SALT Report 2030 – The New York Department of Taxation and Finance issued an advisory opinion regarding a commercial printer’s use of the resale exemption on its purchases of envelopes that it sells to its customers when providing printing services.
The Taxpayer prints and mails account statements, benefit statements, health insurance claim checks, and other types of business documents on behalf of credit unions and insurance companies. The Taxpayer uses information provided by its customers to print the appropriate documents. One printed, the Taxpayer inserts the documents into envelopes for direct mailing to the credit union’s or insurance companies’ clients.
In their decision, the Department referred to regulation section 527.4(a)(4) which states, “When . . . [printing or imprinting] services are combined with the sale of property by the person performing the services, the entire transaction is subject to tax as a retail sale of tangible personal property.” Under the terms of the regulation, the Taxpayer’s sales of printed materials and envelopes are taxable sales of tangible personal property.
Therefore, the Department determined that the Taxpayer’s purchases of the outer and inner envelopes, which become part of the end product, are considered purchases for resale and are not subject to sales tax when the Taxpayer purchases them. To retain its exempt status, the Taxpayer should provide its vendors with Form ST-120, Resale Certificate when purchasing the envelopes.
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