Is a diaper bundle priced over $110 still exempt if each component, sold separately, is under the $110 clothing threshold?

Plain-English summary

The Petitioner sells a cloth infant diaper made of four components -- an organic hemp diaper, a hemp booster insert, a disposable liner, and a snap cover. Sold individually, each component is priced under $110. The Petitioner also sells a bundle of varying quantities of all four components for a retail price of $269.95 -- over $110. It asked whether the bundle is exempt.

The Office of Counsel concluded the bundle is exempt:

• Clothing under $110 is exempt. Tax Law 1115(a)(30) exempts clothing and footwear (and items used to make/repair exempt clothing) sold for less than $110 per item. Children's diapers (including disposable diapers) and underwear count as exempt clothing when sold for under $110 (TSB-M-06(6)S).
• Each component is exempt. The four components, sold individually under $110, are each exempt clothing.
• The bundle stays exempt. The $269.95 bundle is also exempt because the price of each article in it, when sold separately, is under $110 -- so the whole bundle is exempt even though the package costs more than $110.

What this means for you

Sellers of diapers and children's clothing

Diapers (cloth or disposable) are exempt clothing under the under-$110 rule. And a multipack/bundle of exempt clothing items doesn't become taxable just because the package crosses $110 -- what matters is the per-item price when sold separately.

Bundles of exempt clothing

If every item in a bundle would be exempt sold on its own (each under $110), the bundle is exempt regardless of total. (Contrast a bundle mixing taxable and exempt goods under one charge, which can be fully taxable -- see TSB-A-14(30)S.)

Keep your per-item pricing documented

The result rests on each component being separately priced under $110. Keep records of the standalone prices so you can support the exemption on the bundle.

Common questions

Q: Are diapers taxable in New York?
A: No. Children's diapers (cloth or disposable) are exempt clothing when sold for less than $110 per item.

Q: My diaper bundle costs more than $110 -- is it taxable?
A: No, if each component in the bundle is priced under $110 when sold separately. The bundle stays exempt.

Q: Does this apply to any bundle over $110?
A: It applies to bundles of clothing items each individually under $110. A bundle mixing taxable and exempt items under one charge can be fully taxable.

Citations and references

• Tax Law section 1105(a) (sales tax on tangible personal property)
• Tax Law section 1115(a)(30) (clothing and footwear under $110 exemption)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2014.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a14_9s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-14(9)S
Sales Tax
May 27, 2014

Office of Counsel
Advisory Opinion Unit

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S121220B

The Department of Taxation and Finance received a Petition for Advisory Opinion
from REDACTION REDACTON REDACTION REDACTION. Petitioner asks whether
its sale of a bundle of infant diapers and diaper components, which individually are exempt
from sales and compensating use taxes, is also exempt though priced above the clothing
and footwear exemption limit. We conclude that Petitioner’s retail sale of the bundle of
individually exempt articles for a price of $110 or more is not taxable, given that all the
components of the bundle, which are sold separately for less than $110 each, are exempt.
Facts
Petitioner sells an infant diaper made up of several components. These are an
organic hemp diaper, a hemp “booster” insert to increase the absorbency of the original
diaper, a soft disposable diaper liner, and a cover into which the various pieces snap.
When sold individually, each of the components is priced under $110. The Petitioner also
sells a bundle consisting of groups of varying quantities of the four components, for a retail
price of $269.95.
Analysis
Tax Law § 1105(a) imposes sales tax on the “receipts from every retail sale of
tangible personal property, except as otherwise provided in this article.” Tax Law §
1115(a)(30) exempts from that tax clothing, footwear, and items used to make or repair
exempt clothing which is sold for less than $110 per item or pair of shoes. See also
Publication 718-C. Children’s diapers, including disposable diapers, and underwear are
each considered to be items of clothing that, when sold for less than $110 per item, are
exempt. See TSB-M-06(6)S. The four diaper components Petitioner sells individually are
each exempt articles of clothing priced under the exemption’s monetary threshold of $110,
and are not subject to tax. The bundled package Petitioner sells at retail for $269.95 also is

-2-

TSB-A-14(9)S
Sales Tax
May 27, 2014

not subject to tax because the price of each article in the bundle, when sold separately, is
priced under the monetary threshold of $110. Therefore, the whole bundle is exempt.

DATED: May 27, 2014

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.