Statement of Basis and Purpose of Proposed Rule
The Department of Consumer Affairs (“DCA” or “Department”) is proposing an amendment to the Consumer Protection Law rules regarding the collection of unlawful sales tax. Currently, Section 5-41 of Chapter 5 of Title 6 of the Rules of the City of New York makes it a deceptive trade practice for any seller to collect sales tax on the sale of any good or service that is not subject to such tax under New York State Tax Law. This amendment would add that it is also a deceptive trade practice for a seller to represent that sales tax may be collected for any good or service that is not subject to such tax.
In enforcing Section 5-41, the Department has encountered businesses that add sales tax to products not subject to such tax at the point of sale and include the illegal tax in the sales price listed on a receipt. The Department is not always able to perform test purchases that include an exchange of payment. Some businesses, faced with a violation for adding illegal sales tax to an item, contend that a sale was never completed because no exchange of payment occurred. This amendment is necessary to allow the Department to properly ensure that businesses are not illegally adding sales tax. Prohibiting a business from representing that illegal sales may be collected will better protect consumers from being charged the illegal tax and allow the Department to more efficiently enforce this provision.
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