Can a retailer advertise and sell an item at a uniform tax-included price, and what must it do at the register?

Plain-English summary

Amerada Hess Corporation planned to sell Hess toy trucks each November–December at a uniform "tax included" price (e.g., $9.00 including tax) and to advertise them that way. Its gas stations (AHC) give no receipts; its convenience-store subsidiary Hess Mart (HM) issues cash-register tapes that separately state the tax. Hess asked whether this violates Tax Law § 1132(a) (collect and separately state the tax), § 1133(d) (no advertising that the tax isn't an element of price), or other provisions.

The Department held the plan is permissible if done correctly:

• Advertising a tax-included price is allowed. Nothing in the Tax Law or regulations prohibits advertising an item at a "tax included" price — but the words "sales tax included" must appear in the advertising, and the vendor may not absorb the tax or hold out that the tax is not an element of the price (§ 1133(d); 20 NYCRR § 532.1(c)).
• No-receipt sales (AHC gas stations) — use the unit price method. Where no written receipt is given, AHC may sell at a tax-included price only by using the unit price method (§ 532.1(b)(4); TSB-M-79(15)S), and must post a placard visible to customers stating that the prices of all taxable items include sales tax.
• Receipt sales (HM convenience stores) — state the tax separately. Because HM issues receipts, it must show the retail price and the sales tax separately on the receipt and may not use "tax included" in place of that separate statement (§ 1144; § 532.1(b)(1)–(3)). On a written receipt, "tax included" does not count as separately stating the tax.

What this means for you

You can advertise a tax-included price — but say "sales tax included"

New York doesn't forbid marketing an item at one round, tax-included price. What it forbids is absorbing the tax or implying the customer isn't being charged tax. Include the words "sales tax included" in the ad, and don't hold out that tax isn't part of the price.

If you don't give receipts, use the unit-price method with a placard

For counter sales where no written receipt is issued, the unit-price method lets you record a tax-included price — provided you post a visible placard telling customers that taxable-item prices include sales tax, and you keep records distinguishing taxable from nontaxable items.

If you do give receipts, the tax must be broken out

The moment you hand the customer a receipt, "tax included" is not enough. The receipt must state the retail price and the sales tax separately. Absorbing the tax or willfully failing to state it separately can carry penalties (§ 1817(g) makes certain failures a misdemeanor).

Common questions

Q: Can we advertise "$9 including tax"?
A: Yes, as long as the ad says "sales tax included" and you don't hold out that the tax isn't part of the price.

Q: Our gas stations don't give receipts — how do we sell tax-included?
A: Use the unit price method (§ 532.1(b)(4)) and post a placard visible to customers stating that all taxable-item prices include sales tax.

Q: Our stores give register tapes — can we just print "tax included"?
A: No. When you issue a receipt, you must state the retail price and the sales tax separately; "tax included" doesn't count as a separate statement.

Citations and references

Statutes and regulations:

• Tax Law § 1132(a) — collect the tax and state it separately on the first document given to the customer
• Tax Law § 1133(d) — no advertising or holding out that the tax is not an element of the price
• Tax Law § 1144 — required form of reference to the tax
• Tax Law § 1817(g) — willful failure to separately state, or improper reference to, the tax is a misdemeanor
• 20 NYCRR § 532.1(b) — separate statement of tax; "tax included" not a separate statement; unit price method for no-receipt sales
• 20 NYCRR § 532.1(c) — absorption of tax and certain forms of advertising prohibited

Referenced guidance:

• Technical Services Bureau Memorandum TSB-M-79(15)S — the unit price method

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1989.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a89_35s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-89 (35)S
Sales Tax
September 21, 1989

