Trapeze Artist Must Collect Sales Tax Only on Certain Performances

The Department of Taxation and Finance has determined that a professional trapeze artist must only collect sales tax on certain performances. Advisory Opinion, TSB-A-13(7)S (N.Y.S. Dep’t of Taxation and Finance, Feb. 25, 2013). When she is hired as an independent contractor to provide instruction, to perform at functions by event planners or people hosting private parties, or by aerial groups who charge admission to the shows, she need not collect sales tax, because her services as an aerialist are not among the taxable services enumerated by Tax Law § 1105(c). However, when she performs directly for the public and charges an admission fee, tax must be collected under § 1105(f)(1), which imposes sales tax on admission charges exceeding ten cents. The Department relied on sales tax regulation § 527.10(d)(2) to conclude that the aerial performance is similar in nature to a circus and does not qualify for the “dramatic or musical arts admission charge” exclusion.

Lawsuit Filed Seeking to Prevent Sale of Tribal Cigarettes

On March 4, 2013, the New York State Attorney General filed suit in federal court against several Native American entities, seeking an injunction against the sale of untaxed cigarettes, and seeking penalties and damages under both state and federal law. State of New York v. Grand River Enterprises Six Nations, Ltd., et al., No. 13-1112 (E.D.N.Y. Mar. 4, 2013), ECF No. 1. The complaint alleges that approximately 30 million packs of cigarettes were sold or shipped into New York between November 2011 and July 2012 without the proper tax stamps, in violation of the federal Contraband Cigarette Trafficking Act, the federal Prevent All Cigarette Trafficking Act, and New York State’s tobacco tax statutes. According to the complaint, New York State had in the past followed a “long-standing policy of forbearance” allowing untaxed cigarettes to be sold by Native Americans, but that policy was revoked in 2010 and new legislation was enacted to ensure that tax was imposed on sales of cigarettes to nonmembers of the Native American nations. Lawsuits were filed challenging those statutes, resulting in the issuance of temporary injunctions while the merits of the actions were being considered, but all injunctions were lifted in June 2011.

Receipts from Wellness Program Not Subject to Sales Tax

The Department of Taxation and Finance determined that a company providing an employee wellness program consisting of both an annual health assessment, and the provision of online and in-person information on maintaining good health, was not providing a service subject to sales tax. Advisory Opinion, TSB-A-13(6)S (N.Y.S. Dep’t of Taxation & Fin., Feb. 11, 2013). The Department looked at the enumerated services subject to tax under Tax Law § 1105(c), and determined that the tax on services provided by a health salon was inapplicable because the company did not operate a physical establishment, and that the tax on information services was inapplicable because any instructional material provided with regard to healthcare was an “integral component of a broader service,” and more in the nature of an educational service which is not subject to sales tax under New York law.

Business Networking Club Not a “Social Club” for Sales Tax Purposes

The Department of Taxation and Finance has ruled that a business development club’s membership dues were not subject to sales tax because the club did not meet the definition of a “social club” for sales tax purposes. Advisory Opinion, TSB-A-13(8)S (N.Y.S. Dep’t of Taxation & Fin., Feb. 28, 2013). The Department found it determinative that the club’s main purpose was to promote the members’ businesses by offering them a networking forum, while, in contrast, the main purpose of a social club (the dues for which would be taxable) is to provide an opportunity to congregate for social interrelationships.