I publish school yearbooks under contract with schools, clubs, and activity funds in New York -- who has to collect sales tax on the yearbooks, me or my school customer?

Plain-English summary

Walsworth Publishing Company, Inc., a Missouri corporation registered as a New York sales tax vendor, publishes school yearbooks under contract with New York customers. Those customers can be a public school, a private school, or a club, extraclassroom activity fund, or organization of such a school -- and the private-school or club/fund customer may or may not itself qualify as a religious/charitable/educational tax-exempt organization. Under the standard sales agreement, the customer (not Walsworth) is responsible for the yearbook's content and for selling and delivering finished books to students and other purchasers. The customer decides, with Walsworth's help, how many copies to order up front; unsold copies from that agreed quantity belong to the customer with no credit, though Walsworth generally throws in 15-25 incidental extra copies that the customer can return for credit if they go unsold.

For an extra fee, a customer can also add one of three optional sales programs -- a school order day, a home order mailing, or a website/call-center ordering system -- run by an independent agency (Agency) that Walsworth contracts with on the customer's behalf. Agency handles taking orders, billing, and collecting payment from individual purchasers (students, parents, etc.), at prices the customer sets, and turns the money over to Walsworth as a prepayment credited against the customer's final invoice. Order forms and invoices in these optional programs still list the customer, not Walsworth or Agency, as the seller.

Walsworth asked whether it or its customers must collect sales tax on these yearbook sales. The Department's answer turns entirely on who the real purchaser and payer of record is:

• If the true contract customer is the public school district itself -- meaning the contract is signed by someone authorized to disburse the district's funds and Walsworth's invoice names the district as purchaser -- the sale is exempt under Tax Law §1116(a)(1), which excuses New York political subdivisions (school districts included) from sales tax as purchasers, and Walsworth need not collect tax (provided it keeps supporting documents like the district purchase order).
• In practice, though, yearbook purchases are usually made by a student organization or "key club" under the school's extraclassroom activity fund, not by the district itself, and that fund is not covered by the district's exemption. Because books are property of a kind ordinarily sold by private persons, the fund's own resales to students are normally taxable. The fund can register as a sales tax vendor and give Walsworth a Resale Certificate (Form ST-120) to buy the yearbooks tax-free for resale, but it must then collect and remit sales tax itself when it sells the yearbooks to students.
• If Walsworth's contract customer is instead a private or parochial school that separately qualifies as a Tax Law §1116(a)(4) exempt organization, and that school is the direct purchaser and payer of record, Walsworth may accept an Exempt Organization Exempt Purchase Certificate (Form ST-119.1) instead of collecting tax -- unless the school sells the yearbooks from a "shop or store," or (for sales on or after September 1, 2008, under the 2008 Chapter 57 amendment to §1116(b)) sells with regularity, frequency, and continuity by phone, mail order, or the Internet, in which case those particular sales become taxable regardless of the school's exempt status.
• Whoever the ultimate seller of record is (public school, extraclassroom fund, or non-exempt/shop-selling private school), sales made through Agency's optional programs are taxed exactly as if the customer had sold the yearbooks directly. Agency is acting as a "fulfillment service provider" (order-taking, billing, and collection on the customer's behalf), and it must separately state the tax due on invoices it sends to individual purchasers, computed on the full amount charged (including Agency's own fee) at the rate where the book is delivered.
• Agency's fulfillment fee itself -- the charge for billing, payment processing, and running the ordering website -- is not a taxable service and is not subject to sales tax, as long as it is separately stated, reasonable, and sold as a distinct service from Walsworth's sale of the yearbooks to the customer.

What this means for you

Yearbook publishers and other fulfillment-based sellers

Your sales tax obligation rides on who your invoice names as purchaser and payer of record, not on who ultimately reads or wears the finished product. Get a purchase order (for a school district) or the right exemption certificate (Form ST-119.1 for an exempt school, Form ST-120 from a resale-registered activity fund) before assuming a sale is tax-free, and keep it in your records to substantiate the exemption.

School districts and extraclassroom activity funds / yearbook committees

A school district itself is exempt as a purchaser under Tax Law §1116(a)(1), but the extraclassroom activity fund or student "key club" that actually buys and resells the yearbooks is a separate entity not covered by that exemption. If your fund resells yearbooks to students, register as a sales tax vendor, issue a resale certificate on your yearbook purchases, and collect and remit tax on your own resale to students.

