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 week of January 18, 1997 through January 24, 1997.
STATUTORY AUTHORITY: 1996 New York Laws 309, § 217.
CERTAIN CLOTHING AND FOOTWEAR EXEMPT FROM NEW YORK STATE'S 4% SALES AND USE TAXES: A change in New York State tax law, effective for the week of January 18, 1997 through January 24, 1997, provides New York vendors a temporary exemption from New York State's 4% sales and use taxes for certain clothing and footwear. The exemption also applies to Connecticut based vendors participating in the Connecticut/New York Reciprocal Tax Program. Participating vendors are required to claim the exemption on New York Schedule H (new schedule for Connecticut and New York vendors to report the exemption from New York State and local sales and use tax) against the New York sales tax collected from their customers. The exemption is computed on the amount of New York State sales tax that is required to be collected on taxable sales made during the week of January 18, 1997 through January 24, 1997. This exemption is not allowed against Connecticut sales and use taxes collected on sales of clothing and footwear costing $50.00 or more.
The exemption applies to 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, Nassau, Orange, Putnam, Rockland, Suffolk and Westchester counties. The exemption also applies to many, but not all, locally imposed sales and use taxes. (See below and New York State publication TSB-M-96(215)S.)
CITIES AND COUNTIES WHERE NO TAX APPLIES
Batavia (city of) - located in Genesee County
Cattaraugus County (including cities of Olean and Salamanca)
Chenango County (including city of Norwich)
Corning (city of) - located in Steuben County
Fulton County (outside city of Johnstown)
Genesee County (including city of Batavia)
Glens Falls (city of) - located in Warren County
Gloversville (city of) - located in Fulton County
Hornell (city of) - located in Steuben County
Ithaca (city of) - located in Tompkins County
Madison County (including city of Oneida)
Mount Vernon (city of) - located in Westchester County
New Rochelle (city of) - located in Westchester County
New York City - includes counties of Bronx, Kings (Brooklyn), New York (Manhattan), Queens and Richmond (Staten Island)
Norwich (city of) - located in Chenango County
Ogdensburg (city of )- located in St. Lawrence County
Olean (city of) - located in Cattaraugus County
Onelda (city of) - located in Madison County
Ontario County (outside cities of Canandaigua and Geneva)
Oswego (city of) - located in Oswego County
Oswego County (outside city of Fulton)
St. Lawrence County (including city of Ogdensburg)
Salamanca (city of) - located in Cattaraugus County
Steuben County (including city of Corning and Hornell)
Tioga County (including city of Ithaca)
Warren County (including city of Glen Falls)
Westchester County (including cities of Mount Vernon, New Rochelle, White Plains and Yonkers)
White Plains (city of) - located in Westchester County
Yonkers (city of) - located in Westchester County
CLOTHING AND FOOTWEAR THAT QUALIFY FOR THE EXEMPTION: The New York exemption applies to items of clothing and footwear worn on the body. The article of clothing or footwear must be sold for less than $500. However, not all items worn on the body are clothing or footwear:
Jewelry, watches, etc. remain taxable. Belt buckles, cloth headbands, and neck wear such as ties and scarves are exempt.
Equipment items such as tool belts, hard hats, bicycle, ski, and motorcycle helmets are not exempt from tax. 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) remain subject to tax.
Antique clothing is exempt provided it is purchased for human wear, and not as collector items. All purchases of doll clothes are taxable.
This $500 limitation also applies to each item of 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 $500 limitation has been met.
Fabric, thread, yarn, buttons, etc., used to make or repair products other than wearing apparel are taxable.
Costumes and rented formal wear are not eligible for exemption. The exemption does not apply to fabric, thread, yarn, buttons, etc., used to make or repair costumes or rented formal wear.
Monogramming of clothing prior to its sale is eligible for exemption 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 eligible for exemption. Monogramming includes application of decals, logos and like items (pictures, letters, etc.) by sewing, printing, imprinting, silk screening etc.
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 or footwear qualifies for the New York State sales and use tax exemption offered during the week of January 18, 1997 through January 24, 1997.
Delivery, Shipping and Handling Charges
Delivery charge by vendors for items of clothing or footwear costing $500 or more remain subject to tax. For example, if an item of clothing sells for $500 and the vendor charges $20 for delivery, the total amount of New York State sales or use tax due is computed on $520 not $500.
Reasonable delivery charges by vendors for items of clothing or footwear costing less than $500 are not subject to tax. For example, if an item of clothing sells for $495 and the vendor charges $10 for delivery, no New York State sales or use tax is due since the item of clothing meets the $500 limitation.
Mail, Telephone, Internet, E-Mail and Computer Bulletin Board Orders
The exemption applies to all eligible clothing and footwear 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 exempt 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.
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 or footwear during the exempt 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 $500 limitation has been met.
Custom and Special Orders
The vendor and customer must enter into a contract during the exempt period to have the custom or special order made for the customer in order for the clothing or footwear item to qualify for the exemption. An item qualifies for the exemption even though it will be delivered after the exemption period.
The exemption does not apply to clothing or footwear purchased after January 24, 1997 even though the purchaser uses a "rain check" that was issued during the week of January 18, 1997 through January 24, 1997.
If an exempt item of clothing is returned to a vendor after January 24, 1997 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 boots, tax is due on the full price of the boots.
Where a customer uses a manufacturer's coupon to pay for eligible clothing or footwear, the value of the coupon does not reduce the selling price for purposes of determining if the item sold for less than $500.
Where a customer pays for eligible clothing or footwear using a store coupon, for which the store received no reimbursement, the store coupon does reduce the selling price for purpose of determining if the item is sold for less than $500.
NEW YORK SCHEDULE H FILING REQUIREMENTS: Vendors that file either monthly or quarterly returns may claim 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 (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 January 31, 1997 and quarterly filers of OP-284Q with their returns for the quarter ending March 31, 1997. This schedule should be completed and filed along with their respective return.
EFFECT ON THIS DOCUMENT: A Special Notice (SN) is a document that, in response to newly enacted or amended state or federal law or in response to newly released judicial decisions, announces a new Department position, policy or practice affecting the tax liability of taxpayers.
FOR FURTHER INFORMATION: For a complete list of clothing and footwear eligible for the New York State tax exemption, contact the New York State Department of Taxation and Finance at 1-800-462-8100 (from Connecticut) and request a copy of TSB-M-96(15)S One-Week Sales and Use Tax Exemption on Clothing and Footwear, and TSB-M-96(15.1)S One-Week Sales and Use Tax Exemption on Clothing and Footwear (Exemption within Cities and Counties).
To order forms and publications or for further information, call the Connecticut Department of Revenue Services at 860-297-5962 (Hartford area or out-of-state) or 1-800-382-9463 (in state). Forms and publications may be ordered through voice-mail 24 hours a day by choosing Option 3 on your touch tone telephone.
Electronic Delivery Options: You can also obtain tax forms and publications 24 hours a day from our site on the World Wide Web at http://www.ct.gov/drs. Telecommunications Device for the Deaf (TDD/TT) users only call 860-297-4911 during business hours.
Sales and Use Taxes