Can an exempt organization's employees still make tax-free purchases using an Exempt Organization Certification (Form ST-119.1) when their corporate credit cards show only the employee's name plus an abbreviation of the organization's name, rather than its full name?

Subject

Issue raised by Petitioner, Empire Blue Cross and Blue shield, is whether purchases made by employees of Petitioner using corporate credit cards issued in the name of the employee and containing the initials of Petitioner would be subject to State and local sales and use taxes.

What this means for you

Empire Blue Cross and Blue Shield, a tax-exempt organization holding an Exempt Organization Certificate (Form ST-119), gives traveling employees a Form ST-119.1 (Exempt Organization Certification) to make tax-free business purchases. Some vendors had started refusing the certification because the employees' corporate American Express cards showed only the employee's name -- no reference to Empire specifically -- due to the card issuer's character limit on the printed company name. Empire proposed switching to an abbreviation, "EBCBS," printed alongside the employee's name on new cards.

The controlling regulation requires an exempt organization to be both the "direct purchaser" (which can include an authorized employee acting on its behalf, as long as both the organization and the employee are identified on the bill/invoice) and the "direct payer of record" (meaning payment comes from the organization's own funds). The Department found that a corporate credit card bearing the employee's name plus an abbreviation of the exempt organization's name is acceptable evidence that the organization is the true payer of record -- the exact wording or abbreviation on the card itself isn't what matters. So as long as vendors receive a properly completed Form ST-119.1 from an authorized employee, and both Empire and the employee are identified on the invoice as the purchaser of record, purchases made with the abbreviated "EBCBS" cards stay tax-exempt.

Q&A

Q: Our exempt organization's corporate credit cards only show the employee's name, or a shortened abbreviation of our name, due to the card issuer's character limits -- does that break our tax-exempt purchasing?
A: Not per this opinion -- an abbreviation of the organization's name on the card is acceptable evidence of exempt-organization payment, as long as the organization and employee are both identified on the invoice and a properly completed Form ST-119.1 is furnished to the vendor.

Q: What exactly needs to appear on the invoice for the exemption to hold up?
A: Per 20 NYCRR § 529.7(h), the vendor's name/address, the exempt organization's name/address, its certificate number, a responsible officer's signature (on the certification itself, not necessarily the invoice), and the date -- plus both the organization and the authorized employee/agent identified as purchaser of record on the bill.

Q: Can any employee use the org's Form ST-119.1 to buy things tax-free for personal use?
A: No -- per 20 NYCRR § 529.7(h)(4), sales to an exempt organization's members, officers, or employees are still taxable when the purchase is for the individual's personal use rather than the organization's, regardless of certification or payment method.

Citations

• 20 NYCRR § 529.7(h) -- requires an exempt organization to be the direct purchaser/payer of record and furnish a properly completed exempt organization certification (Form ST-119.1), including when acting through an authorized agent or employee identified alongside the organization on the invoice.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1994.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a94_30s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-94 (30)S
Sales Tax
July 18, 1994

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S940502C

On May 2, 1994, a Petition for Advisory Opinion was received from Empire Blue Cross and
Blue Shield, 622 Third Avenue, New York, New York 10017-6758.
The issue raised by Petitioner, Empire Blue Cross and Blue shield, is whether purchases
made by employees of Petitioner using corporate credit cards issued in the name of the employee and
containing the initials of Petitioner would be subject to State and local sales and use taxes.
Petitioner is an organization exempt from State and local sales and use taxes and has been
issued an Exempt Organization Certificate, Form ST-119. As an exempt organization, Petitioner
provides its employees with a New York State and Local Sales and Use Tax Exempt Organization
Certification, Form ST-119.1, to use when they travel on company business to make tax free
purchases. Several establishments who have accepted a Form ST-119.1 in the past from Petitioner's
employees have informed Petitioner that they can no longer accept them to certify that the purchaser
is an exempt organization since the corporate credit card only carries the employee's name and makes
no reference to Petitioner specifically. Due to the limitations of American Express regarding the
number of characters allowed for a corporate name on the credit card, Petitioner proposes to use the
abbreviation "EBCBS" in place of Petitioner's full name. New credit cards issued to employees will
now bear the employees name along with initials EBCBS.
Section 529.7(h) of the Sales and Use Tax Regulations provides as follows:
(h)
Sales to exempt organizations. (1) Any sale or amusement charge to
or any use or occupancy by an exempt organization to which an exempt organization
certificate has been issued is exempt from sales and use tax.
(2)
In order to exercise its right to exemption the organization must be the
direct purchaser, occupant or patron of record. It must also be the direct payer of
record and must furnish its vendors with a properly completed exempt organization
certification. "Direct purchaser, occupant or patron" as used in this paragraph
includes any agent or employee authorized by the organization to act on its behalf in
making such purchases, provided the organization and its agent or employee are both
identified on any bill or invoice. "Direct payer of record" means that direct payment
is made by the organization or from its funds.
(3)
An exempt organization certification is deemed to be properly
completed when it contains the:

-2­
TSB-A-94 (30)S
Sales Tax
July 18, 1994
(i)

name and address of the vendor;

(ii)

name and address of the exempt organization;

(iii)

number assigned to the exempt organization certificate;

(iv

signature of a responsible officer of the exempt organization;
and

(v)

date the certification was executed.

(4) Sales to any member, office or employee of an exempt organization are
subject to the sales and use tax when the sales are for the personal use of the
purchaser rather than the organization. (emphasis added)
Pursuant to Section 529.7(h) of the Sales and Use Tax Regulations, an exempt organization
must be the direct purchaser and payer of record in order to make tax free purchases. A corporate
credit card which bears the name of the employee along with name of the exempt organization, or
an abbreviation for the name of the exempt organization, would be acceptable evidence for
establishing that the exempt organization is the direct payer of record and that payment for purchases
will be made from the funds of the organization. Accordingly, provided vendors are issued properly
completed Exempt Organization Certifications, Form ST-119.1, by Petitioner's employees who are
authorized by Petitioner to act on its behalf to make purchases and Petitioner and the employee are
identified on any bill or invoice as the purchaser of record, employee purchases by use of the
corporate credit card bearing the name of the employee and an abbreviation of Petitioner's name will
not be subject to sales and use taxes.

DATED: July 18, 1994

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

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