SALT Report 1849 – The New York Department of Taxation and Finance issued an advisory opinion regarding the taxability of pattern or project downloads, sometimes called eProjects.
The Taxpayer is an out-of-state publisher who sells arts and crafts books, magazines, DVDs, and patterns in a downloadable format directly to the consumer. Access to the downloadable patterns and eProjects is through the use of an online tool that allows the customer to select, pay for, and download a specific project.
New York Tax Law § 1105(a) imposes sales and use tax on tangible personal property, including prewritten software. However, the Department determined that the Taxpayer’s downloads and eProjects are non-tangible electronic or digital files that only provide patterns or instructions for purchasers to create their own arts and crafts projects. The downloadable instruction or projects do not provide any access to prewritten computer software and are not sold in conjunction with any tangible personal property. Therefore, the Taxpayer’s downloads are not subject to New York sales or use tax
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