Private and parochial schools with exempt status

Qualifying under Tax Law §1116(a)(4) does not make every yearbook sale automatically tax-free. It only works if your school is the direct purchaser/payer of record (furnish Form ST-119.1), and it stops working for sales made through a shop or store, or -- since September 1, 2008 -- for sales made with regularity by phone, mail order, or Internet.

Accountants and tax professionals

This opinion is a useful template for any client selling through a school's fundraising or activity-fund structure with an outside fulfillment/billing agency: the fulfillment agency's own service fee is untaxed if separately stated and distinct from the product sale, but tax still tracks the underlying product sale based on the true purchaser's exempt status.

Common questions

Q: Do I need to collect sales tax if I sell yearbooks directly to a public school district?
A: No, not if the district itself -- through someone authorized to spend district funds -- is the actual purchaser and payer of record on your invoice; that sale is exempt under Tax Law §1116(a)(1).

Q: What if the buyer is really the school's extraclassroom activity fund, club, or yearbook committee, not the district itself?
A: That fund is not covered by the district's exemption. It can register as a sales tax vendor and buy the yearbooks from you tax-free with a resale certificate (Form ST-120), but it must then collect and remit sales tax itself when it resells the yearbooks to students.

Q: Are sales to a private or parochial school always exempt from sales tax?
A: Only if the school qualifies as a Tax Law §1116(a)(4) exempt organization and is the direct purchaser/payer of record with a properly completed Exempt Organization Exempt Purchase Certificate (Form ST-119.1) -- and only if it isn't selling the yearbooks through a shop or store, or, since September 1, 2008, doing so with regularity by phone, mail order, or the Internet.

Q: Is the independent fulfillment agency's billing/website/call-center fee itself taxable?
A: No. Billing, payment processing, and order-website/call-center services are not enumerated taxable services under Tax Law §1105(c), so the agency's separately stated, reasonable fee for those services is not subject to sales tax, even though tax still applies to the underlying yearbook sale.

Q: Does this ruling apply directly to my yearbook or fundraising-fulfillment business?
A: Not automatically. This is an Advisory Opinion binding only on Walsworth Publishing Company, Inc., limited to the facts it described; a different publisher-agency-customer arrangement could produce a different result.

Citations and references

Statutes and regulations:

• Tax Law §1101(b)(4) (definition of "retail sale")
• Tax Law §1101(b)(18) (definition of "fulfillment services")
• Tax Law §1105(a) (tax on retail sales of tangible personal property)
• Tax Law §1116(a)(1) (exemption for New York State and its political subdivisions, including school districts)
• Tax Law §1116(a)(4) (exemption for religious, charitable, scientific, literary, or educational organizations)
• Tax Law §1116(b), as amended by Chapter 57 of the Laws of 2008 (limits on the exempt-organization exemption for shop/store sales and regular remote sales)
• Sales and Use Tax Regulations §525.2(a) (sales tax as a transactions tax, destination tax, and consumer tax)
• Sales and Use Tax Regulations §529.2 (New York governmental entities as purchaser and as vendor)
• Sales and Use Tax Regulations §529.7 (religious, charitable, scientific, literary, or educational organizations)
• Sales and Use Tax Regulations §532.1 (collection of tax from customer; separate statement of tax)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2008.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a08_42s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Taxpayer Guidance Division

