The New York State Department of Taxation and Finance has released information for a possible tax break that can be beneficial to software and website professionals. If this applies to you, the purchase of computer hardware may be exempt from sales tax. The exemption can end up being worth several hundred dollars in savings when purchasing eligible computer system hardware.
Generally, no state or local sales tax will be charged on the purchase of computer system hardware when it is used more than 50% of the time to:
- design and develop computer software for sale;
- provide website design and development services for sale; or
- provide a combination of the two uses described above.
Computer systems that are rented or leased may qualify for the exemption as well.
Computer system hardware includes the physical components from which a computer system is built, as well as associated parts and embedded software. The exempt hardware includes a range of items from laptops to external hard drives. Designing and developing services include system analysis, program design, coding, testing, debugging, and documentation activities. The use of computer system hardware for administration, production, or distribution activities isn’t eligible for this exemption.
To claim the exemption, the purchaser must provide a completed Form ST-121.3 to the computer hardware seller. More information on how to use Form ST - 121.3 can be found by clicking here.
Contact us at (212)-605-0276 if you have any questions about this type of tax exemption or other related exemptions.