Does a New York jeweler have to collect sales tax on jewelry sold to foreign customers who are only temporarily in the United States?

Plain-English summary

F. Staal, Inc., a Fifth Avenue jeweler, asked whether it must collect sales tax on jewelry sold to foreign customers who are only temporarily in the United States. It proposed using a certificate to negate the tax.

The Department held the in-store sale is taxable, and only a genuine carrier-shipped export sale is exempt.

• A completed New York sale is taxable. Section § 1105(a) taxes retail sales made in New York, so F. Staal's retail sales of jewelry to customers in New York are generally taxable and the tax must be collected.
• The proposed § 1132(c) certificate doesn't fit. Section § 1132(c) provides only for certificates establishing a sale as being for resale or for a § 1115(a) exempt use — neither of which describes a sale to a departing foreign tourist. So that certificate can't negate the tax here.
• The Ammex case doesn't control. Ammex Warehouse Co. v. Procaccino (85 Misc.2d 327, aff'd 55 A.D.2d 535) involved bonded liquor and cigarettes sold at the Canadian border, the whole transaction supervised by federal officers and the bond not released until the goods were actually landed in Canada — so no taxable incident occurred in New York. Here, by contrast, there is a completed sale within New York, fully subject to the tax.
• But a documented export sale is exempt. Under the NYC Comptroller's Bulletin 1962-1 (recognized by the State Tax Commission for both the State and City taxes), if the vendor delivers the goods to a carrier (ship or plane) that agrees not to turn them over to the buyer until the conveyance has left U.S. territory, and the carrier does so, the sale is an exempt export sale where the customer is (a) a non-resident alien returning to a foreign country, or (b) a resident alien or U.S. citizen who will sell or dispose of the property abroad and not bring it back.
• Evidence is required. The vendor must obtain and keep a carrier certificate (acknowledging receipt and that the goods won't be released until outside U.S. limits) and a signed customer certificate with the prescribed details. Without that evidence, the sale is deemed taxable.

What this means for you

Handing merchandise to a foreign tourist in your store is a taxable New York sale. The buyer's foreign residence or plans to take the item home don't exempt an over-the-counter sale.

A resale/exempt-use certificate won't cover a tourist sale. The § 1132(c) certificate machinery is for resale and § 1115(a) exempt uses — not for "customer is leaving the country."

The real export exemption runs through a carrier, not the customer's hands. To exempt the sale, deliver the goods to the ship or plane's carrier so the buyer doesn't get them until after departure from the U.S., and collect the carrier and customer certificates. No paperwork, no exemption.

Common questions

Q: My customer lives abroad and is flying home with the jewelry. Can I skip the tax?
A: No, if you hand the item over in the store. That's a completed New York sale and is taxable.

Q: Can I use a resale or exempt-use certificate to avoid charging tax?
A: No. The § 1132(c) certificate only covers resale or § 1115(a) exempt-use sales, not a departing-tourist sale.

Q: How can a sale to a departing foreign customer be exempt?
A: Deliver the goods to the carrier (ship or plane) under an agreement that the buyer won't receive them until after the conveyance leaves U.S. territory, and keep the required carrier and customer certificates (NYC Comptroller's Bulletin 1962-1). Without that evidence, the sale is taxable.

Citations and references

Statutes and guidance:

• Tax Law § 1105(a) — tax on retail sales made in New York
• Tax Law § 1132(c) — certificates only for resale or § 1115(a) exempt uses
• Tax Law § 1115(a) — exempt uses
• Office of the Comptroller, City of New York Bulletin 1962-1 (as amended) — export-sale procedure (State and City)

Case distinguished:

• Ammex Warehouse Co., Inc. v. Procaccino, 85 Misc. 2d 327, aff'd 55 A.D. 2d 535

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1981.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a81_68s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-81(68)S
Sales Tax
December 30, 1981

