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Brian Gordon, CPA, is the Director of State and Local Taxes at Sanders Thaler Viola & Katz, LLP. Previously, Brian was with the NYS Department of Taxation and Finance as the District Audit Manager in Manhattan and Brooklyn. He is a member of the NYSSCPA New York, Multistate & Local Taxation Committee and writes and speaks on various tax issues. He can be reached at 516-704-7130 or 516-510-6041 and email: bgordon@st-cpas.com.

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New Exemption from Use Tax for Alcoholic Beverage Tasting

By Brian Gordon

What is Use Tax?

Usually, when a vendor sells you a product, they collect sales tax from you. When you purchase goods out of state from a vendor with no connection to New York, they are not required to charge or collect New York State Sales Tax. The most common instance of this is when you order goods from an out of state vendor to be delivered to you in New York. When these goods arrive in New York at your business or home, you owe the sales tax directly to New York. In this case, because you are the purchaser and you are “using” the goods in New York, the technical term for this tax is “Use Tax.”

Another instance when use tax is due is if you have a business that carries an inventory of goods subject to sales tax, and you pull some of that inventory out – not to be sold, but to be used – you will owe Use Tax. The Use Tax also applies to products that are produced for sale but instead are used for promotional or marketing purposes, such as for wine tasting events.

New York law which was enacted this year exempts beer, cider, and liquor used at tastings held in conformity with the Alcoholic Beverage Control Law from New York State Use Tax (there has already been an exemption for wine tasting). It also exempts bottles, corks, caps, and labels used to package such beverages. In addition, the new law clarifies that the existing exemption for wine tastings includes the items used to package the wine and applies to tastings held either on or off of the winery’s premises.

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