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S890511A

On May 11, 1989 a Petition for Advisory Opinion was received from Amerada Hess
Corporation, Tax Dept., 1 Hess Plaza, Woodbridge, N.J., 07095, Attention: Joseph M. Aspray.
The issue raised is whether the advertising of and the sales of Hess toy trucks at a uniform
"tax included" price by Amerada Hess Corporation ("AHC") and Hess Mart, Inc. ("HM") will violate
Section 1132(a) or Section 1133(d) of the Tax Law or any other section of the Tax Law or Sales and
Use Tax Regulations.
AHC sells petroleum products through dealer operated and company owned gasoline stations
on the East Coast. HM, a wholly owned subsidiary of AHC, operates convenience stores at some of
these gasoline stations.
Each November and December AHC and HM sell toy trucks at the gasoline stations and
convenience stores. AHC does not issue receipts when it sells the trucks at its gasoline stations. In
contrast, HM, as with its other sales, provides the purchaser of toy trucks with a cash register tape
which separately states the sales tax collected.
During the months of November and December 1989, AHC and HM intend to sell the toy
trucks at a uniform "tax included" price (e.g. $9.00 including tax) and to advertise the sale of these
trucks in newspapers and on television and radio at such tax-included price. AHC and HM will
determine the tax due by employing the "unit price method" (as set forth in Technical Services
Bureau Memorandum TSB-M-79(15)S) as follows:
1)
Subtract nontaxable sales, if any, from gross receipts, per records, to arrive at taxable
receipts plus applicable sales tax.
2)

Add the applicable sales tax rate to 100%.

3)
Divide taxable receipts plus applicable sales tax (#1 above) by the percentage
resulting from #2 above to arrive at taxable sales.
4)
Subtract taxable sales (#3) from taxable receipts plus applicable sales tax (#1) to
arrive at the amount of sales tax due.
During the sales campaign, AHC and HM intend to post placards at the gasoline stations and
convenience stores which will advertise the sale of the trucks at the tax-included price. The price of
the trucks excluding the tax will appear on the cash register tapes which HM provides to customers
who purchase the toy trucks at the convenience stores.

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TSB-A-89 (35)S
Sales Tax
September 21, 1989
Section 1132(a) of the Tax Law states, in part:
Every person required to collect the tax shall collect the tax from the customer when
collecting the price ... to which it applies. If the customer is given any sales slip,
invoice, receipt or other statement or memorandum of the price ... paid or payable,
the tax shall be stated, charged and shown separately on the first of such documents
given to him. The tax shall be paid to the person required to collect it as trustee for
and on account of the state.
Section 1133(d) of the Tax Law states:
No person required to collect any tax imposed by this article shall advertise or hold
out to the public in any manner, directly or indirectly, that the tax is not considered
as an element in the price, amusement charge or rent payable by customers.
Section 1144 of the Tax Law states:
Reference to tax. - Whenever reference is made in placards or advertisements or in
any other publications to any tax imposed by this article, such reference shall be in
substantially the following form: "sales and use tax"; except that in any bill, receipt,
statement or other evidence or memorandum of sale, services rendered, amusement
charges, dues, rent or occupancy, issued or employed by a person required to collect
tax, if the tax is required to be stated separately thereon as provided in subdivision
(a) of section eleven hundred thirty-two, the word "tax" will suffice.
Section 532.1(b) of the Sales and Use Tax Regulations states, in part:
Statement of and reference to tax. (1) Whenever the customer is given any sales slip,
invoice, receipt, or other statement or memorandum of the price ... paid or payable,
the tax shall be stated, charged and shown separately on the first of such documents
given to him.
(2)
Whenever the sales and use tax is separately stated on such document, it may
be referred to as tax.
(3)
The words tax included or words of similar import, on a sales slip or other
document, do not constitute a separate statement of the tax, and the entire amount
charged is deemed the sales price of the property sold or services rendered.
(4)
No written receipt. For sales other than sales of gasoline and diesel fuel a unit
price method of accounting for sales may be used where no written receipt is given
to the customer. The unit price is the price, including sales tax, at which the sale is
recorded. Since the customer must be made aware of the inclusion of sales tax in the
total sales price, every business establishment employing the unit price method must

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TSB-A-89 (35)S
Sales Tax
September 21, 1989

visibly display, to all customers a placard stating that the prices of all taxable items
include sales tax. If the sale is recorded on a cash register it may be rung up on a
single ring, a quantity of individual items may be rung up in total, or a quantity of
items can be rung up individually with a total. In addition, the vendor shall, for the
benefit of his customers, distinguish between taxable and nontaxable items offered
for sale. This may be done by such methods as:
(i)

attaching labels to merchandise to indicate taxable or nontaxable status;

(ii)

displaying taxable and nontaxable merchandise separately; or

(iii)

having available detailed listings of taxable and/or nontaxable items.

