Tax Bulletin 
                                                                      Sales and Use Tax 
                                                                      TB-ST-910 
                                                                      August 17, 2017 
                                                                       
 Use Tax for Businesses                
 
Introduction 
 
New York State and local sales taxes are imposed on taxable property  and services 
purchased  or delivered  to you in New York State. In most instances, when you purchase 
a taxable item or service  in the state, or if it is delivered  to you in the state, the seller will 
collect sales tax from you. The  seller then pays the tax over  to the Tax Department. 
 
When sales tax has not been  collected on taxable items or services, tax is required  to be 
paid when  the items or services  are used in New  York. Use tax is a tax imposed  on the 
use of taxable items and services  in New York when the sales tax has not been  paid. 
There  is a distinction between sales tax that should  have  been  paid and use tax. 
However, for purposes  of simplicity, the tax required  to be paid is referred  to in this 
bulletin as use tax. 
 
This bulletin discusses the following  common situations in which a business operating  in 
New York State may owe use tax: 
 
 • purchases  of taxable property  or services  made outside of New York State; 
  
 • purchases  of taxable property  or services  made over  the Internet,  from catalogs, or 
  by phone  from businesses that are located outside of New York State; 
  
 • purchases  of taxable property  or services  on an Indian  reservation; 
  
 • purchases  where  the taxable property or services are used in a different  local taxing 
  jurisdiction in the state from where  they were  purchased  or where  they were 
  delivered; 
  
 • withdrawal  of taxable property from  inventory  for use by the business; and 
  
 • use of taxable property  that is manufactured,  processed, or assembled by the 
  business. 
 
This bulletin also discusses how  to calculate the use tax and how to report and pay the 
use tax. 
 
This bulletin does not address use tax as it applies to individuals.  For information  on use 
tax as it relates to individuals,  including estates and trusts, see Tax Bulletin Use Tax for 
Individuals  (including  Estates and Trusts) (TB-ST-913). 
 
Situations in which a business owes use tax 
 
Below are explanations  of common situations in which a business operating  in New  York 
State would owe  use tax. For purposes of use tax, taxable property  or services    are               
generally  the same items or services that would  be subject to New York sales tax if sold 
in New York State. For more information  on sales subject to tax, see  Publication 750, 
A Guide to Sales Tax in New  York State, and Tax Bulletin Quick Reference  Guide  for 
Taxable and Exempt Property  and Services      (TB-ST-740). 
 
W A Harriman Campus, Albany NY 12227                                          www.tax.ny.gov                                      
                                                                                                                                    

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Purchases  of taxable property or services  made outside of New York  State 
 
When you purchase taxable property  from a seller who is located outside of New York 
without paying New York State and local sales taxes, and you later use that property in 
New York, you are required  to pay use tax. 
 
     Example:  You buy office supplies in New  Jersey and bring them back to 
     New  York State for use in your  business. The seller does not collect New  York 
     State and local sales tax. You owe  use tax on the amount you  paid for the supplies. 
      
     Example:  While in Florida attending  a business meeting, you  purchase equipment 
     that will be used by your  business in New  York State. You have the equipment 
     delivered  to your business. The seller does not collect New  York sales tax. You 
     owe  New  York State and local use tax on the cost of the equipment,  including any 
     charge for shipping and handling. 
 
When you take property out of New  York State to have  a taxable service  performed  on 
that property, and then bring that property  back into New York for use, you are required 
to pay use tax. 
 
     Example:  You take an office fax machine to New  Jersey to be repaired.  The 
     repaired  fax machine is brought back for use in your  business in New  York. You 
     owe  use tax on the amount you paid to have the fax machine serviced. 
 
When you purchase taxable services  outside New  York and you use them in New York 
State you are required  to pay use tax. Examples of these services include taxable 
information  services and protective  (security) and detective  services. 
 
     Example:  Your New  York State firm intends to expand  its market for one of its 
     products. You contract with  an out-of-state survey  group  to provide  you  with certain 
     information. The service is a taxable information  service. The report  and data are 
     sent to your New  York office. No New  York sales tax is collected by the survey 
     group.  You owe  use tax on the amount you paid to the survey  group  for the report 
     and data. 
 
Purchases  made over the Internet, from catalogs, or by phone from businesses 
that are located outside of New York State 
 
When you purchase taxable property  or services  over  the Internet, from  catalogs, or by 
phone  without paying New York sales tax, and the seller delivers  the property  or services 
to you in New  York by common carrier,  you are required  to pay use tax. 
 
