NY TSB-A-20(71)S Sales Tax 2020-11-24

Is fabric sold for more than $110 exempt under New York's clothing exemption if the buyer will make several garments from it?

Short answer: No. New York exempts clothing and footwear costing less than $110 per article, and 'clothing' includes fabric, thread, buttons, zippers and similar items that become part of clothing. But the $110 test is applied to the item as sold. When fabric is sold as a single unit costing more than $110, the sale is taxable — it doesn't matter that the price per yard is under $110, or that the buyer says the fabric will be used to make multiple garments. The exemption looks at the article sold, not the items the customer might later make from it.

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

A retailer sells fabric by the yard plus sewing notions (buttons, thread, zippers, linings). Some customers buy fabric costing more than $110 in a single purchase and say they'll use it to make multiple garments. The retailer asked whether such a sale still qualifies for New York's clothing exemption.

The Office of Counsel said no:

New York exempts clothing and footwear costing less than $110 per article (Tax Law § 1115(a)(30)), and "clothing" is defined to include fabric, thread, yarn, buttons, snaps, hooks, zippers and like items that are used to make or repair clothing and become part of it (Tax Law § 1101(b)(15)).
But the $110 threshold is measured by the item as sold. When fabric is sold as a single unit for more than $110, the sale is taxable — regardless of whether the per-yard price is under $110, or whether the customer intends to make several items from it (TSB-A-01(10)S).

The exemption looks at the article actually sold, not the hypothetical garments a buyer might later cut from it.

What this means for you

Fabric stores and sewing/craft retailers

Apply the $110 exemption to the unit you actually ring up. A single cut/bolt of fabric sold for $110 or more is taxable, even though the same total in separate under-$110 articles would each be exempt, and even if the customer plans to make multiple garments.

Notions and components

Fabric, thread, buttons, zippers, and similar items do fall within "clothing," so each is exempt under $110 — but the threshold is per item as sold, not per finished garment.

Bookkeepers and POS setup

Set exemption logic on the selling unit/line price, not on a downstream per-garment or per-yard calculation. The customer's stated intended use doesn't drive the result.

Common questions

Q: The fabric is only $20 a yard — why is a $300 cut taxable?
A: Because the exemption is measured by the item as sold. Sold as a single $300 unit, it exceeds $110 and is taxable, regardless of the per-yard price.

Q: My customer will make five dresses from it. Doesn't that count as five exempt articles?
A: No. The exemption looks at the article you sell, not the garments the customer may later make.

Q: Are buttons, thread, and zippers exempt?
A: Yes, when under $110 — they're treated as clothing because they become part of clothing. The same per-item-sold threshold applies.

Q: Can I rely on this opinion?
A: It binds the Department only as to the petitioner. Use it as guidance and confirm your own facts.

Citations and references

Tax Law § 1105(a) (tax on retail sales of tangible personal property)
Tax Law § 1115(a)(30) (exemption for clothing and footwear under $110 per article)
Tax Law § 1101(b)(15) (clothing includes fabric, thread, yarn, buttons and like items that become part of clothing)
Tax Law § 1101(b)(4) (definition of retail sale)
TSB-M-00(1)S; TSB-A-01(10)S

Source

Original ruling text

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Sales taxNovember 24, 2020Office of Counsel

The Department of Taxation and Finance received a Petition for Advisory Opinion from Redacted (Petitioner). Petitioner asks whether sales of fabric are eligible for the clothing exemption if the sale is for more than $110. We conclude that such sales are not exempt from State and local sales tax.

Facts

Petitioner sells fabric by the yard, as well as other clothing accessories, such as buttons, thread, zippers, linings, etc. Petitioner does not provide any information about the materials it sells, but contends that customers “purchase fabric costing in excess of $110 and claim that they will be using the fabric to create multiple garments.” It is assumed that the fabric at issue is purchased by customers as a single unit, and that Petitioner’s sale of such constitutes a “retail sale” pursuant to Tax Law § 1101(b)(4).

Analysis

Tax Law § 1105 imposes sales tax on, among other things, retail sales of tangible personal property. See Tax Law § 1105(a). Tangible personal property is “[c]orporeal personal property of any nature,” and generally includes the items that Petitioner sells, including fabric. However, receipts from the sale of clothing and footwear for which the receipt or consideration given or contracted to be given is less than one hundred ten dollars per article or pair are exempt from New York State (and, if authorized by a city or county, local) sales tax. See Tax Law § 1115(a)(30). See also Sales and Use Tax Exemption on Clothing, Footwear, and Items Used to Make or Repair Exempt Clothing, TSB-M-00(1)S. “Clothing and footwear” is defined to include fabric, thread, yarn, buttons, snaps, hooks, zippers and like items that are used or consumed to make or repair clothing, and that become a physical component part of such clothing. See Tax Law § 1101(b)(15).

Petitioner sells fabric by the yard, as well as other clothing accessories, such as buttons, thread, zippers, linings, etc. Retail sales of such items are exempt from State (and, if approved, local) sales tax when such items cost less than $110 per item. Here, however, Petitioner indicates that it sells fabric costing more than $110. When sold as a single unit, such sales are not exempt from sales tax, irrespective of whether the fabric’s unit cost (i.e., cost per yard.) is less than $110, or whether the fabric will be used to make multiple items. See TSB-A-01(10)S.

Deborah R. Liebman
Deputy Counsel

Note: 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.