TSB-A-08(42)S
Sales Tax
September 15, 2008

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S070724A

On July 24, 2007, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Walsworth Publishing Company, Inc., 306 North Kansas Avenue,
Marceline, Missouri 64658. Petitioner, Walsworth Publishing Company, Inc., provided
additional information pertaining to the Petition on October 10, 2007.
The issue raised by Petitioner is whether Petitioner or its customers are required to collect
sales tax on sales of school yearbooks.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner, a Missouri corporation, is a publisher of school yearbooks and is registered for
the collection of sales tax in New York State. Petitioner contracts with customers in the State for
publication of their school yearbooks. Petitioner’s customer may be a public school, a private
school, or a club, extraclassroom activity fund or organization of such public or private school.
Such private school, club, extraclassroom activity fund, or organization may or may not be a
qualifying (religious, scientific, charitable, educational, etc.) exempt organization pursuant to
section 1116(a)(4) of the Tax Law. Under its sales agreement with the customer, the customer is
responsible for the content, sale and delivery of the yearbook to the student or other purchaser.
The customer, with Petitioner's assistance if requested, determines how many yearbooks are to
be printed at the time the initial sales agreement is signed. Should the customer not sell all of the
books it agreed to purchase in the contract with Petitioner, the customer will own those books
and will not receive a credit for unsold books. In addition to the agreed upon number of
yearbooks, Petitioner will generally provide an incidental number (15 - 25) extra copies of the
yearbook in case the customer sells more books than it has anticipated. The customer is invoiced
for these additional copies along with the agreed upon number of books. However, if the extra
copies are not sold, they may be returned to Petitioner for a credit.
For an additional fee, a customer may also contract with Petitioner for the provision of
three optional programs for selling the yearbooks. These three optional sales programs also
provide purchasers with alternative payment methods. The optional programs are (1) a school
order day, (2) a home order mailing, and (3) a Web site and call center for taking orders.
When Petitioner's customer chooses to purchase one of these three sales options,
Petitioner contracts on behalf of the customer with an independent agency (Agency) to develop
and service the optional sales programs. Billing services and payment processing service are
provided for yearbooks ordered by individual purchasers (e.g., students, parents, etc.) through the
sales programs; and, arrangements for a school order day, home order mailing, or Web site and

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call center services may also be provided for the yearbook sales pursuant to the offered sales
option plans, thus relieving the customer of these responsibilities. The customer determines the
price to be charged to the individual purchasers (e.g., students, parents, etc.) for the yearbook and
provides that information to Agency. The price charged to the individual purchasers as
determined by the customer takes into account any additional funds provided by the customer for
the yearbook purchase such as monies obtained from sales of advertising, subsidies or
endowments and other fundraising activities.
Individual yearbook purchasers ordering yearbooks may pay Petitioner's customer
directly, or, if the customer is participating in one of the optional sales programs, yearbook
purchasers may be billed for the yearbooks at a later date, make payment to the sales program by
check or credit card, or make payments in installments. The yearbooks are delivered to
Petitioner’s customer at the school for distribution regardless of the manner in which the
individual purchasers placed their orders. The contract or enrollment form signed by Petitioner's
customer with respect to each of the three optional sales programs contains the statement: “I (the
customer) understand that (Petitioner) or other third parties will act on behalf of the (customer)
to bill students for yearbooks and collect funds from them in accordance with the pricing
specified (by the customer) . . . .”
The order forms and invoices used in the optional sales programs list the name of
Petitioner's customer as the seller. The return address for payments lists the name of the
customer in care of Agency’s order center. In order to access yearbook sales information for a
particular customer through the Internet, individual purchasers placing orders through the Web
site must enter a number identifying the customer. The individual purchasers (students, parents,
etc.) are directed to make checks payable to Agency’s order center.
Amounts collected by Agency from individual purchasers (students, parents, etc.) on
behalf of the customer are turned over to Petitioner. Petitioner treats these collections as amounts
paid on account by the customer to whom Petitioner provides its final invoice. Such collections
are deducted as prepayments from the amount shown on Petitioner's final invoice to its customer.
When the customer is invoiced for the yearbooks by Petitioner, the per-unit charge paid to
Agency by Petitioner for Agency’s services is passed through to the customer by Petitioner. If
the total of the payments collected by Agency directly from purchasers (i.e., the retail sales price
as determined by Petitioner’s customer) happens to exceed the total amount of Petitioner's
contract with the school (i.e., the wholesale cost of all the books plus the cost of Agency’s sales
program) the overage is returned to the customer. Otherwise, the customer is responsible for
paying to Petitioner the difference between what was collected by Agency and turned over to
Petitioner as a prepayment for the customer’s purchase and the total of what was owed by the
customer for the books and Agency’s services.

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Applicable law and regulations
Section 1101(b) of the Tax Law provides, in part:
When used in this article for the purposes of the taxes imposed by subdivisions
(a), (b), (c) and (d) of section eleven hundred five and by section eleven hundred ten, the
following terms shall mean:
*

*

*

(4) Retail sale. (i) A sale of tangible personal property to any person for any
purpose, other than (A) for resale as such . . . .
*

*

*

18. Fulfillment services. Any of the following services performed by an entity on
    its premises on behalf of a purchaser:
    (i)

the acceptance of orders electronically or by mail, telephone,
telefax or internet;

(ii)

responses to consumer correspondence and inquiries electronically
or by mail, telephone, telefax or internet;

(iii)

billing and collection activities; or

(iv)

the shipment of orders from an inventory of products offered for
sale by the purchaser.

