Are facial moisturizers and cosmetic makeup that contain an SPF of 2 or greater exempt from NY sales tax?

Plain-English summary

The petitioner is a retailer that sells facial moisturizers and cosmetic makeup (liquid and powder) that contain a sun-protection factor (SPF) of 2 or greater. It noted that the Department treats sunscreens with SPF 2+ as exempt (TB-ST-135; Publication 840) and asked whether its SPF-containing cosmetics are likewise exempt, and whether fragrance or color matters.

The Office of Counsel concluded the products are taxable cosmetics:

• The exemption excludes cosmetics. Tax Law 1115(a)(3) exempts drugs and medicines and products consumed for the preservation of health, but not cosmetics or toilet articles "notwithstanding the presence of medicinal ingredients therein."
• These are cosmetics. The regulation defines cosmetics as articles applied to the body for cleansing, beautifying, promoting attractiveness, or altering appearance (e.g., cold creams, suntan lotions, and makeup are taxable cosmetics) (20 NYCRR 528.4). The petitioner's products are labeled and marketed as cosmetics, with sun protection as an added benefit.
• An SPF ingredient doesn't transform them. The SPF ingredients are drugs/medicines intended to mitigate or prevent illness, but the question is whether adding them to a cosmetic makes the whole product an exempt drug -- and it does not. The statute taxes cosmetics "notwithstanding the presence of medicinal ingredients" (TSB-A-10(58)S; Skin Culture Institute, TSB-A-99(38)S).
• Fragrance/color supports taxability. It isn't the deciding factor, but products with coloring, perfume, or similar additives are generally treated as taxable cosmetics/toiletries (Publication 840).
• Contrast a true sunscreen / single-purpose drug. A product whose primary purpose is sun protection (a sunscreen with SPF 2+) can be exempt; compare Mannatech, where lotions were taxable cosmetics but an antiseptic gel whose sole purpose was treating minor skin conditions was exempt.

What this means for you

Retailers and makers of skin-care, makeup, and SPF products

A cosmetic doesn't become tax-exempt just because you add SPF (or another active drug). New York taxes cosmetics even with medicinal ingredients. The line is primary purpose: a true sunscreen (its job is sun protection) can be exempt, but a moisturizer or makeup with sunscreen as a bonus is a taxable cosmetic. How you label and market the product matters, and fragrance/coloring pushes toward taxable. When unsure, ask whether the product is fundamentally a beautifying/appearance product (taxable) or fundamentally a drug whose sole purpose is treating/preventing a condition (potentially exempt).

Common questions

Q: Our moisturizer/makeup has SPF -- is it tax-exempt like sunscreen?
A: No. It's a taxable cosmetic; adding an SPF ingredient doesn't make a cosmetic an exempt drug.

Q: Why are standalone sunscreens exempt but my SPF makeup isn't?
A: Because a sunscreen's primary purpose is sun protection (a drug function), while your product is fundamentally a cosmetic with sun protection as an added benefit.

Q: Does fragrance or color decide it?
A: Not by itself, but the presence of fragrance or color supports treating the product as a taxable cosmetic.

Q: Is any topical with a medicinal ingredient exempt?
A: Only if it's truly a drug/medicine -- e.g., a product whose sole purpose is treating a skin condition. A beautifying product with an added active ingredient stays taxable.

Citations and references

• Tax Law section 1105(a) (tax on retail sales of tangible personal property)
• Tax Law section 1115(a)(3) (drugs/medicines exemption; cosmetics excluded)
• 20 NYCRR section 528.4 (drugs and medicines; cosmetics)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2011.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a11_31s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Counsel
Advisory Opinion Unit

