NY TSB-A-12(26)S Sales Tax 2012-10-15

Are downloadable craft patterns and project collections (eProjects) subject to NY sales tax?

Short answer: No. Downloadable craft patterns (step-by-step instructions to make something) and eProjects (collections of multiple electronic patterns) are non-tangible digital files. They are not tangible personal property, they don't provide access to prewritten computer software, and they aren't sold together with tangible personal property such as the materials to make the craft. On those facts, their sale or use is not subject to sales or use tax. (If they were instead sold bundled with tangible craft materials, the analysis could differ.)

Disclaimer: This is an official New York State Department of Taxation and Finance Advisory Opinion (TSB-A), issued by the Office of Counsel at a taxpayer's request. It is limited to the facts set forth in it and binds the Department only with respect to the petitioner to whom it was issued, and only if that petitioner fully and accurately described all relevant facts; another taxpayer cannot rely on it. It reflects the law, regulations, and Department policy in effect when issued and may since have changed. Taxpayer-identifying details are redacted. New York State and local sales taxes are administered centrally by the Department. This summary is informational only and is not legal or tax advice. Consult a licensed New York tax professional about your specific situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked at the bottom of this page, or PDF in the sidebar) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

The petitioner is an out-of-state publisher of arts-and-crafts content (books, magazines, DVDs, patterns) in both physical and downloadable versions. It sells downloadable patterns (step-by-step instructions to make something, e.g., knit a hat) and eProjects (a collection of multiple electronic patterns in one download) directly to consumers through an online checkout. It asked whether those download sales are taxable.

The Office of Counsel concluded the downloads are not taxable. Sales/use tax applies to tangible personal property, including prewritten software (Tax Law 1105(a)). But the petitioner's pattern downloads and eProjects are non-tangible electronic files that simply provide instructions for buyers to make their own projects. They don't provide access to prewritten software, and they are not sold in conjunction with tangible personal property (such as the materials to make the craft). On those facts, they are not tangible personal property, and their sale or use is not subject to sales or use tax (TSB-A-07(14)S; TSB-A-01(15)S).

What this means for you

Sellers of downloadable instructions, patterns, and plans

Purely digital instructional files -- patterns, plans, project guides -- delivered with no tangible copy are generally not taxable in NY, as long as they don't deliver prewritten software and aren't bundled with tangible goods. Watch the bundling line: sell the same pattern packaged with a craft kit or materials, and the transaction can become a taxable sale of tangible personal property.

Common questions

Q: Our patterns are downloads, not paper -- taxable?
A: No. As non-tangible files that aren't software and aren't sold with materials, they're not subject to sales or use tax.

Q: An eProject bundles several patterns -- does that change anything?
A: No. A collection of electronic patterns is still a non-tangible download and not taxable on these facts.

Q: What if we sell the pattern with a craft kit?
A: Then it may be sold in conjunction with tangible personal property, and the analysis could differ -- potentially taxable.

Citations and references

Tax Law section 1105(a) (sales tax on tangible personal property)
Tax Law section 1110(a) (compensating use tax)

Source

Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2012.htm
Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a12_26s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Counsel
Advisory Opinion Unit

TSB-A-12(26)S
Sales Tax
October 15, 2012

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S110722A

The Department of Taxation and Finance received a Petition for an Advisory Opinion
from name and address redacted. Petitioner asks whether its receipts from the sale of pattern
or project downloads (eProjects) are subject to tax.
We conclude that, since Petitioner’s pattern downloads and eProjects are not sold in
tangible form and are not sold with other tangible items, such as craft materials, the sale of
these items is not subject to sales or use tax pursuant to sections 1105(a) or 1110(a) of the Tax
Law.
Facts
Petitioner is a company based in another state that publishes various arts and craft
related books, magazines, DVDs, and patterns in both physical and downloadable versions.
Petitioner sells downloads of patterns, eProjects, E-Books, periodicals, and videos directly to
consumers. Access to the pattern downloads and eProjects is through the use of an online
check-out tool that allows the customer to select and pay for the electronic pattern or project
which the customer would like to download. Petitioner described an electronic pattern and an
eProject as follows: An electronic pattern consists of step-by-step instructions that are
downloadable to teach someone how to make something, such as how to knit a hat or crochet
a scarf. An eProject is a collection of multiple electronic patterns combined together into one
download, such as a certain number of jewelry projects.
Analysis
The Tax Law imposes sales and use tax on tangible personal property, including
prewritten software. See Tax Law § 1105(a). Petitioner’s pattern downloads and eProjects
are non-tangible electronic or digital files that provide patterns and instructions for purchasers
to make their own craft projects. The downloads do not appear to provide any access to
prewritten computer software. The downloaded patterns and eProjects are also not sold in
conjunction with tangible personal property (such as materials to make the craft projects). To

-2-

TSB-A-12(26)S
Sales Tax
October 15, 2012

the extent that this is the case, they would not constitute tangible personal property and their
sale or use would not be subject to sales or use tax. See TSB-A-07(14) S, TSB-A-01(15) S.

DATED: October 15, 2012

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. The information provided in
this document does not cover every situation and is not intended to replace the law
or change its meaning.