Section 1105(a) of the Tax Law imposes sales tax upon the receipts from every retail sale
of tangible personal property, except as otherwise provided.
Section 1116(a) of the Tax Law provides, in part:
Except as otherwise provided in this section, any sale or amusement charge by or
to any of the following or any use or occupancy by any of the following shall not be
subject to the sales and compensating use taxes imposed under this article:
(1)

The state of New York, or any of its agencies, instrumentalities,
public corporations (including a public corporation created
pursuant to agreement or compact with another state or Canada) or
political subdivisions where it is the purchaser, user or consumer,

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or where it is a vendor of services or property of a kind not
ordinarily sold by private persons;
*

*

*

(4) Any corporation, association, trust, or community chest, fund,
foundation, or limited liability company, organized and operated exclusively for
religious, charitable, scientific, testing for public safety, literary or educational
purposes, or to foster national or international amateur sports competition (but
only if no part of its activities involve the provision of athletic facilities or
equipment), or for the prevention of cruelty to children or animals, no part of the
net earnings of which inures to the benefit of any private shareholder or
individual, no substantial part of the activities of which is carrying on
propaganda, or otherwise attempting to influence legislation, (except as otherwise
provided in subsection (h) of section five hundred one of the United States
internal revenue code of nineteen hundred fifty-four, as amended), and which
does not participate in, or intervene in (including the publishing or distributing of
statements), any political campaign on behalf of any candidate for public office;
Section 1116(b) of the Tax Law, as amended by Chapter 57 of the Laws of 2008,
effective September 1, 2008, provides, in part:
Nothing in this section shall exempt:
(1) (i) retail sales of tangible personal property by any shop or store operated by
an organization described in paragraph (4), (5) or (6) of subdivision (a) of this section;
(ii) sales, other than for resale, of services described in subdivision (b) or paragraph
five
of subdivision (c) of section eleven hundred five of this article by that
organization, whether or not at a shop or store; (iii) retail sales of tangible personal
property and sales, other than for resale, of those services by that organization, made
with a degree of regularity, frequency, and continuity by remote means, such as by
telephone, the internet, mail order or otherwise; or (iv) retail sales of tangible personal
property by lease or rental by that organization as lessor, whether or not at a shop or
store;
Section 525.2(a) of the Sales and Use Tax Regulations provides, in part:
Sales tax.
*

*

*

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(2) Except as specifically provided otherwise, the sales tax is a “transactions tax,”
with the liability for the tax occurring at the time of the transaction. Generally, a taxed
transaction is an act resulting in the receipt of consideration for the transfer of title to or
possession of (or both) tangible personal property or for the rendition of an enumerated
service. The time or method of payment is generally immaterial, since the tax becomes
due at the time of transfer of title to or possession of (or both) the property or the
rendition of such service . . . .
(3) Except as specifically provided otherwise, the sales tax is a “destination tax.”
The point of delivery or point at which possession is transferred by the vendor to the
purchaser, or the purchaser’s designee, controls both the tax incidence and the tax rate.
(4) The sales tax is generally a “consumer tax.” That is, the person required to
collect tax must collect the tax from the customer (i.e., the consumer) when collecting the
taxable receipt . . . to which the tax applies. The customer cannot shift the liability for
payment of the tax to another person nor otherwise be relieved of such liability. The
vendor, or other person required to collect the tax, collects the tax as trustee for and on
account of the State and is also personally liable for the tax required to be collected.
Section 529.2 of the Sales and Use Tax Regulations provides, in part:
New York State, agencies, instrumentalities, public corporations, and political
subdivisions thereof. (a) Governmental entities.
*

*

*

(3) A political subdivision as used in this section means a county, town, city,
village, school district, fire district, special district corporation and board of cooperative
educational services of this State.
(b) As purchaser. (1) New York State, or any of its agencies, instrumentalities,
public corporations or political subdivisions (hereinafter referred to as New York State
governmental entities) are not subject to sales or use tax when they are the purchaser,
user, or consumer of tangible personal property or services or when they are the occupant
of a hotel room or a patron at a place of amusement, club, roof garden, cabaret or other
similar places.
(2) New York State governmental entities as purchasers, users, consumers,
occupants or patrons must exercise their right to exemption through the issuance of
governmental purchase orders or the appropriate exemption document.

