N.Y. Tax Law § 1118: Exemptions from use tax

§ 1118. Exemptions from use tax. The following uses of property and

services shall not be subject to the compensating use tax imposed under

this article:

(1) In respect to the use of property used by the purchaser in this

state prior to August first, nineteen hundred sixty-five.

(2)(a) In respect to the use of property or services purchased by the

user while a nonresident of this state, except in the case of tangible

personal property or services which the user, in the performance of a

contract, incorporates into real property located in the state. A person

while engaged in any manner in carrying on in this state any employment,

trade, business or profession, shall not be deemed a nonresident with

respect to the use in this state of property or services in such

employment, trade, business or profession. This exemption does not apply

to the use of qualified property where the qualified property is

purchased primarily to carry individuals, whether or not for hire, who

are agents, employees, officers, shareholders, members, managers,

partners, or directors of (A) the purchaser, where any of those

individuals was a resident of this state when the qualified property was

purchased or (B) any affiliated person that was a resident when the

qualified property was purchased. For purposes of this subdivision: (i)

persons are affiliated persons with respect to each other where one of

the persons has an ownership interest of more than five percent, whether

direct or indirect, in the other, or where an ownership interest of more

than five percent, whether direct or indirect, is held in each of the

persons by another person or by a group of other persons that are

affiliated persons with respect to each other; (ii) "qualified property"

means vessels and motor vehicles; and (iii) "carry" means to take any

person from one point to another, whether for the business purposes or

pleasure of that person. For an exception to the exclusions from the

definition of "retail sale" applicable to vessels, see subdivision (q)

of section eleven hundred eleven of this article.

(b) Notwithstanding any provision of this article to the contrary, the

exclusion in paragraph (a) of this subdivision shall not apply to the

use within the state of property or a service purchased outside this

state by a nonresident that is not an individual, unless such

nonresident has been doing business outside the state for at least six

months prior to the date such nonresident brought such property or

service into this state.

(3) In respect to the use of property or services upon the sale of

which the purchaser would be expressly exempt from the taxes imposed

under subdivision (a), (b) or (c) of section eleven hundred five. In

respect to the use of property to the extent that it is exempt from the

sales tax under subdivision (g) of section eleven hundred eleven of this

article.

(4) In respect to the use of property which is converted into or

becomes a component part of a product produced for sale by the

purchaser.

(5) In respect to the use of paper in the publication of newspapers

and periodicals.

(6) In respect to the use of property used exclusively for the

temporary construction, improvement, alteration or repair of any

building, structure or exhibit, located entirely on land owned by a city

having a population of one million or more and leased by it to a

corporation organized for the sole purpose of holding a world's fair and

confining its operations solely to preparing for and conducting such

fair.

(7) (a) In respect to the use of property or services to the extent

that a retail sales or use tax was legally due and paid thereon, without

any right to a refund or credit thereof, to any other state or

jurisdiction within any other state but only when it is shown that such

other state or jurisdiction allows a corresponding exemption with

respect to the sale or use of tangible personal property or services

upon which such a sales tax or compensating use tax was paid to this

state. To the extent that the tax imposed by this article is at a higher

rate than the rate of tax in the first taxing jurisdiction, this

exemption shall be inapplicable and the tax imposed by section eleven

hundred ten of this chapter shall apply to the extent of the difference

in such rates, except as provided in paragraph (b) of this subdivision.

(b) To the extent that the compensating use tax imposed by this

article and a compensating use tax imposed pursuant to article

twenty-nine are at a higher aggregate rate than the rate of tax imposed

in the first taxing jurisdiction, the exemption provided in paragraph

(a) of this subdivision shall be inapplicable and the taxes imposed by

this article and pursuant to article twenty-nine shall apply to the

extent of the difference between such aggregate rate and the rate paid

in the first taxing jurisdiction. In such event, the amount payable

shall be allocated between the tax imposed by this article and the tax

imposed pursuant to article twenty-nine in proportion to the respective

rates of such taxes.

(8) In respect to the use of spare parts (including engines),

consumable technical supplies, maintenance and ground equipment used

exclusively in the operation or handling or maintenance of aircraft, and

aircraft stores, brought into this state from a foreign country by a

foreign airline which holds a foreign air carrier permit, issued by the

Civil Aeronautics Board pursuant to Section 402 of the Federal Aviation

Act of 1958, as amended, to engage in foreign air transportation,

provided that:

(i) such property is to be used on aircraft (or directly in the

operation, handling or maintenance of aircraft) of the airline providing

foreign air transportation services (or such aircraft of another foreign

airline eligible under this subdivision); and

(ii) such property would not be subject to taxes imposed in the

foreign country in which the particular foreign airline is based if

brought into such country by a United States airline operating in that

country.

(9) In respect to the use of a thoroughbred, standardbred or quarter

horse purchased outside the state and brought into the state for the

purpose of entering a racing event or events on which pari-mutuel

wagering is authorized by law, and to prepare therefor. Provided,

however, that the exemption contained in this subdivision shall not

apply to any such horse which enters racing events in this state on more

than five days in any one calendar year. Nothing contained herein shall

alter the exemption provided to nonresidents, as specified in

subdivision two of this section.

(10) In respect to the use of horses purchased outside the state and

brought into the state for racing to the extent that the value of the

horse exceeds one hundred thousand dollars. On or before December

fifteenth, nineteen hundred eighty-five, and December fifteenth,

nineteen hundred eighty-six, the board shall report to the director of

the budget, the chairman of the senate finance committee and the

chairman of the assembly ways and means committee concerning the

benefits or costs associated with the provisions of this subdivision, an

assessment of any economic impact and appropriate recommendations. The

commissioner of taxation and finance shall provide to the board such

reports as are necessary to effect the board's mandate.

(11) In respect to the use of computer software that did not

constitute tangible personal property prior to September first, nineteen

hundred ninety-one, used by the purchaser, author or other creator, or

copyright owner in this state prior to such date.

(12) In respect to the use of prepaid telephone calling service prior

to the effective date of a chapter of the laws of nineteen hundred

ninety-nine which added this subdivision.

* (13) In respect to the use of the following items at a tasting held

by a licensed producer of alcoholic beverages in accordance with the

alcoholic beverage control law: (i) the alcoholic beverage or beverages

authorized by the alcoholic beverage control law to be furnished at no

charge to a customer or prospective customer at such tasting for

consumption at such tasting; and (ii) bottles, corks, caps and labels

used to package such alcoholic beverages.

* NB There are 2 sb (13)'s

* (13) In respect to the use within the state of a vessel, as defined

in section twenty-two hundred fifty of the vehicle and traffic law,

until the first of the following events occur:

(a) the use of such vessel within this state by the purchaser thereof

for a period in excess of ninety consecutive days;

(b) the date upon which such vessel is first required to be registered

pursuant to section twenty-two hundred fifty-one of the vehicle and

traffic law; or

(c) the date upon which such vessel is so registered.

* NB There are 2 sb (13)'s