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S810923B

On September 23, 1981 a Petition for Advisory Opinion was received from F. Staal, Inc., 743
Fifth Avenue, New York, New York 10022.
At issue is Petitioner's liability for the collection of sales tax on sales of jewelry to foreign
customers who are in the United States only temporarily.
Section 1105(a) of the Tax Law imposes a tax on the "receipts from every retail sale of
tangible personal property . . . ." made in New York. Petitioner's retail sales of jewelry to customers
in New York are therefore generally subject to tax, which is required to be collected by Petitioner.
Petitioner proposes the utilization of a certificate, to be prescribed pursuant to Section
1132(c) of the Tax Law, by means of which the customer's liability for tax would be negated.
However, Section 1132(c) provides only for certificates establishing sales as being for resale or for
uses exempted under Section 1115(a) of the Tax Law. The situation here under discussion would
therefore not be amenable to such treatment.
Ammex Warehouse Co., Inc. v. Procaccino, 85 Misc. 2d 327, aff'd 55 A.D. 2d 535, cited by
Petitioner, is not controlling herein. That case dealt with a situation where sales of bonded liquor,
cigarettes and other merchandise, originating outside New York, were made at or near the U.S.Canadian border. The entire transaction was "supervised by and under the control of federal govern­
mental officers to insure that the goods . . . [were] taken across the border into Canada." Id., at 336.
Further, the bond under which the vendors operated was not relieved until the merchandise was
actually landed in Canada. The court held, accordingly, that "no incident occurs in New York which
is subject to the excise tax sought to be imposed." Id. In the present case, of course, there is a
completed sale within New York, wholly subject to New York's jurisdiction and, accordingly,
subject to sales tax.
It is to be noted that there is a procedure which will render exempt from tax certain sales
made to an individual about to depart from the United States. This is the procedure set forth in the
Office of the Comptroller, City of New York Bulletin, 1962-1 (as amended), which is recognized
by the State Tax Commission as applicable to both the State and New York City sales taxes. The text
of such Bulletin reads as follows:
"FACTS:

A retail vendor sells tangible personal property to a customer who is about to leave
the City of New York on a trip to a foreign country. The customer requests that the
property purchased by him be delivered in the City of New York on board a ship or
plane, as the case may be, on which the customer is to be a passenger. The vendor
delivers the property to a duly authorized representative of the carrier and obtains a

JAMES H. TULLY., COMMISSIONER
TP-8 (4/80)

LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

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TSB-A-81(68)S
Sales Tax
December 30, 1981

receipt from the carrier in which it is set forth that the carrier agrees that the property
delivered to its representative will not be turned over to the purchaser until after the
conveyance leaves the territorial limits of the United States. The carrier turns over
the property to the purchaser on board the conveyance outside the territorial limits
of the United States.
HOLDING:

A sale of tangible personal property delivered in the manner described above is
subject to the Sales Tax, and the vendor is required to charge and collect the tax upon
the receipts from such sale except where:
(a) the customer is an alien returning to a foreign country, or
(b) the customer is a resident alien or an American citizen going abroad, including
a member of the armed forces of the United States, and the property purchased by
such customer will be sold or otherwise disposed of by him in a foreign country and
will not at any time thereafter be returned by him to the United States.

Sales described in (a) and (b) above are considered to be export sales exempt from the tax.
A retail vendor claiming to have made such sales is required to obtain and make available to the
Comptroller satisfactory evidence in support of the claim that the property sold was an export. Such
evidence shall be in the form of a certificate furnished to the vendor by the carrier certifying that the
carrier acknowledges receipt of the property from the vendor and certifying that the property will not
be turned over to the purchaser until after the plane or ship, as the case may be, has reached a point
outside the territorial limits of the United States.
In addition, with respect to a sale made to a non-resident alien as described in (a) above, the
vendor shall obtain from the customer a certificate signed by the customer, which shall set forth the
latter's name, foreign residence address, and that he is not a resident or a citizen of the United States,
the nature of the property purchased and the purchase price, the name and address of the vendor,
identification of the carrier to which said property is delivered, the date and time of the scheduled
departure and the destination of the customer, and a statement that the certificate is made for the
purpose of showing that the purchase is made for export and is therefore not subject to the New York
City Sales Tax.
With respect to a sale made to a resident alien or an American citizen, as described in (b)
above, the vendor shall obtain from the customer a certificate signed by the customer, which shall
set forth the latter's name and residence in the United States, the nature of the property purchased and
the purchase price, the name and address of the vendor, identification of the carrier to which said
property is delivered, the date and time of the scheduled departure, and the destination of the
customer, and a statement to the effect that the property purchased will be sold or otherwise disposed
of by him in a foreign country, and that he will not, at any time thereafter, return the property to the
United States. If the property is to be disposed of in a foreign country in any manner other than by
sale, the certificate shall state the details with respect thereto. It shall also contain a statement that
it is made for the purpose of showing that the purchase is made for export and is therefore not subject
to the New York City Sales Tax.

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TSB-A-81(68)S
Sales Tax
December 30, 1981

If a vendor fails to obtain and make available the above-described evidence, the sale shall be
deemed to be subject to tax."

DATED: December 10, 1981

s/LOUIS ETLINGER
Deputy Director
Technical Services Bureau