N.Y. Comp. Codes R. & Regs. tit. 20 § 527.2

Current through Register Vol. 46, No. 17, April 24, 2024

Section 527.2 - Sale of utility and similar services

Tax Law, § 1105(b)

(a)Imposition.

(1) Section 1105(b) of the Tax Law imposes a tax on the receipts from every sale, except a sale for resale or a sale specifically exempt under section 1115(b)(i) and (ii) (c) or (e) of the Tax Law, of

(i) gas, electricity, refrigeration and steam, and gas, electric, refrigeration and steam service of whatever nature; and

(ii) telephony and telegraphy and telephone and telegraph service of whatever nature, except interstate and international telephony and telegraphy and telephone and telegraph service.

Cross reference:

Exemptions, see Part 528 of this Title.

(2) Although this tax is generally known as the "consumer's utility tax," the intention of the statute is to tax the enumerated sales and services whether or not rendered by a company subject to regulation as a utility company. The words "of whatever nature" indicate that a broad construction is to be given the terms describing the items taxed. The inclusion of the word "service" indicates an intent to tax, under this provision, items that are furnished as a continuous supply while the vendor-vendee relationship exists.

(3) A charge for installing equipment, such as transmission equipment, which a gas, electric, or telephone or telegraph company makes, according to a tariff, to a real property developer is deemed to be a charge for gas, electric, telephone or telegraph service. The charge may be for reimbursement of the company's cost of doing the work itself, or for the cost the company incurred in having a contractor perform the work.

(b)Gas and gas service.

(1) All types of gas service and gas sold through pipes or mains, or in containers with a capacity of 100 pounds of gas or more, for heating, cooking, refrigerating or lighting purposes by residential, commercial or industrial users are subject to the tax imposed under subdivision (b) of section 1105 of the Tax Law.

(2) Where gas service or gas is sold and delivered, in a truck from which the gas is transferred to a container on the premises of the purchaser, such transaction is taxed as a sale in a bulk container having a capacity of 100 or more pounds of gas subject to tax as in paragraph (1) of this subdivision.

(3) Sales of gas in containers or cylinders having a capacity of less than 100 pounds of gas are considered to be sales of tangible personal property subject to tax under subdivision (a) of section 1105 of the Tax Law and not the sale of gas service or gas for the purposes of this section.

Example 1:

A resident of a city purchases 50 cubic feet of natural gas from a regulated company (public utility). The transaction is the purchase of a gas service.

Example 2:

A dealer in LP gas visits a residence on a monthly basis, and refills or replaces the cylinders. The charge that is made for the gas consumed is for a gas service.

Example 3:

A dealer in LP gas sells 20 pound cylinders for use on trailers, or by plumbers and also refills such cylinders. The receipts from all such sales are receipts from the sale of tangible personal property.

Example 4:

A person purchases two 100 pound tanks of LP gas from a non-regulated company. The transaction is the purchase of gas.

Example 5:

A welding shop purchases a tank of oxygen and a tank of acetylene. The transaction is not the purchase of a gas service but is the purchase of tangible personal property.

(c)Refrigeration and refrigeration service.

(1) The sale of air conditioning is a sale of refrigeration service.

Example:

A lease provides that a landlord will furnish the tenant with air conditioning service during normal business hours and further provides for an additional charge, for air conditioning service during other hours at $10 an hour. This additional charge is for the sale of refrigeration service.

(2) The sale of refrigerated storage or refrigerated transportation is not the sale of refrigeration or refrigeration service. The taxability of such services is governed by the provisions relating to storage and transportation.

(3) Refrigeration or refrigeration service may not be purchased for resale by a vendor of refrigerated storage.

(d)Telephony and telegraphy; telephone and telegraph service.

(1) The provisions of section 1105(b) of the Tax Law with respect to telephony and telegraphy and telephone and telegraph service impose a tax on receipts from intrastate communication by means of devices employing the principles of telephony and telegraphy.

(2) The term telephony and telegraphy includes use or operation of any apparatus for transmission of sound, sound reproduction or coded or other signals.

Example 1:

Dispatch services, commonly used by taxicab companies, trucking firms and similar operations, which provide two-way voice communication between a base location and mobile units or between mobile units are considered telephony even though the base and mobile units are not interconnected with a telephone system.

Example 2:

Paging service which is a one-way transmission of communication by signal or voice or both signal and voice from a base unit to a mobile unit is considered telephony.

Example 3:

Message switching services, transmitted to a computer over lines leased from a communication carrier are telegraph services subject to the tax imposed under section 1105(b) of the Tax Law.

Example 4:

Facsimile transmission services are telegraph services subject to the tax imposed under section 1105(b) of the Tax Law.

Example 5:

The use of a teletypewriter is a telegraph service subject to tax imposed under section 1105(b) of the Tax Law.

(3) The term telephony and telegraphy, as used in this Subchapter, does not include:

(i) cable television service, which is the service of receiving and amplifying programs broadcast by television or radio stations or any other programs originated by a cable television company or by any other party, and distributing such programs by wire, cable, microwave or other similar means, whether such means are owned or leased, to persons who subscribe to such service. See New York State Cable Television Association v. State Tax Commission, 59 AD 2d 81;

(ii) music service, which is the initiation of musical programs, and the distribution of such programs by wire, cable or other similar means, whether such means are owned or leased, to persons who subscribe to such service.

(4) A service is not considered telegraphy or telephony if either of these services is merely an incidental element of a different or other service purchased by the customer.

Example 6:

A company offers its customers a protective service using a central station alarm system, which transmits signals telegraphically. The customer is purchasing a protective service.

(5) The tax on utility services applies to every charge for any telephone and telegraph service. Among these charges are monthly message rate and intrastate toll charges and charges for special services, such as installation, change of location, conference connections, tie-lines, WATS lines and the furnishing of equipment.

Example 7:

A telephone company installs station apparatus, owned by it, on the premises of a customer. The installation is a service taxable under section 1105(b) of the Tax Law.

(6) Where a customer has telephones at a single location connected to exchanges in different localities, and a tie-line to a locality in which he is not located, the tax rate applicable for each service is the tax rate in effect in the locality to which the exchange is assigned.

Example 8:

A business located in Nassau County has two telephone numbers, one with a Nassau exchange and one with a Queens exchange. This enables his Queens customers to phone him toll free. Service on the Queens exchange is considered to be purchased in Queens County even though the telephone is physically located in Nassau County.

(e)Sales for resale.

Purchases of utility services by a utility for resale as such may be made without payment of the sales tax. The purchaser must furnish the supplier of the utility to be resold with a resale certificate (Form ST-120). When the utility services are resold by the purchaser he must collect the sales tax on the receipts from his sales as imposed under section 1105(b) of the Tax Law. A purchase of a utility service which is not resold is subject to tax as a purchase at retail.

Example:

A utility company purchases excess power from an industrial organization or through a power pool for resale to its customers. Such purchase may be made without payment of tax upon the presentation of a properly completed resale certificate.

(f)Computation of receipt.

Where a utility company bills a customer and indicates on such bill the amount for the service and a late payment charge which may be imposed because of the failure of the customer to pay such bill within a specified period of time, the sales tax is computed on the amount billed without consideration of the late payment charge. The late payment charge constitutes a charge for interest and is not part of the sale price of the service rendered. (See section 526.5[h] of this Title.)

N.Y. Comp. Codes R. & Regs. Tit. 20 § 527.2