NY TSB-A-24(17)S Sales Tax 2024-08-01

Did a New York resident who bought a car in Maine (and paid Maine sales tax) owe New York use tax when she registered it in New York, with no credit for the Maine tax?

Short answer: Use tax was due. The Department concluded that a New York resident who bought, registered, and paid sales tax on a vehicle in Maine still owed New York compensating use tax when she registered it in New York (Tax Law § 1110(a)). She was a New York resident at purchase, and garaging/storing the car in New York is a taxable 'use' (Tax Law § 1101(b)(7)); the tax is due at New York registration (Tax Law § 1132(f)). She got NO credit for the Maine tax because the reciprocal credit under Tax Law § 1118(7)(a) applies only when the other state gives a reciprocal credit, and Maine does not.

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 New York resident temporarily lived and worked in Maine in late 2016, where she bought, registered, insured, and paid sales tax on a car. She drove it in Maine, then brought it back to New York in December 2016, where it was garaged until June 2018; her mother registered it in New York in December 2017 and paid New York use tax. She asked whether that New York use tax was properly due. The Department said yes.

New York imposes a compensating use tax on a resident's use of property in the State, unless the property was already subject to New York sales/use tax or an exemption applies (Tax Law § 1110(a); 20 NYCRR 525.2(b)(1)(i)). "Use" is broad — it includes "the exercise of any right or power over" the property and explicitly storage, keeping, or retention (Tax Law § 1101(b)(7)). She was a New York resident when she bought the car, and garaging it in New York from December 2016 to June 2018 was a taxable use. For vehicles, the rate is the purchaser's county of residence (Tax Law § 1214(a)(2)), and the tax is due on registration in New York (Tax Law § 1132(f); 20 NYCRR 531.6(f)). So the use tax was properly collected.

No credit for the Maine tax. New York gives a reciprocal credit for sales/use tax paid to another state only when that state gives a corresponding credit for tax paid to New York (Tax Law § 1118(7)(a); TB-ST-765). Maine doesn't allow a credit for New York State or local sales tax (per the Form DTF-804 instructions), so she got no credit — she effectively paid tax to both states.

What this means for you

New York residents buying vehicles (or other goods) out of state

If you're a New York resident, buying a car in another state and paying that state's tax does not get you out of New York tax. Garaging or keeping the vehicle in New York is a taxable "use," and the tax comes due when you register here. Whether you get any relief for the other state's tax depends entirely on reciprocity.

Watch reciprocity before assuming a credit

New York's credit for out-of-state tax is a two-way street: you only get it if the other state would credit New York tax. Some states (here, Maine) give no such credit — so you can end up taxed twice. Check New York's TB-ST-765 and Form DTF-804 before counting on a credit.

Accountants and tax professionals

The chain is § 1110(a) (use tax) + § 1101(b)(7) (broad "use" incl. storage) + § 1132(f) (due at registration), rate per § 1214(a)(2). The credit under § 1118(7)(a) is conditional on reciprocity; confirm the other state's treatment (DTF-804 instructions / TB-ST-765) rather than assuming a rate-to-rate credit.

Common questions

Q: I'm a New York resident and paid sales tax on a car I bought in another state. Do I still owe New York tax?
A: Likely yes. New York imposes use tax on a resident's use (including garaging/storage) of the vehicle, due when you register it in New York.

Q: Don't I get credit for the tax I already paid to the other state?
A: Only if that state gives a reciprocal credit for New York tax. Here Maine gives none, so there was no New York credit and the resident effectively paid both.

Q: When is the New York tax due?
A: On registration of the vehicle in New York (Tax Law § 1132(f)).

Q: Can I rely on this opinion?
A: Not as binding. A TSB-A advisory opinion binds the Department only as to the petitioner and the exact facts described. Use it to understand the reasoning, then check your own facts and the relevant state's reciprocity.

