Adjunct Law Prof Blog

Editor: Mitchell H. Rubinstein
New York Law School

Sunday, February 21, 2010

Free Books Given To Professors Are Subject To New York State Use Tax

One of the benefits professors enjoy is free books. We get books all the time to examine for use in class and we get to keep them. They are often unsolicited. The NYS Department of the Taxation and Finance recently issued an advisory opinion, OPINION NO. S090923A (Feb. 8, 2010) about whether such books are taxable. I am no tax expert, but this opinion suggests that free copies of books given out are subject to a use tax. Professors are considered readers and not prospective customers who are covered by an exemption. It does not appear that such books would be subject to income tax. However, this opinion may result in less books being distributed. The Opinion states in part:

Section 1105(a) of the Tax Law imposes sales tax on the sale of tangible personal property in New York. Tax Law section 1110 imposes use tax on the use in the State of tangible personal property purchased outside the State. Use includes the distribution of tangible personal property as promotional material in the State. Tax Law section 1101(b)(7). Tax Law section 1115(n)(4) provides an exemption from sales and use tax on printed promotional materials mailed or shipped by a common carrier or a like delivery service to customers or prospective customers of the purchaser of the promotional materials. The Tax Law section 1115(n)(4) exemption is inapplicable to the books distributed by Petitioner in New York because the recipients are not Petitioner’s customers or prospective customers. The
professors, book critics, and other recipients are not prospective customers of a book after they receive a free copy of the book. Petitioner’s prospective customers as to the books it distributes free to professors, book critics, and other recipients are students and readers of book reviews, respectively. That is, neither a professor’s assignment of a book as course material nor a critic’s public recommendation that a book be purchased makes the professor or critic a prospective customer of the book. See Promex Medical, Inc., Adv Op Comm T&F, April 8, 1999, TSB-A-99(23)S. Use tax is due on the books distributed in New
York because the books are used in New York. Tax Law section 1101(b)(7). (The exemption from use tax provided by Tax Law section 1118(2) is inapplicable to Petitioner’s use of books in New York because Petitioner is conducting business in the State.) The basis of the tax is the amount Petitioner paid for the books. Tax Law section 1110(b).

Hat Tip: New York Public Personnel Law

Mitchell H. Rubinstein

February 21, 2010 in Tax Law Information, Tax Law News | Permalink | Comments (0)

Thursday, June 18, 2009

Employer Provided Cell Phones/PDA's and Taxes

The law firm of McGuire and Woods has recently summarized the taxability of cell phones  provided by employers as follows:

Under current law, employers may deduct the expense of providing employees with the use of such devices, and employees are generally not taxed on the value of that use, but only to the extent the use is business-related. Conversely, the cost associated with personal use is not deductible by the employer, and the value of such use is taxable to the employee. To establish the amount of business-related use, employers and employees must meet specific substantiation requirements that can be quite difficult to satisfy in practice.

In response to this situation, the Internal Revenue Service (IRS) has proposed three alternative methods for meeting the substantiation requirements and has invited public comment on the proposed new rules. (See IRS Notice 2009-46). Adding to the confusion, the Commissioner of the IRS has recently announced that the Obama administration is asking Congress to change the current tax laws to eliminate any tax consequences to employers or employees for personal use of work-related cellular phones and PDAs.

This is an important development to keep an eye on.

Mitchell H. Rubinstein

June 18, 2009 in Tax Law News | Permalink | Comments (1) | TrackBack (0)

Thursday, May 7, 2009

1st $2400 of Unemployment To Be Tax Free in 2009

Finally, there is some sense to the Tax Code. One of the provisions of the federal stimulus is that the first $2400 of unemployment will be tax free in 2009. Therefore, this does not apply to the 2008 tax returns. Additional details about this benefit are available here.    
Frankly, it seems to me that all of unemployment insurance proceeds should be tax free. I believe the same should occur with respect to social security benefits because most of those individuals are on a fixed income. Unfortunately, that is not the law-at least yet!
Mitchell H. Rubinstein  

May 7, 2009 in Tax Law News | Permalink | Comments (2) | TrackBack (0)