New York Extends the Sales and Use Tax Exemption to e-News and e-Periodicals
In a step to update the sales and use tax law in an era of electronic commerce, New York State as of March 1, 2012, is exempting subscriptions to pay-for-news websites (such as NYTimes.com) and online/digital magazines (such as a subscription to an e-magazine on Kindle) from sales tax. The State also is exempting the information services and telecommunications services that are purchased and used by these types of news services. Blogs and so-called news ‘aggregators’ (such as The Huffington Post) will likely not qualify for the exemption.
Recently issued Technical Memorandum TSB-M-12(1)S, January 3, 2012, explains in detail the recently expanded sales and use tax exemption for “electronic news services” and “electronic periodicals.”
Separately stated charges for newspapers and periodicals that are delivered to the purchaser electronically, and that have the exact same content (other than advertising) of the paper edition, have always been exempt in New York.
“Electronic news service” is defined as a service that is delivered or accessed by the purchaser electronically or digitally and meets the following requirements:
- The service’s predominant purpose is the presentation of “news content.” “News content” means articles, photographs, and video and audio material devoted to literature, the sciences, the arts, news, an industry, profession, sport or other field of endeavor, and does not include listings, advertisements, catalogs, compilations, databases, or the like.
- The service’s news content includes general news that is accessible without having to use a search function.
- The service’s news content is newly published or updated at least daily.
- The service’s news content must be predominantly purchased from contracted wire services or be written or produced by employees/contractors engaged by the person providing the service
- The service is available to the public.
- The publication describes itself as a magazine, periodical, or likewise using similar words.
- The service is not, in whole or in substantial part, a listing, catalog, database, or compilation.
- The service only offers a free search of its own or its affiliates present or past news content.
The electronic news service must be sold at or below the cap amount determined yearly by the Tax Department by April 1. The cap amount for the period March 1, 2012 to May 31, 2012 is $2,034 for a yearly subscription. The cap amount is 300% of the annualized average daily newsstand price of the three newspapers with the largest total paid national daily circulation.
The new law also exempts “electronic periodicals” which are publications that are delivered to or accessed by the purchaser electronically or digitally and that meet the following conditions:
- The publication’s predominant purpose is the presentation of “news content,” which it prominently features.
- The publication is published at stated intervals, at least as frequently as four times a year, but no more than weekly, and is not updated between issues. (Reader comments or the “incidental provision of additional news content between issues” will not prevent this condition from being met.)
- The publication’s news content is purchased from contracted wire services or written or produced by multiple employees/contractors engaged by the person providing the publication.
- The publication is available to the public.
- The publication describes itself as a magazine, periodical, or likewise using similar words.The title of the publication and the general nature of its content are continuous over time.
- The publication is not, in whole or in substantial part, a listing, catalog, database, or compilation.
- The only free search function the publication offers is a search of its own or its affiliates present or past news content. Note, however, that this condition will be considered to have been met if the publication provides access to a search function, at no additional charge, if this same search function is offered to the public for free.
Note that if an electronic periodical is bundled together with other components that are subject to sales tax, the exemption for the sale of an electronic periodical will not apply unless the vendor sells the electronic periodical and the other components separately in the regular course of business.
More information, including examples of how the news “cap amount” is applied, can be found in the full TSB, which can be accessed here:
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