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New York’s Controversial Sales Tax on Transportation

  • Oct 26, 2014 | Gail Cole

 The transportation sales tax does not apply to NYC taxicabs.

Should New York sales tax on transportation services be eliminated?

New York black car service providers and San Francisco-based Uber think it should be and have been lobbying in support of S920A (A8751) for months. Earlier this year, Uber paid a New York lobbyist to argue for the measure. A spokesman for Uber says the company is "supportive of efforts that will level the playing field for all drivers and removes arbitrary burdens on a segment of the transportation industry.”

Uber, which connects riders to drivers through apps, has shaken up the transportation industry. Founded in 2009 (the same year the New York transportation sales tax took effect),  it now has drivers in 45 countries and has been valued at $17 billion. If any business has the clout to combat a local transportation sales tax, it's Uber.

The New York Senate approved S 920A in June and delivered it to the assembly, where it was immediately referred to the Ways and Means Committee. If approved, it would eliminate sales tax on transportation services and “repeal certain provisions of such law relating thereto.”

The justification for the repeal reads:

“In 2009 a hidden sales tax was imposed on the livery industry. This new tax was specifically aimed at services for sedans, vans, SUV’s and limos; leaving public transportation, taxis, and buses untaxed. This new responsibility caught the entire industry off guard, and creates an unfair disadvantage to the industry when purchasing tangible property.

This legislation would repeal several provisions that exist in current law in order to equalize the tax burden for the transportation industry. This legislation will provide a much needed tax relief to small businesses, as well as help to offset the rising costs that the livery industry faces.”

Uber claims the tax costs its drivers $4,483 each year. This has caused “taxi industry insiders” to question if Uber is “violating state law by foisting the tax on drivers.” Normally, sales tax is collected by the seller but paid by the buyer—the tax simply passes through the seller, who remits it to the state. Uber has not commented on that.

According to “The Fine Print” on the bottom of Uber’s New York City page, the 8.875% New York sales tax is included in the fare.

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photo credit: 28 Dreams via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
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.