     Example:  You buy a computer through  a retail Web site from a business that does 
     not collect New  York sales tax. It is delivered  by a freight company  to your 
     business in New  York State. You owe  New  York State and local use tax on the cost 
     of the computer, including any  charge for shipping  and handling.    
 
Purchases  of taxable property or services  on an Indian reservation 
 
When you purchase taxable property  or services  from an Indian  reservation  without 
paying New York sales tax, and you bring it or have  it delivered  to your business location 
in New York for use in your business, you are required  to pay use tax. 
 
     Example:  While on an Indian reservation,  you  purchase a fax machine to be used 
     by your business. You bring the machine to your business location off the 
     reservation.  You owe  New  York State and local use tax not collected by the seller 
     on the cost of the fax machine. 
 
Note: Indian  arts and crafts purchased  on an Indian  reservation  are not taxable property. 
 

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Purchases  where the taxable property or services  are used in a different local 
taxing jurisdiction  than where they were purchased or where they were delivered 
 
Local sales tax rates vary  from  one jurisdiction (city, county, etc.) within New  York State 
to another. The  amount of use tax you owe is generally  determined  by the rates in effect 
where  your business uses the item or service. Therefore,  even  though  New York State 
and local sales tax may have  been collected where  you purchased  an item or service,  if 
the local tax was collected at a rate that is lower than the rate at the location where  you 
use the item or service,  you will owe the difference  in use tax. 
 
 Example:  You purchase  and pay sales tax on office equipment  and supplies in a 
 locality in New  York State with a lower  tax rate than the rate where  your  business 
 uses the items. When you bring the equipment  and supplies to your  office, you will 
 owe  tax for the difference  between  the rate in the locality of the business location 
 where  you use the items and the rate in the locality where  you purchased  and took 
 delivery  of the equipment  and supplies. 
  
 Example:  A printer  used in your business is in need of repair.  You have  it repaired 
 at a shop in a locality in New  York State that has a lower  sales tax rate than the 
 rate in the locality where  your business uses the printer. You will  owe  tax for the 
 difference    between  the rate in the locality where  your  business uses the printer 
 and the rate in the locality where  the printer  was repaired. 
 
However,  if the local tax was collected at a rate that is higher  than the rate at the location 
where  you use the item or service,  you are not entitled to a refund  of the difference. 
 
Withdrawal of taxable property from inventory for use by the business 
 
When you purchase taxable property  (such as inventory)  or services without paying taxes 
because you intend to resell them, but you remove  an item from inventory  and use it, you 
are required  to pay use tax. 
 
 Example:  You purchase  a dozen desks for sale to your customers. You 
 subsequently withdraw  a desk from inventory  to be used in your  office. You owe 
 use tax on the amount you paid for the desk. 
  
 Example:  You own  a lumber yard  in New York State. You purchase,  for resale, 
 lumber from an out-of-state  vendor  who  will deliver  the lumber by common carrier. 
 No tax is collected by the supplier. Upon  delivery  of the lumber, you withdraw 
 enough  lumber to build shelves to be used in a milling room. You owe  use tax on 
 the cost of the lumber used to build the shelves. 
 
Use of taxable property that is manufactured, processed,  or assembled by the 
business 
 
When a manufacturer,  processor, or assembler uses its product  in New York State or 
incorporates  the product  into real property, it has made a taxable use of the property. 
This is so whether  it was manufactured,  processed, or assembled inside or outside of 
New York State. For information  on calculating use tax in this case, see How  to calculate 
use tax below. 
 
 Example:  You own  manufacturing  facilities located in New  York that produce 
 furniture. Your company  makes office furniture for its own  use. You owe  use tax on 
 the furniture  used in New  York State. 
 
Purchases by nonresident businesses 
 
Use tax is generally  not due on taxable property or services purchased  by a business 
while it is a nonresident  of New  York State. However,  the Tax Law was amended 
effective  April 10, 2017, to narrow  the exclusion from use tax for purchases  made by 

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nonresident  businesses. Use tax is now imposed when  a nonresident  business brings 
tangible personal  property  or a taxable service  into New York State for use here unless 
the nonresident  business has been  doing business outside of New York for at least six 
months prior  to the date that the property or service  is brought  into New  York State. 
 
Doing  business means that the business is actively engaged  in normal  operating 
activities, such as hiring  employees, having  a payroll, and making routine  purchases and 
sales. Merely being  organized  as a legal entity is not a sufficient  indication of doing 
business absent other normal  operating  activities. 
 
