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New York: Electronic Craft Patterns Are Intangible, Not Taxable


Are electronic downloads tangible or intangible, taxable or not? The New York Department of Taxation and Finance recently determined that downloaded patterns and projects are intangible, and therefore not subject to sales tax. Let the knitting begin.

The issue was brought to the department's attention by a company that publishes arts and craft books, magazines, DVDs, and patterns in both downloadable and physical forms. The company is based outside of New York State, and sells directly to customers in New York and elsewhere. Customers purchase electronic patterns and projects from the website, and then download them to their computers. The patterns and projects are for such items as knitted hats, crocheted scarves, and directions to make jewelry.

According to New York Tax Law (ยง 1105(a)), tangible personal property, which includes prewritten software, is subject to sales and use tax. Since the downloaded patterns and projects sold by the company in question do not include prewritten computer software and are not sold with materials to create the products, it was determined that there is no transfer of tangible personal property. The downloaded patterns and projects are therefore not subject to sales and use tax in New York. That's good news for craftspeople preparing holiday gifts.

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Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.