Does an out-of-state supplier owe New York sales tax on materials it sells to New York dental laboratories that use them to make dentures and crowns?

Subject

Issue raised by Petitioner, Alvy Dental Supply, is whether sales by it of tangible personal property to dental laboratories are subject to State or any local sales taxes.

What this means for you

If you sell materials to dental laboratories (or run one buying supplies), the tax answer turns entirely on whether the item physically ends up in the finished denture or crown, not on who the customer is or what industry they're in.

• Component materials -- teeth, porcelain, certain acrylics, certain metals -- that become a physical part of the finished denture or crown for resale by the lab can be sold to the lab tax-free as a sale for resale, as long as the lab gives the seller a properly completed Resale Certificate (Form ST-120).
• Consumed-but-not-incorporated supplies -- waxes, abrasives, plaster, and similar items the lab uses up in the manufacturing process but that don't become part of the finished product -- qualify instead for New York's production-equipment/supplies exemption (for supplies "used or consumed directly and predominantly in the production of tangible personal property... for sale by manufacturing, processing... or extracting"). That exemption reaches the state sales tax and all local sales taxes except New York City's -- New York City's local sales tax still applies to these supplies. The lab should give the seller an Exempt Use Certificate (Form ST-121) to document the exemption.

Q&A

Q: Do I need to charge sales tax on teeth or porcelain I sell to a dental lab?
A: No, as long as the lab is going to resell those items as part of a denture or crown and gives you a completed Resale Certificate (ST-120). You're selling for resale, not making a retail sale.

Q: What about plaster, wax, or abrasives the lab uses to shape and finish the denture but that don't end up in the finished piece?
A: Those are exempt from the state sales tax and from local sales tax everywhere in New York State except New York City, because they're production supplies consumed in manufacturing tangible personal property for sale. The lab should give you an Exempt Use Certificate (ST-121). If the sale happens in or is delivered to New York City, the city's local sales tax still applies to these items.

Q: What if the lab doesn't give me any certificate?
A: Without a properly completed resale certificate or exempt use certificate, the seller generally must collect sales tax on the sale.

Citations

• Tax Law § 1101(b)(4)(i) -- defines a retail sale, excluding sales for resale.
• 20 NYCRR 526.6(c) -- resale exclusion; requires a properly completed resale certificate.
• 20 NYCRR 528.13 -- exemption for parts/tools/supplies used directly and predominantly in production of tangible personal property for sale, reaching the state tax and all local taxes except New York City's.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1995.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a95_27s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-95 (27)S
Sales Tax
July 17, 1995

Taxpayer Services Division
Technical Services Bureau

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S950207B

On February 7, 1995, a Petition for Advisory Opinion was received from Alvy Dental Supply
Co., 160 Park Avenue, Nutley, New Jersey 07110.
The issue raised by Petitioner, Alvy Dental Supply, is whether sales by it of tangible personal
property to dental laboratories are subject to State or any local sales taxes.
Petitioner, a New York corporation, has its only place of business located outside of New
York State. It sells tangible personal property to dental laboratories throughout the State of New
York. The dental laboratories use the tangible personal property to manufacture dentures and crowns
for resale to dentists. Tangible personal property sold by Petitioner includes items such as teeth,
porcelain, certain acrylics and certain metals which become a physical component part of a denture
or crown and items such as waxes, abrasives and plaster which do not.
Section 1101(b)(4)(i) of the Tax Law defines a retail sale as "[A] sale of tangible property
to any person for any purpose, other than (A) for resale as such or as a physical component part of
tangible property,...."
Section 526.6(c) of the Sales and Use Tax Regulations defines a sale for resale as follows:
Resale exclusion. (1) Where a person, in the course of his business operations, purchases
tangible personal property or services which he intends to sell, either in the form in which
purchased, or as a component part of other property or services, the property or services
which he has purchased will be considered as purchased for resale, and therefore not subject
to tax until he has transferred the property to his customer.
(2) A sale for resale will be recognized only if the vendor receives a properly completed
resale certificate....
Section 528.13 of the Sales and Use Tax Regulations provides an exemption from sales tax
of certain machinery, equipment and tools and supplies as follows:
(a) Exemption. (1) Exemption from statewide tax. An exemption is allowed from the tax
imposed under subdivisions (a) and (c) of section 1105 of the Tax Law, and from the
compensating use tax imposed under section 1110 of the Tax Law, for receipts from sales
of the following:
*

*

*

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TSB-A-95 (27)S
Sales Tax
July 17, 1995

(iii)(a) Parts with a useful life of one year or less, tools or supplies for use or consumption
directly and predominantly in the production of tangible personal property, gas, electricity,
refrigeration or steam for sale by manufacturing, processing, generating, assembling,
refining, mining or extracting. (Emphasis added)
*

*

*

(2) Exemption from taxes imposed by localities other than New York City.
(i) There is an exemption from all local sales and use taxes, other than the taxes imposed in
New York City, for all sales and uses of:
(a) tangible personal property used or consumed directly and predominantly in the production
for sale of tangible personal property, gas, electricity, refrigeration or steam by
manufacturing, processing, generating, assembling, refining, mining or extracting; and
*

*

*

(3) Exemptions from New York City local tax. (i) There is an exemption from the sales and
use tax imposed in New York City under Section 1107 of the Tax Law for sales and uses of
the following:
*

*

*

(ii) There is no exemption from the sales and use tax imposed in New York City under
section 1107 of the Tax Law for sales and uses of:
(a) parts with a useful life of one year or less or tools or supplies used in connection with the
exempt machinery, equipment or apparatus described in subparagraph (i) of this paragraph;
or (Emphasis added)
Sales by Petitioner to dental laboratories of teeth, porcelain, certain acrylics and certain
metals which become a physical component part of a denture for sale by the laboratory may be
purchased for resale provided the purchaser thereof gives the seller a properly completed Resale
Certificate (Form ST-120) in accordance with the provisions of Section 1101(b)(4)(i) of the Sales
Tax Law and sections 526.6(c)(1) and (2) of the Sales and Use Tax Regulations.
Sales of waxes, abrasive, plaster and other supplies that are used to produce tangible personal
property for sale by dental laboratories may be purchased without payment of the State sales tax and
all local sales taxes other than the New York City sales tax in accordance with the provisions

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TSB-A-95 (27)S
Sales Tax
July 17, 1995

of section 528.13 of the Sales and Use Tax Regulations. Laboratories making purchases of such
supplies should give the seller a properly completed Exempt Use Certificate (Form ST-121).

DATED: July 17, 1995

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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