TSB-A-11(31)S
Sales Tax
November 17, 2011

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S111012A

The Department of Taxation and Finance received a Petition for Advisory Opinion from
Petitioner’s name and address redacted. Petitioner asks whether sales of products containing a
sun protection factor (SPF) of 2 or greater, including facial moisturizers, cosmetic make-up in
liquid and powder form, and other cosmetic liquid or powder products are exempt from sales and
use tax. Petitioner further asks if the presence of a fragrance or color in a product is a
determining factor in its taxability.
We conclude that, pursuant to Tax Law §1115(a)(3) and 20 N.Y.C.R.R. §528.4,
petitioner’s products are cosmetics, notwithstanding the presence of medicinal ingredients, and
receipts from the sales of these products are subject to State and local sales and use taxes.
Although not a determining factor, the presence of a fragrance or color in a product supports the
conclusion of taxability.
Facts
Petitioner is a retailer that markets and sells, among other products, facial moisturizers,
cosmetic make-up in liquid and powder form, and other cosmetic liquid or powder products that
contain a SPF of 2 or greater.
Petitioner notes that TB-ST-135 (April 13, 2011) includes sunscreens with a SPF of 2 or
greater among those products exempt from state and local sales and use taxes. TB-ST-135 is in
accord with prior Departmental publications. See Publication 840, A Guide to Sales Tax for
Drugstores and Pharmacies (8/98), p.6 & p.25.
Analysis
All retail sales of tangible personal property are subject to sales tax pursuant to Tax Law
§1105(a), unless otherwise exempted. Tax Law §1115(a)(3) provides an exemption for “[d]rugs
and medications intended for use, internally or externally, in the cure, mitigation, treatment or
prevention of illnesses in human beings … and products consumed by humans for the
preservation of health but not including cosmetics or toilet articles notwithstanding the presence
of medicinal ingredients therein….”
The Sales and Use Tax Regulations define “drugs and medicines” as “articles, whether or
not a prescription is required for purchase, which are recognized as drugs or medicines in the
United States Pharmacopeia, Homeopathic Pharmacopeia of the United States, or National
Formulary, and intended for use in the diagnosis, cure, mitigation, treatment or prevention of

-2-

TSB-A-11(31)S
Sales Tax
November 17, 2011

disease in humans;” and provides that “(2) [t]he base or vehicle used (oil, ointment, talc, etc.)
and the medium used for delivery (disposable wipe, syringe, saturated pad, etc.) of a drug or
medicine will not affect its exempt status.” 20 N.Y.C.R.R. § 528.4(b)(1)
The regulations define “cosmetics” as “[a]rticles intended to be rubbed, poured, sprinkled
or sprayed on, introduced into, or otherwise applied to the human body for cleansing,
beautifying, promoting attractiveness, or altering the appearance, and articles intended for use as
a component of any such articles are subject to tax. Example: Cold creams, suntan lotions and
makeup are taxable cosmetics.”
The petition does not dispute that the products in question are cosmetics as defined by 20
N.Y.C.R.R. §528.4(c). Further, the product examples provided by the Petitioner consisted of
moisturizers and powders that are identified in product labeling and marketing as cosmetics, with
sun protection as an added benefit. Although not dispositive, the finding that the products are
cosmetics is further supported by the presence of fragrance and coloring. “Generally, products
that contain coloring, perfume, or similar additives are considered to be cosmetic or toiletry
products, and the sale of such products is subject to sales tax.” PUB-840, supra at 6. The SPF
ingredients contained in Petitioner’s products are drugs or medicines intended to mitigate or
prevent illness.
The question for resolution, then, is whether the presence of the SPF ingredients in these
cosmetics transforms them into drugs and medicines eligible for the §1115(a)(3) sales tax
exemption. It does not. Tax Law §1115(a)(3) and 20 N.Y.C.R.R. §528.4(a)(3) directly address
this issue providing that cosmetics are taxable “notwithstanding the presence of medicinal
ingredients therein.” See Adv Op Comm T&F, November 16, 2010, TSB-A-10(58)S; Skin
Culture Institute, Inc., Adv Op Comm T&F, August 4, 1999, TSB-A-99(38)S. Cf. Mannatech
Incorporated, Adv Op Comm T&F, July 25, 2002, TSB-A-02(36)S (lotions were deemed taxable
cosmetics, but antiseptic gel the sole purpose of which was the treatment of “minor burns,
scratches, cuts, insect bites, and other minor skin conditions to help prevent against infection,”
was found to be exempt from sales tax).

DATED: November 17, 2011

NOTE:

/S/
DEBORAH R. LIEBMAN
Deputy Counsel

An Advisory Opinion is issued at the request of a person or entity. It is limited to the
facts set forth therein and is binding on the Department only with respect to the
person or entity to whom it is issued and only if the person or entity fully and
accurately describes all relevant facts. An Advisory Opinion is based on the law,
regulations, and Department policies in effect as of the date the Opinion is issued or
for the specific time period at issue in the Opinion.