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(c) As vendor. (1) Sales by New York State governmental entities of tangible
personal property or services of a kind not ordinarily sold by private persons are exempt
from sales and use tax.
Example 1: A county clerk sells tax maps, copies of ordinances and
certified copies of documents. The sale of these items is not taxable.
Example 2: A governmental entity sells evergreen seedlings in bundles of
1,000 to qualified landowners with the stipulation that once the evergreens
are planted they may not be removed with roots attached nor may they be
planted for ornamental purposes. The sale of the seedlings is not taxable,
because the sales are of a kind not ordinarily sold by private persons.
(2) Sales by New York State governmental entities of tangible personal property
or services of a kind which are ordinarily sold by private persons . . . are subject to the
sales and use tax. . . .
Section 529.7 of the Sales and Use Tax Regulations provides, in part:
Religious, charitable, scientific, testing for public safety, literary or educational
organizations, organizations which foster national or international amateur sports
competition, and organizations for the prevention of cruelty to children or animals.
(a) General. (1) Any corporation, association, trust, or community chest, fund or
foundation, organized and operated exclusively for religious, charitable, scientific, testing
for public safety, literary or educational purposes, or to foster national or international
amateur sports competition (but only if no part of its activities involve the provision of
athletic facilities or equipment), or for the prevention of cruelty to children or animals, no
part of the net earnings of which inures to the benefit of any private shareholder or
individual, no substantial part of the activities of which is carrying on propaganda or
otherwise attempting to influence legislation (except as otherwise provided in subsection
(h) of section 501 of the United States Internal Revenue Code of 1986), and which does
not participate in, or intervene in (including the publishing or distributing of statements),
any political campaign on behalf of any candidate for public office, which meet the
qualifications of this section are exempt from the sales and use tax on any purchases of
tangible personal property, services, food and drink, hotel occupancy, or admissions and
dues. In addition, such organizations may, except under the circumstances described in
subdivision (i) of this section, make sales without collecting the sales or use tax.
*

*

*

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(h) Sales to exempt organizations. (1) Any sale or amusement charge to or any
use or occupancy by an exempt organization to which an exempt organization certificate
has been issued is exempt from sales and use tax.
(2) In order to exercise its right to exemption the organization must be the direct
purchaser, occupant or patron of record. It must also be the direct payer of record and
must furnish its vendors with a properly completed exempt organization certification.
Direct purchaser, occupant or patron as used in this paragraph includes any agent or
employee authorized by the organization to act on its behalf in making such purchases,
provided the organization and its agent or employee are both identified on any bill or
invoice. An organization is the direct payer of record where direct payment is made by
the organization or from its funds directly to the vendor.
(3) An exempt organization certification is deemed to be properly completed
when it contains the:
(i)

name and address of the vendor;

(ii)

name and address of the exempt organization;

(iii)

number assigned to the exempt organization certificate;

(iv)

signature of a responsible officer of the exempt organization; and

(v)

date the certification was executed.

(4) Sales to any member, officer or employee of an exempt organization are
subject to the sales and use tax when the sales are for the personal use of the purchaser
rather than the organization.
(i) Sales by exempt organizations. (1) Except as provided in paragraphs (2)
through (4) of this subdivision, sales of tangible personal property and services by
exempt organizations are exempt from the sales and use tax.
(2) Retail sales of tangible personal property made by any shop or store operated
by an exempt organization described in section 1116(a)(4), (5) or (6) are subject to the
sales and use tax. A shop or store as used in this section includes any place or
establishment where goods are sold from display with a degree of regularity, frequency
and continuity as well as any place where sales are made through a temporary shop or
store located on the same premises as persons required to collect tax. Vending machines
alone do not constitute a shop or store. However, where vending machines are located in

