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February 14th, 2014
NY Sales and Use Tax Application to Advertising Businesses
In a recently-issued Tax Bulletin, the New York State Department of Taxation and Finance has explained the application of New York's Sales and Use Tax to sales and purchases by advertising businesses.
The bulletin defines advertising services -- which are not subject to sales tax -- as "consultation and development of advertising campaigns and placement of advertisements with the media." Thus, for example, the fee charged by an advertising agency for designing an advertising program and furnishing a finished advertisement to the media is not subject to sales tax. In addition, advertising materials created by an advertising agency and conveyed to a customer by intangible means (e.g., digital or other electronic media) are not subject to sales tax.
Tangible materials used by an advertising agency to furnish advertising content to the media and then turned over to its customer are considered incidental to the agency's sale of advertising services and thus not subject to sales tax, but tangible personal property (TPP), such as layouts or art work, sold to a customer prior to being furnished to the media is subject to sales tax, as are any other outright sales of TPP (such as layouts, printing plates or films contained on tangible media).
The bulletin also indicates that the sale of a personal report containing information derived from information services is not the sale of a taxable information service, but that a survey is a taxable information service.
Finally, the bulletin addresses the treatment of an advertising agency's purchases in performing its services, noting that such purchases at retail generally are subject to sales tax, although exemptions may apply to purchases related to the production of television and radio commercials and advertisements and the development and production of printed promotional materials.
To learn more about the application of New York sales tax to advertising services, please contact Jeffrey Marks at (212) 826 5536 or firstname.lastname@example.org or Bernard Topper at (212) 826 5547 or email@example.com.
Other Advertising Law Alerts
Get Ready for California’s New “Automatic Renewal” Rules
California recently amended its Automatic Purchase Renewals law. The amended statute - effective July 1st -- require marketers to provide consumers of automatic renewal or continuous service offers with more information and easier ways to terminate. Read more.
June 22 2018
“Made in the U.S.A.” Claims Continue to be Scrutinized
In 2016, California amended Section 17533.7 of the California Business and Professions Code ("Section 17533"), liberalizing the standard for selling products labeled "Made in U.S.A" to California consumers. Read more.
June 4 2018
FTC Issues a $2 Million Reminder to Ad Agencies
The Federal Trade Commission ("FTC") and the State of Maine have announced a $2 million dollar settlement with ad agency Marketing Architects, Inc. ("MAI") for deceptive weight-loss claims. Read more.
February 12 2018