It is responsibility of every vendor who sells both taxable and nontaxable items to
maintain accurate records indicating such sales. ...
Section 532.1(c) of the Sales and Use Tax Regulations states, in part:
Absorption of tax and forms of advertising prohibited. No person required to collect
any tax imposed by article 28 and pursuant to the authority of article 29 of the Tax
Law, shall advertise or hold out to any purchaser, to any person, or to the public in
general, in any manner, that the tax is not considered as an element in the price,
amusement charge, or rent payable by the customer. Among the acts prohibited are
statements that the customer is not being charged the tax, or that the tax will be
refunded to the customer, or applied as a credit against the customer's bill, account
or future purchases. ...
Section 1817(g) of the Tax Law states:
Any person (1) who willfully fails to charge separately the tax imposed under article
twenty-eight of this chapter or to state such tax separately on any bill, statement
memorandum of receipt issued or employed by him upon which the tax is required
to be stated separately as provided in subdivision (a) of section eleven hundred thirty­
two of this chapter, or (2) who shall refer or cause reference to be made to such tax
in a form or manner other than that required by such article twenty-eight shall be
guilty of a misdemeanor.
Whereas Section 1133(d) of the Tax Law and Section 532.1(c) of the Sales and Use Tax
Regulations prohibit the absorption of sales tax by a vendor and certain forms of advertising wherein
a vendor holds out the sales tax is not considered an element in the price payable by the customer,
and whereas Section 532.1(b)(3) of the Sales and Use Tax Regulations prohibits the use of the words
"tax included" or words of similar import on sales slips or other documents in instances where

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Sales Tax
September 21, 1989

written receipts are issued to the customers, neither the Tax Law nor the Sales and Use Tax
Regulations contain any provisions which either directly or by inference prohibits a vendor from
advertising an item for sale at a "tax included" price.
Accordingly, in the instant case, AHC will not be in violation of sections 1132(a), 1133(d)
or 1144 of the Tax Law, Section 532.1 of the New York State Sales and Use Tax Regulations, nor
of Section 1817(g) of the Tax Law or any other section of the Tax Law or Regulations when
advertising the sale of the Hess toy trucks in newspapers or on radio or television at a uniform "tax
included" price. It is noted that the words "sales tax included" must appear in any such advertising.
Furthermore, AHC will not be in violation of any section of the Tax Law or Regulations when
making sales of the Hess toy trucks at such "tax included" price provided that in accordance with
section 532.1(b)(4) of the Sales and Use Tax Regulations AHC accounts for sales of the Hess toy
trucks by use of the unit price method, whereby: a) each gasoline station under AHC's jurisdiction
posts a placard, visible to all customers, stating that the prices of all taxable items include sales tax;
and b) such unit price method is only employed at those stations where no written receipt is given
to the customer.
Nor will HM be in violation of any sections of the Tax Law or Regulations when advertising
the sale of the toy trucks at such uniform "tax included" price provided that in accordance with
Section 1144 of the Tax Law and Sections 532.1(b)(1), (2) and (3) of the Sales and Use Tax
Regulations HM issues its customers a sales slip, invoice, receipt or other statement or memorandum
of the price paid or payable on which the retail price and the sales tax are charged and shown
separately and on which the words "tax included" are not used in lieu of such separate statement of
tax paid or payable.

DATED: September 21, 1989

s/FRANK J. PUCCIA
Director
Technical Services Bureau

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.