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 desks, 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)