New York recently considered whether or not the sale of a book delivered electronically should be treated as the sale of an information service subject to sales tax under section 1105(c)(1) of the New York Tax Law. New York Technical Service Bureau Memorandum TSB-M-11(5)S discusses their findings.
Although the Tax Department is currently reviewing the application of the sales tax on information services to e-books their current policy is that, until further notice, the sale of an e-book does not constitute the sale of an information service subject to sales tax. In order to be exempt the e-book must meet all of the following conditions:
- the purchase of the product does not entitle the customer to additional goods and services and any revisions done to the e-book are for the limited purpose of correcting errors;
- the product is provided as a single download;
- the product is advertised or marketed as an e-book or a similar term;
- if the intended or customary use of the product requires that the product be updated or that a new or revised edition of the product be issued from time to time (e.g., an almanac), the updates or the new or revised editions are not issued more frequently than annually; and
- the product is not designed to work with software other than the software necessary to make the e-book legible on a reading device (e.g., Kindle, Nook, iPad, iPhone or personal computer).
For further information see: New York Advisory Opinion TSB-A-11(20)S , 07/08/2011