NY Sales and Use Tax: Department Announces That E-Books Do Not Constitute Taxable Information Services

The New York Department of Taxation and Finance has issued a memorandum announcing that its current policy, until further notice, is that the sale of a book delivered electronically (e-book) does not constitute the sale of an information service subject to state and local sales and use tax under Tax Law §1105(c)(1). However, 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 (i.e., 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).

The policy discussed in the memorandum is limited to products that are not, or do not include, prewritten computer software or any other product that constitutes tangible personal property under Tax Law §1101(b)(6).