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a defined area devoted to selling tangible personal property, then sales from such vending
machines constitute sales from a shop or store.
Section 532.1 of the Sales and Use Tax Regulations provides, in part:
Collection of tax from customer. (a) Time of collection. (1) Every person
required to collect the tax shall collect the tax from the customer when collecting the
price, amusement charge or rent to which it applies.
(2) Where a vendor makes a sale for which payment is not received at the time of
delivery, such sale must be reported on the return covering the period in which the sale is
made. Thus, if the sale is a taxable sale, the full amount of tax must be remitted with the
return whether or not any money was collected at the time of sale.
(3) Any person willfully failing to collect the tax from a customer may be subject
to the criminal penalties prescribed by section 1817 of the Tax Law and the Penal Law. . .
(b) Statement of and reference to tax. (1) Whenever the customer is given any
sales slip, invoice, receipt, or other statement or memorandum of the price, amusement
charge, or rent paid or payable, the tax shall be stated, charged and shown separately on
the first of such documents given to him.
(2) Whenever the sales and use tax is separately stated on such document, it may
be referred to as tax.
(3) The words tax included or words of similar import, on a sales slip or other
document, do not constitute a separate statement of the tax, and the entire amount
charged is deemed the sales price of the property sold or services rendered.
Opinion
Petitioner is a publisher of school yearbooks and is registered for the collection of sales
tax in New York State. Petitioner contracts with customers in the State for publication of their
school yearbooks. Petitioner’s customer may be a public school, a private school, or a club,
extraclassroom activity fund, or organization of such public or private school. Such private
school, club, extraclassroom activity fund, or organization may or may not be a qualifying
(religious, scientific, charitable, educational, etc.) exempt organization pursuant to section
1116(a)(4) of the Tax Law.
Under Petitioner's sales agreement with its customer, the customer is responsible for the
content of the publication and for the sale and delivery of the yearbook to the individual
purchasers (students, parents, etc.). Petitioner invoices the customer for the number of books the

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customer agreed by contract to purchase. The customer will own those books and will not
receive a credit for any unsold books included in that amount. Petitioner also bills the customer
for an additional 15-25 yearbooks printed and delivered to the customer, but the customer may
return any of such yearbooks not sold and the customer will be given a credit for these returns.
According to the facts presented, Petitioner is making a sale of tangible personal property
that may be subject to sales tax imposed under section 1105(a) of the Tax Law. If Petitioner’s
customer is a public school as described in section 1116(a)(1) of the Tax Law and section
529.2(a)(3) of the Sales and Use Tax Regulations, Petitioner will have a contract signed by the
person authorized to contract for a disbursement of the school district’s funds. In such instance,
Petitioner’s invoice would name the school district as purchaser. In that case, Petitioner would
not be required to collect sales tax on sales of yearbooks to the customer (i.e., public school) as
the sale would be exempt from sales tax pursuant to the provisions of section 1116(a)(1) of the
Tax Law. See section 529.2(b)(1) of the Sales and Use Tax Regulations. Petitioner would be
required to substantiate that the sale was exempt by maintaining in its sales records documents
(e.g., school district purchase orders) as described in section 529.2(b)(2) of the Sales and Use
Tax Regulations.
The provisions of section 1116(a)(1) of the Tax Law provide that school districts, as
political subdivisions of New York State, are not required to collect sales tax on receipts from
sales of tangible personal property of a kind not ordinarily sold by private persons. Section
529.2(c)(2) of the Sales and Use Tax Regulations further provides that sales by political
subdivisions of New York State, including school districts, of tangible personal property of a
kind ordinarily sold by private persons are subject to the sales and use tax. Since books are
property of a kind ordinarily sold by private persons, public school districts are generally
required to collect sales tax on their sales of such books.
However, the acquisition of yearbooks by public schools is typically handled by a student
organization such as a yearbook committee or “key club” under the aegis of the extraclassroom
activity fund of the school district. Such student organizations and extraclassroom activity funds
of public schools are not included in the exemption granted to school districts under section
1116(a)(1) of the Tax Law. Purchases by these organizations and funds are normally subject to
sales tax. Purchases of tangible personal property for resale, however, are not subject to sales
tax. See section 1101(b)(4) of the Tax Law.
The extraclassroom activity fund of a school district (only one such fund is required for
each school district) may register as a sales tax vendor with the Department. As a registered
vendor, the extraclassroom activity fund may issue a properly completed Resale Certificate
(Form ST- 120) to Petitioner when purchasing yearbooks for student organizations or the fund if
such yearbooks are purchased by the fund for resale. The student organization or the
extraclassroom activity fund must collect and remit sales tax on their receipts from sales of
yearbooks.

