Must a customer that resells purchased business forms only to tax-exempt New York municipalities still register as a sales tax vendor and give its supplier a resale certificate?

Subject

Issue raised by Petitioner, Transkrit Corporation, is whether a vendor located within New York State, who makes sales of business forms exclusively to municipalities in New York State, is required to issue a properly completed Form ST-120, Resale Certificate to Petitioner, who is the in-state supplier of such forms to the vendor.

What this means for you

A New York manufacturer of business forms sells and ships those forms to a customer, who in turn resells the forms exclusively to New York municipalities. The customer argued that because its own downstream buyers (the municipalities) never pay sales tax, it shouldn't have to bother registering as a sales tax vendor or giving the manufacturer a resale certificate.

The Department disagreed. Selling business forms is a taxable retail sale of tangible personal property, and New York's law presumes every such receipt is taxable unless the seller gets a properly completed resale certificate from the buyer within 90 days of delivery -- the burden is on the seller or the customer to establish otherwise. To issue a VALID resale certificate, though, the customer itself must be registered as a sales tax vendor. Because the customer's own buyers (the municipalities) being tax-exempt doesn't change the fact that the customer is buying the forms for resale, the customer still needs to register as a vendor and give the manufacturer a completed Form ST-120 -- otherwise the manufacturer must charge sales tax on its own sales to the customer.

Q&A

Q: We sell taxable merchandise to a customer who resells it, but only to tax-exempt buyers (like municipalities) -- do we still need a resale certificate from that customer?
A: Yes, per this opinion -- the tax-exempt status of the customer's own downstream buyers doesn't excuse the customer from registering as a sales tax vendor and issuing a resale certificate to its supplier.

Q: If our customer doesn't give us a resale certificate within 90 days of delivery, what happens?
A: Per this opinion and Tax Law § 1132(c), the sale is presumed taxable, and the burden shifts to the vendor or customer to prove otherwise; absent a timely, valid certificate, the seller must collect sales tax.

Q: Does a customer need to be a registered sales tax vendor to issue a valid Form ST-120?
A: Yes -- per this opinion and Tax Law § 1134, a purchaser must be registered as a sales tax vendor in order to issue a valid resale certificate.

Q: Can another manufacturer or supplier rely on this opinion for its own resale-certificate practices?
A: No. This advisory opinion binds the Department only as to the petitioner and the facts described here; another taxpayer cannot rely on it.

Citations

• Tax Law § 1105(a) -- imposes sales tax on retail sales of tangible personal property.
• Tax Law § 1132(c) -- presumes all receipts are taxable until proven otherwise, and requires a vendor to obtain a properly completed exemption/resale certificate from the purchaser within 90 days of delivery.
• Tax Law § 1134 -- requires a person purchasing or selling tangible personal property for resale to register with the Department and obtain a certificate of registration.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1993.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a93_55s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-93 (55)S
Sales Tax
October 18, 1993

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S930721A

On July 21, 1993 a Petition for Advisory Opinion was received from Transkrit Corporation,
PO Box 500, Transkrit Lane, Brewster, NY 10509.
The issue raised by Petitioner, Transkrit Corporation, is whether a vendor located within New
York State, who makes sales of business forms exclusively to municipalities in New York State is
required to issue a properly completed form ST-120, Resale Certificate to Petitioner who is the in­
state supplier of such forms to the vendor.
Petitioner, a manufacturer of business forms, sells and ships forms to a customer located
within New York State. The customer contends that since it resells the forms only to municipalities,
it is not required to issue a form ST-120, Resale Certificate to Petitioner.
Section 1105(a) of the Tax Law imposes a tax on "[t]he receipts from every retail sale of
tangible personal property, except as otherwise provided in this article"
Section 1132(c) of the Tax Law provides, in part:
For the purpose of the proper administration of this article and to prevent
evasion of the tax hereby imposed, it shall be presumed that all receipts for property
or services of any type mentioned in subdivisions (a), (b), (c) and (d) of section
eleven hundred five ... are subject to tax until the contrary is established, and the
burden of proving that any receipt ... is not taxable hereunder shall be upon the
person required to collect tax or the customer . ... unless (1) a vendor, not later than
ninety days after delivery of the property ... shall have taken from the purchaser a
certificate in such form as the tax commission may prescribe ... to the effect that the
property ... was purchased for resale or for some use by reason of which the sale is
exempt from tax, ... the sale shall be deemed a taxable sale at retail ....
Section 1134 of the Tax Law states, in part:
Registration. (a)(1)(i) Every person required to collect any tax imposed by this
article ..., (ii) every person purchasing or selling tangible personal property for resale
..., shall file with the commissioner of taxation and finance a certificate of
registration, in a form prescribed by him, at least twenty days prior to commencing
business ... or such purchasing, selling ... whichever comes first.

-2­
TSB-A-93 (55)S
Sales Tax
October 18, 1993
In the instant matter when Petitioner makes sales of business forms to the customer,
Petitioner is considered to be selling tangible personal property to the customer, the sale of which
is subject to the sales tax imposed under Section 1105(a) of the Tax Law.
Accordingly, Petitioner should collect the appropriate State and local sales tax on the receipts
from such sales to the customer unless the customer furnishes Petitioner a properly completed form
ST-120, Resale Certificate as required under Section 1132(c) of the Tax Law. It is noted that the
customer must be registered as a vendor for sales tax purposes as required under Section 1134 of the
Tax Law in order to issue a valid form ST-120, Resale Certificate.
The fact that the customer is selling the business forms purchased from Petitioner to New
York State municipalities, which are exempt from paying State or local sales tax, does not preclude
the customer from the requirement of being registered as a sales tax vendor and issuing the proper
exemption certificate to Petitioner.

DATED: October 18, 1993

/s/
PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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