 Example:  X Corporation  was formed in Delaware  on January  15, 2017.  X 
 Corporation  is a nonresident  of New  York State. X Corporation  remained  dormant 
 until March  17, 2017, when  it hired  employees  and purchased  a number of computer 
 servers for use in its business. On June 24, 2017, X Corporation  opened  an office in 
 New  York State and brought some of the servers to New  York for use here. Because 
 X Corporation  had been doing  business outside New  York for less  than six months 
 prior to bringing the servers into New  York (i.e., March  17 - June 24), X Corporation 
 owes  use tax on the servers. 
  
 Example:  Same facts as in the preceding  example, except that X Corporation  does 
 not open  its New  York office and bring some of the servers to New  York until October 
 4, 2017. Since X Corporation  had been doing  business outside New  York for       at least 
 six months prior  to bringing the servers  into New  York (March  17  - October 3), the 
 exclusion from use tax provided  in Tax Law      § 1118(2)  applies and X Corporation 
 does not owe  use tax on the servers. 
  
 Example:  XYZ Corporation  is a resident of New  York. On May  1, 2017, XYZ 
 Corporation  forms PQR, Inc., a Delaware  corporation  wholly  owned  by XYZ 
 Corporation.  On June 1, 2017, PQR, Inc., purchases  a large sculpture for installation 
 in the lobby of XYZ Corporation’s  New  York City offices. PQR, Inc., conducts no 
 other business activity, and has no employees  or offices. On February  1, 2018, PQR, 
 Inc., brings the sculpture into New  York and delivers it to the installation site. Even 
 though  PQR, Inc., was in existence for more than six months when  it brought the 
 sculpture into New  York (May  1, 2017 - February  1, 2018),  PQR, Inc., was never 
 doing business as required  by the statute. Therefore,  PQR, Inc., will owe  use tax on 
 the sculpture when  it is brought into New  York.    
 
This new restriction on the use tax exclusion does not apply to individuals.  Additionally, if 
a nonresident  business paid sales or use tax in another  state when it purchased  the 
property  or service  subject to use tax under  this new law, a reciprocal credit for sales or 
use tax paid in the other state may be available. 
 
For more information,  see TSB-M-09(4)S, Amendments Affecting the Application of Sales 
and Use Tax to Aircraft, Vessels and Motor  Vehicles  , and Tax Bulletin Reciprocal  Credit 
for Sales or Use Taxes Paid to Other Taxing Jurisdictions (TB-ST-765). 
 
How to calculate use tax 
 
Use tax is generally  due on the consideration  given  or contracted to be given  for the 
property  or service,  or for  the use of the property  or service,  including  any charges by the 
seller to the user for  shipping or handling.  Generally,  the rate of tax used to compute the 
use tax due is the rate in effect where  the business takes delivery  of an item or service, 
or where  it uses the item or service, if higher. 
 

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Consideration  is the dollar value  of all amounts paid for any property or service.  It can 
include: 
 
 • money; 
 • bartered  goods or services; 
 • assumption of liabilities; 
 • fees, rentals, royalties; 
 • charges  that a purchaser, lessee, or licensee is required  to pay (such as a delivery 
 charge);  and 
 • any other agreement  for payment. 
 
Calculating use tax on purchases of tangible personal property 
 
Any use tax due on tangible personal  property  purchased  by a business is computed  on 
the price paid by the business for the property. 
 
 Example: Your business purchased  a dozen desks at $750 each for retail sale to 
 your  customers at $1,250 each. You subsequently withdrew  one desk from inventory 
 to be used in your  office. Use tax is computed  on $750.     
 
Calculating use tax on tangible personal property manufactured, 
processed, or assembled by the user 
 
If you are engaged  in a business that manufactures,  processes, or assembles tangible 
personal  property  and you take an item that you made from  inventory  and use it in New 
York State, you owe use tax. The amount of the use tax depends  on these factors: 
 
 • whether  or not you offer  items of the same kind for sale in the regular  course of your 
 business; and 
 • if you do offer  items of the same kind for sale in the regular  course of your business, 
 whether  or not the item is used solely on your own premises and the item retains its 
 character as tangible  personal property  when  used. 
 
If you do offer items of the same kind for sale in the regular  course of business, the basis 
of the use tax that you owe on your use of the item is the price for which you sell similar 
items, as evidenced  by a price list, catalog, or record of sales. In the absence of a catalog 
price or price list, the basis of the use tax that you owe is the average  of the prices 
charged  to customers. 
 
