and medicines:
(1) used in the practice of veterinary
medicine on livestock or poultry, exempt pursuant to section 1115 (f) of the Tax Law,
used in the production of tangible personal property for sale, by
farming;
(2) sold to a person
entitled to the farming exemption provided by section 1115 (a)(6) of the Tax Law
for his use on livestock or poultry used in the production of tangible personal
property for sale, by farming; or
(3) provided the drugs and medicine are used
by the veterinarian as described above within three years after the date such
tax was payable to the Department of Taxation and Finance and that an
application for a credit or refund is filed within three years after the date
such tax was payable to the Department of Taxation and Finance.
Cross-reference:
Veterinarian and practice of veterinary medicine, see
section
528.24
of this Title. Farming, see section
528.7
of this Title.
Example 1:
A veterinarian treats several cows in a dairy herd for
mastitis. The veterinarian may apply for a credit or refund of the sales tax
paid at the time of purchase on the drugs and medicine he uses to treat the
affected cows. Additionally, he may claim a credit or refund of sales tax paid
on drugs or medicine he sells the farmer to treat the herd.
Example 2:
A veterinarian treats an injured racehorse and sells the
trainer drugs and medicine to continue treatment. Since the racehorse is not
used in the production of tangible personal property for sale, by farming, the
veterinarian may not file a claim for credit or refund of the tax paid on such
drugs and medicine since a refund or credit is not allowable.
Example 3:
A veterinarian renders veterinary services to puppies
raised for resale by a kennel. The puppies, although held for resale, are not
livestock or poultry and, therefore, the veterinarian may not file a claim for
a credit or refund of tax paid on such drugs and medicine used in conjunction
with the services since a refund or credit is not allowable.
Example 4:
An operator of a fur farm purchases drugs and medicine from
a veterinarian to treat animals he is raising for fur. Although the operator is
engaged in farming, fur bearing animals are not livestock or poultry.
Therefore, the veterinarian may not file a claim for a credit or refund of tax
paid on his purchase of the drugs and medicine since a refund or credit is not
allowable.
