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Legislative Memo

Ken Pokalsky
Senior Director, Government Affairs
T 518.465.7517 x205
www.bcnys.org

BILL:

S.5637 (Defrancisco) / A.8223-A (Farrell)

  Support

SUBJECT:

Sales Tax Exemption for Electronic Newspapers and Periodicals

 

S.5637 (Defrancisco) / A.8223-A (Farrell)

DATE:

June 14, 2011

 

The Business Council supports this legislation that would exempt electronic news sources and electronic periodicals from sales and compensating use taxes.  In effect, this bill gives electronic versions of newspapers and magazines the same tax exempt status as their paper version, while providing their publishers flexibility to provide new or modified content in electronic versions of papers and periodicals.

This legislation reflects the fact that the public is increasingly reliant on electronic versions of newpapers and periodicals – services that are increasingly on a subscription basis.  Extending the current sales tax exemption to e-versions of these publications supports the underlying intent of the tax exemption – to exempt news sources from the state sales tax.

Under the state’s sales tax law, services are considered taxable if specifically listed as such in Article 28 of the Tax Law.  Current law applies the sales tax to “information services,” but provides an exemption for “newspapers and periodicals” including newspapers delivered through electronic media, but only if the e-version contains the entire content of the “hard copy” as published with no additional content.

This legislation is the product of discussions with the Department of Taxation and Finance, and was crafted to assure that the existing sales tax exemption applies to real world practices in distributing electronic newspapers and magazines, while avoiding the possibility that the exemption would apply to unintended categories of information services.

This legislation serves the public interest in promoting broad distribution of news, and supports New York State’s significant news media industry.

For these reasons, The Business Council supports approval of S.5637/A.8223-A.