However,  if you use an item you made and you sell similar items in the  ordinary  course of 
business, but use the item only in the conduct of your business operations  on your own 
premises, and the item retains its characteristics as tangible  personal  property when 
used, then the base on which the use tax is computed is the cost of the tangible personal 
property  (for example, raw materials)  used to manufacture,  process, or assemble the 
item used, including  any charges for shipping  and delivery  that the vendor  of those raw 
materials charged  you. 
 
 Example: As a manufacturer  of desk s, you withdraw  a desk from your  inventory  for 
 use in your  executive  office located on the premises. In the regular  course of 
 business, you sell similar desks for $1,500  each. The cost of the property  (raw 
 materials) you used to manufacture,  process, or assemble the desk was  $400. Use 
 tax is computed on $400, plus any charges for shipping or delivery  that the vendor  of 
 the raw  materials charged  you. 
 
If you use an item you made but you  do not offer similar items in the regular  course of 
your business, then the base on which the use tax is computed is the cost of the tangible 
personal  property  (for example, raw materials)  you used to manufacture,  process, or 
assemble the item used, including  any charges for shipping  and delivery  that the vendor 
of those raw materials charged  you. 
 

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Calculating use tax on services and tangible personal property upon which 
services were performed 
 
The  applicable tax rate is computed on the consideration  given  or contracted to be given 
for the service and for  any tangible personal  property  transferred  in conjunction with the 
service.  The consideration  includes any charges to you by the vendor  for the service, for 
shipping or delivery,  and any charges to you by the vendor  for  picking up the tangible 
personal  property  upon which taxable services  will be performed. 
 
 Example: You contract  with an auto shop located outside of New  York State to 
 change the oil in your  company’s  vehicles. The shop does not collect New  York State 
 sales tax. When you bring the vehicles back into New  York State, you owe  use tax. 
 The use tax is computed on the total cost to you including the service charge and the 
 costs for the oil and filter replacements. 
 
Six-month rule 
 
The  sales tax is generally  computed  on the price you paid for an item or service, 
including any shipping  or handling  charges made  by the seller. However,  there are two 
instances where  a New  York State business’s tax due is not based on the purchase  price 
of the item or service: 
 
 • If you used the item or service  outside of New York for more than six months prior 
     to bringing  the item or service  into New York, the amount  subject to tax is the lesser 
     of the purchase  price or the fair market value  at the time you bring the item or 
     service  into New  York State. 
  
 • If tangible  personal  property is brought  into New York to be used in the performance 
     of a contract for a period of less than six months, the user may elect to compute the 
     tax on the fair  rental value  of the property  for the period  of its use within New  York. 
     This method may only be used if the property  is not completely consumed or 
     incorporated  into real property  in New York State. 
 
In these instances, a lower  amount of tax may be due. The  same six-month rule applies 
when  computing local tax due. 
 
Credit for sales taxes paid on purchases outside of New York State              
 
You may be eligible for a credit for tax you paid to another  state or local jurisdiction 
against the tax owed  to New York State on your purchase  of taxable property or services. 
To determine  whether  the tax you paid qualifies  for credit against New  York State and 
local tax, see Tax Bulletin Reciprocal  Credit for Sales or Use Taxes Paid to Other Taxing 
Jurisdictions (TB-ST-765). 
 
Federal  excise taxes, customs duties, and taxes and fees you paid in foreign  countries 
are not allowed  as a credit against any New  York State or local sales or use tax that you 
owe. 
 
How to report and pay use tax 
 
Report  your use tax in one of the following  ways: 
 
 1.  If your business is registered  (or  required  to be registered)  for New  York State 
     sales tax purposes,  you must report  your use tax on your sales and use tax 
     return. 
 
 2.  If you are a business operating  in New  York State as a sole proprietor  that is not 
     registered  or required  to be registered  for New York State sales tax purposes, 
     report  your use tax on your: 
 

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   • New  York State personal  income tax return; 
    
   • Form ST-140,    Individual  Purchaser’s  Annual Report  of Sales and Use Tax;        or 
    
   • Form ST-141,    Individual  Purchaser’s  Periodic Report  of Sales and Use Tax. 
 
 3.  If you are a business, other than a sole proprietorship,  operating  in New York 
   State and you are not registered  or required  to be registered  for New  York State 
   sales tax purposes,  report your use tax on  Form ST-130, Business Purchaser’s 
   Report  of Sales and Use Tax. 
 
