New York Codes, Rules and Regulations › Title 20 - DEPARTMENT OF TAXATION AND FINANCE › Chapter IV - Sales And Use And Other Miscellaneous Taxes › Subchapter A - Sales And Use Taxes › Part 531 - Compensating Use Tax › Section 531.1 - Imposition of compensating use tax

Current through Register Vol. 46, No. 28, July 10, 2024
Tax Law, § 1110
(a)
Imposition.
The compensating use tax is imposed on every person for the
					 use within New York State of tangible personal property and certain services
					 described in subdivision (b) of this section, except to the extent they have
					 been or will be subject to sales tax and except to the extent they are exempt
					 from use tax.
Example 1:
A lumber yard in New York State purchases, for resale, a
					 car load of lumber from a west coast supplier who is not a registered New York
					 State vendor and who will deliver the lumber to the purchaser by rail within
					 this State. No tax is collected by the supplier. Upon delivery of the lumber,
					 the purchaser withdraws enough lumber to construct workbenches and shelves in
					 its milling room. The lumber withdrawn for use by the lumber yard is subject to
					 a compensating use tax.
(b)
Property and services subject to tax.
The compensating use tax is imposed on the use within New
					 York State of the following tangible personal property and services.
(1) Tangible personal property purchased at
				  retail.
(2)
(i) Tangible personal property manufactured,
				  processed or assembled by the user;
(a) if
				  items of the same kind are offered for sale by him in the regular course of
				  business; or
(b) if items are used
				  as such or incorporated into a structure, building, or real property by a
				  contractor, subcontractor or repairman in erecting structures or buildings, or
				  building on, or otherwise adding to, altering, improving, maintaining,
				  servicing or repairing real property, property or land, as the terms real
				  property, property or land are defined in the real property tax law, if items
				  of the same kind are not offered for sale as such by such contractor,
				  subcontractor or repairman or other user in the regular course of
				  business.
(ii) In
				  essence, when a manufacturer, processor or assembler uses its products as such
				  or incorporates the product into real property it has made a use of the
				  property subject to the compensating use tax. This is so whether or not it
				  offers items of the same kind for sale in the regular course of business and
				  whether the product was manufactured, processed or assembled inside or outside
				  New York State.
Example 2:
A company with manufacturing facilities located in New
					 Jersey that manufactures lawn furniture exclusively, made office furniture for
					 its own use in its New York City offices. The use of this office furniture is
					 subject to tax.
Example 3:
Company C manufactures and installs custom designed, in-
					 ground swimming pools. The pools are manufactured at Company C's plant in New
					 Jersey and are transported to the customer's site where Company C installs the
					 pool. Company C only sells the pools on an installed basis. When Company C
					 installs its pool at a customer's site in New York State Company C has made a
					 use of its manufactured product within New York State.
(iii) While the use of tangible personal
				  property manufactured, processed or assembled by the user is subject to
				  compensating use tax, the base on which the use tax is computed varies
				  depending on whether the manufacturer, processor or assembler offers items of
				  the same kind for sale in the regular course of business. (See section
				  531.3[b] 
				  of this Part.)
Cross-reference:
See section
					 528.28 
					 of this Title regarding exemption from tax for property donated by the
					 manufacturer, processor or assembler of the property to an exempt
					 organization.
(3)
				  Information services which would be subject to tax under subdivision (1) of
				  section 1105 (c)  of the Tax Law.
Example 4:
A New York State firms intends to expand its market for one
					 of its products which is similar to products of its competitors. The firm
					 engages an Ohio survey group to provide it with market data on such products.
					 The data provided by the survey group is obtained from its records and is an
					 information service which is not private or individual in nature. When the
					 report and data is sent to the New York firm no tax is collected by the survey
					 group. Although no tax was collected, the New York firm is liable for a
					 compensating use tax on the price paid for the information
					 received.
(4) Services
				  subject to tax under subdivisions (2) or (3) of section 1105 (c)  of the Tax Law
				  which have been performed on tangible personal property however acquired where
				  not acquired for resale.
Example 5:
Aircraft engines are sent by the owner to a firm outside of
					 New York State for rebuilding. The engines are rebuilt and returned to the
					 owner in New York State. The owner of the engines was charged for the
					 rebuilding services and replacement parts but was not charged a sales tax. the
					 rebuilding service and replacement parts are subject to the compensating use
					 tax.