Wondering which services are taxable in New York? If that's the question worrying you, rest easy. This article will provide in-depth information on the services subject to tax in New York. Most U.S. states charge taxes on services. New York State sales and use tax rate is currently at 4%, but each county charges an additional tax of 3% to 4.5%. Generally, tangible personal property is subject to tax. However, in New York, some services are taxable too.
Services Taxable Only in New York City
The following is a list of services that are subject to New York City sales tax:
- Manicure and pedicure
- Credit rating services (oral and written)
- Oral credit reporting services
- Lastly, beautician, barbering, and hair restoring services
If your company provides any of the above-listed services, you're liable to pay tax. Indeed, failure to remit tax attracts a fine.
Services and Transactions That Are Subject to Sales Tax
The list below has examples of taxable services in New York state:
- Prepaid phone calling service
- Mobile telecommunication services
- Telephone answering services
- Utility services
- Interior decorating and design service
- Protective and detective services
- Hotel occupancy
- Admission charges to amusement parks
- Portions of cabaret charges
- Certain transportation services
- Passenger transport service with a driver using black cars, limousines, or other specific motor vehicles - TSB-M-09(7)S
- Providing information by telephone or telegraph service
- Lastly, maintaining, servicing, and repairing real property
If your company offers any of the above services, you must register and collect taxes. Failure to do so makes your company liable for uncollected taxes. In New York, the sales tax rate is made up of two independent taxes: sales tax and use tax.
Services Exempt From Tax in New York
The list below shows services that are exempt from the sales tax. Some services require you to produce exemption documents, which you have to give the seller for the service to be exempted from tax. Services that require tax exemption documents include:
- Building or installing capital improvements require ST-124
- Purchases by vendors of certain products or services intended for resale require ST-120
- Some residential energy sources and services require TP-385
- Services applied in farming, commercial horse boarding, fuel and utilities require ST-125
- Commercial vessels, aircraft, property, and services related to their maintenance require ST-121
Unless you get a properly completed exemption certificate from the purchaser, you must collect sales tax on sales that need an exemption document. Further, the exemption document must be received within 90 days of the date you delivered the property or provided the service.
Some tax-exempt services that don't require exemption documents include:
- Tailoring, laundering, shoe shining, dry cleaning, weaving, and pressing
- Certain drinks and food
- Water delivered through pipes or mains
- Medical equipment and related services
- Feminine hygiene products
- Newspapers and qualified periodicals
- Prosthetic devices and related services
- Sales by funeral homes
- Lastly, U.S. and N.Y. official flags
If you file your tax returns late, you will be charged a penalty of 5% of the tax due for each month the return is late, to a maximum of 25%. Waive the penalty only if you provide reasonable cause for late payment.
Learn More About the Services That Are Subject to Tax in New York
The state of New York has a low tax rate of about 4%. Each county or city in the state, however, imposes its own sales tax. Some counties additionally levy a transportation tax, which is included in their sales tax. As a result, you may anticipate paying a sales tax of between 7% and 8.875 percent in New York. New York City has the highest tax rate in the state, at 8.875 percent.