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If Petitioner's contract is signed with a private or parochial school that is exempt from
sales tax under the provisions of section 1116(a)(4) of the Tax Law, and such school is the
purchaser and payer of record, Petitioner may accept a properly completed Exempt Organization
Exempt Purchase Certificate (Form ST-119.1) in lieu of collecting the sales tax on the receipts
from its sales of yearbooks. See section 529.7(h) of the Sales and Use Tax Regulations. Sales of
tangible personal property by an organization exempt from tax under section 1116(a)(4) of the
Tax Law are not subject to sales tax unless such sales are made by a shop or store operated by
such organization. See section 1116(b)(1) of the Tax Law. Therefore, when the yearbooks are
sold from a shop or store as described in section 529.7(i)(2) of the Sales and Use Tax
Regulations, these organizations’ sales of yearbooks are subject to sales tax. It should be noted
that for these organizations' yearbook sales made on or after September 1, 2008, such sales will
be taxable when made with a degree of regularity, frequency, and continuity by remote means,
such as by telephone, the Internet, or mail order. See section 1116(b)(1) of the Tax Law as
amended by Chapter 57 of the Laws of 2008; section 1116(a)(4) of the Tax Law and section
529.7(i) of the Sales and Use Tax Regulations.
Agency’s role pursuant to the optional sales programs in these transactions is that of a
fulfillment service provider. That is, Agency provides services on behalf of Petitioner's
customers which services include accepting orders electronically or by mail, telephone, fax or
Internet; and, billing and collection activities. See section 1101(b)(18) of the Tax Law. As a
fulfillment service provider for Petitioner’s customers, sales through Agency are subject to sales
tax to the extent that such sales would be subject to sales tax if made directly by the customer.
Thus, sales of school yearbooks to students, parents, and other purchasers by a public school; by
an extraclassroom activity fund, club, or organization of a private or public school; by a private
school that is not exempt from sales tax under section 1116(a)(4) of the Tax Law; or by a school
which, though qualifying for exemption pursuant to section 1116(a)(4) of the Tax Law, makes
sales of yearbooks through a shop or store; are subject to sales tax whether such sales are made
directly by those entities or through Agency acting for such entities. Similarly, on and after
September 1, 2008, Agency’s sales as agent for a private school made via the Internet, telephone
or mail order may also be subject to tax regardless of whether the school regularly sells property
at a shop or store. See section 1116(b)(1) of the Tax Law as amended by Chapter 57 of the Laws
of 2008, effective September 1, 2008.
As the fulfillment service provider for Petitioner's customer, Agency must separately
state the sales tax due on any bill or invoice rendered on behalf of the customer to the consumer.
See section 532.1(b) of the Sales and Use Tax Regulations. The sales tax on each individual sale
is computed on the amount (including any amount charged for Agency’s services) actually
charged to the individual consumer by the public school, student organization, extraclassroom
activity fund, or non-exempt private school at the tax rate in effect where the book is delivered to
the consumer or its designee. See section 525.2 of the Sales and Use Tax Regulations.

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TSB-A-08(42)S
Sales Tax
September 15, 2008

The services provided by Agency (billing, payment processing, maintaining a Web site
for sales, etc.) are not services enumerated as taxable under section 1105(c) of the Tax Law.
Petitioner pays Agency for the services contracted by Petitioner with Agency on the customer’s
behalf and passes Agency’s charges for these services through to its customer on its bill to the
customer for the yearbooks. However, Petitioner's customers may purchase yearbooks from
Petitioner without purchasing the services performed by Agency. The sale to the customer of
Agency’s services is a sale separate and distinct from Petitioner's sale of the yearbooks to the
customer. The purchase of Agency’s services is not an expense of Petitioner in its sale of
yearbooks to the customer. The services provided by Agency are not services which are subject
to sales tax, and such services being separately contracted and sold constitute a separate sale the
charges for which are distinct from the charges for the sale of the yearbook. Thus, the amounts
charged and billed for Agency’s services are not subject to tax, provided that the charges for the
services are separately stated and reasonable. The amounts paid for Agency’s services by the
customer are a part of the customer’s expense of selling the yearbooks to the consumer (students,
parents, etc). If such costs are included in the price charged for the purchase of the yearbook by
consumers, such costs are part of the customer’s receipts from its sale of the yearbooks.

DATED: September 15, 2008

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Taxpayer Guidance Division

An Advisory Opinion is issued at the request of a person or entity. It is
limited to the facts set forth therein and is binding on the Department only
with respect to the person or entity to whom it is issued and only if the
person or entity fully and accurately describes all relevant facts. An
Advisory Opinion is based on the law, regulations, and Department
policies in effect as of the date the Opinion is issued or for the specific
time period at issue in the Opinion.