Citations and references

New York Tax Law and regulations:
- Tax Law § 1110(a) — compensating use tax on a resident's use of property
- Tax Law § 1101(b)(7) — definition of "use," including storage/keeping/retention
- Tax Law § 1105(a) — sales tax on retail sales of tangible personal property
- Tax Law § 1214(a)(2) — vehicle use-tax rate is the purchaser's county of residence
- Tax Law § 1132(f) — tax due on registration of the vehicle (20 NYCRR 531.6(f))
- Tax Law § 1118(7)(a) — reciprocal credit for sales/use tax paid to another state
- 20 NYCRR 525.2(b)(1)(i) — use-tax complement to sales tax

Guidance cited:
- TB-ST-765 — Reciprocal Credit for Sales or Use Taxes Paid to Other Taxing Jurisdictions
- Form DTF-804 — Claim for Credit of Sales Tax Paid to Another State (Maine gives no reciprocal credit)

Source

Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao.htm
Opinion: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales/24-17s.htm
Printer-friendly PDF: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a24-17s.pdf

Original ruling text

Sales Tax
August 1, 2024
Office of Counsel

The Department of Taxation and Finance received a Petition for an Advisory Opinion from [ redacted ] (Petitioner). Petitioner asks whether her purchase of a vehicle in Maine while a New York State resident was properly subject to New York State and local use tax upon the vehicle’s registration with the New York State Department of Motor Vehicles. We conclude that Petitioner’s purchase of a vehicle in Maine was properly subject to State and local use tax upon registration in New York State.

Facts

Petitioner, a New York State resident, temporarily lived and worked in Maine from September 2016 through December 2016. On September 28, 2016, Petitioner purchased, registered, and insured a vehicle in Maine. Petitioner paid state and local sales tax to the State of Maine. Petitioner used the vehicle in Maine until December 24, 2016, at which point Petitioner returned to New York for vacation and brought the vehicle to New York. The vehicle remained in New York until June 2018. In December of 2017, Petitioner’s mother registered the vehicle for Petitioner in New York and paid use tax to New York. From January 2017 through June 2018, Petitioner temporarily relocated several times for work. Petitioner permanently moved to Washington with the vehicle in July of 2018.

Analysis

Tax Law § 1105(a) imposes sales tax on the receipts from every retail sale of tangible personal property, unless a specific exemption applies. With regard to motor vehicles, the applicable rate of sales or use tax is the combined state and local rate in effect in the purchaser’s county of residence. See Tax Law § 1214(a)(2). Tax Law § 1110(a) imposes a compensating use tax on the use of tangible personal property within the State by a resident, except to the extent that the property has or will be subject to state and local sales taxes, or unless a specific exemption applies. See 20 NYCRR 525.2(b)(1)(i). Tax Law § 1101(b)(7) defines the term “use” to include “[t]he exercise of any right or power over tangible personal property . . . and includes, but is not limited to, the receiving, storage or any keeping or retention for any length of time. . . .” The tax due is required to be paid upon registration of the vehicle in New York. See Tax Law § 1132(f), 20 NYCRR 531.6(f). Petitioner was a New York State resident at the time she purchased and registered her vehicle. The vehicle was brought to New York in December of 2016 and garaged in New York until June of 2018. Petitioner’s storage of the vehicle in New York constitutes use under Tax Law § 1101(b)(7). Therefore, Petitioner’s purchase of the vehicle was subject to New York use tax and the tax was properly collected when the vehicle was registered in New York.

Tax Law § 1118(7)(a) provides an exemption from use tax to the extent that tax on the purchase of a vehicle was legally due and paid to another state, without any right to refund or credit, if that state allows a corresponding exemption for such taxes paid to New York. New York may provide a credit on a rate-to-rate basis for sales or use taxes paid to another state only where, and to the extent that, the other state provides a reciprocal credit for sales or use taxes paid to New York State and/or its localities. See TB-ST-765-- Reciprocal Credit for Sales or Use Taxes Paid to Other Taxing Jurisdictions. Maine does not allow a credit for either New York state or local sales taxes. See Instructions on Form DTF-804 - Statement of Transaction – Claim for Credit of Sales Tax Paid to Another State. Consequently, Petitioner is not entitled to a credit against the New York State and local use tax due for taxes paid to the State of Maine.

DATED: August 1, 2024

Mary Ellen Ladouceur
Principal Attorney

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.