Reporting use tax on your sales and use tax returns.      A business required  to collect 
sales tax in New  York State must file sales and use tax returns periodically to report  and 
remit any sales tax collected and sales or use tax owed  during  each sales tax period. A 
business is required  to file annually, quarterly, or monthly (part-quarterly),  depending  on 
the amount of taxable sales or tax collected. You can file your return  online using 
New York’s Web Filing for sales tax returns. Also, see Tax Bulletin Filing Requirements 
for Sales and Use Tax Returns     (TB-ST-275).  Businesses required  to collect sales taxes 
should use these returns to pay their use tax. 
 
Reporting use tax on personal income tax returns.  If  your business is a sole 
proprietorship  and is not required  to be registered,  and you are filing Form IT-201, 
Resident Income Tax Return,      Form IT-203, Nonresident  and Part-Year Resident  Income 
Tax Return, or Form IT-205,    Fiduciary  Income Tax Return, your sales or use tax is due 
on the due date of your income tax return. 
 
If you request  an  automatic extension of time to file  your New  York State personal 
income tax return, you should pay your sales or use tax (as well as the personal  income 
tax you may owe) by using one of these forms: 
 
 • Form IT-370,     Application for Automatic Six-Month  Extension of Time to File for 
 Individuals, or 
 • Form IT-370-PF,   Application for Automatic Six-Month  Extension of Time to File for 
 Partnerships  and Fiduciaries   . 
 
You must file your extension application  on or before  the due date for  filing your income 
tax return (generally  April 15 or the first business day after April 15). 
 
Sales and use tax forms. If your business is not a sole proprietorship  and is not required 
to be registered  for  New York State sales tax purposes,  you must report your use tax 
liability by filing Form ST-130, Business Purchaser’s  Report of Sales and Use Tax.     The 
use tax is due within 20 days from  the date the property or service  purchased  is first 
brought  or delivered  into New York State (or into a jurisdiction within the state where  you 
have  a business location with a higher  tax rate than the rate originally paid). 
 
 Example: A travel agency  located in New  York State is a corporation.  It is not 
 registered  or required  to be registered  for sales tax purposes.  The corporation 
 purchases a computer  over the Internet from a seller located outside New  York State, 
 who  did not collect New  York State sales tax from the corporation.  The seller has the 
 computer delivered  to the travel  agency’s  office in New  York. Use tax on the 
 purchase  must be paid directly to the Tax Department  using the Form ST-130 within 
 20 days of its delivery  to the travel agency. 
 
Special rule for motor vehicles, trailers, or vessels 
 
The  tax on a motor vehicle,  trailer, or vessel that must be registered  or titled by the New 
York State Department  of Motor Vehicles (DMV) will be collected by DMV when you 
register it. The  tax is computed at the combined  state and local rate in effect  where  your 
business is located or at the rate in effect where  the property  will be principally used or 

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garaged.  For more information,  see Publication 750, A Guide to Sales Tax in New  York 
State, and Sales tax forms used for Department  of Motor Vehicles transactions .  
 
If you will not be registering  or titling the motor vehicle,  trailer, or vessel  at DMV, tax must 
be remitted directly to the Tax Department  using Form ST-130,             Business Purchaser’s 
Report  of Sales and Use Tax. 
 
Failure to pay use tax 
 
Failure to pay the use tax you owe by the due date  may result in the imposition of 
penalties, interest, or both. You can use the online   Penalty  and Interest Calculator to 
determine  the amount of penalty and interest due. 
 
The  Tax Department  conducts both routine and special audits to promote compliance. In 
addition, the U. S. Customs Service  provides  the Tax Department  with information  from 
customs declarations  filed by New York State residents returning  from overseas  travel.   
The  Tax Department  also obtains information  on sales to New York State residents under 
information  exchange agreements  with other states. 
 
Note: A Tax Bulletin is an informational  document designed  to provide  general  guidance 
     in simplified language  on a topic of interest to taxpayers. It is accurate as of the 
     date issued. However,  taxpayers should be aware  that subsequent changes  in the 
     Tax Law or its interpretation  may affect  the accuracy of a Tax Bulletin. The 
     information  provided  in this document does not cover  every  situation and is not 
     intended  to replace the law or change its meaning. 
 
References and other useful information 
 
Tax Law :  Sections 1105,1110, 1118, and 1133 
 
Regulations:  Parts 525 and 531 
 
Publications:  Publication 750, A Guide to Sales Tax in New York State  
 
Bulletins: 
 
Filing Requirements for Sales and Use Tax Returns (TB-ST-275) 
Quick Reference Guide for Taxable and Exempt Property and Services (TB-ST-740) 
Reciprocal Credit for Sales or Use Taxes Paid to Other Taxing Jurisdictions (TB-ST-765) 
Use Tax for Individuals (including Estates and Trusts) (TB-ST-913)