Does a newspaper distributor pay sales tax on the twine, strapping, and wire it buys to bundle newspapers for delivery to dealers?

Plain-English summary

Gaynor News Company, Inc., a newspaper distributor that sells newspapers to news dealers, buys twine, strapping, and wire to bundle the newspapers for delivery. It asked whether those purchases are taxable.

The Department held the bundling materials are exempt — no sales tax.

• The packaging-materials exemption. Tax Law § 1115(a)(19) exempts receipts from the sale of "cartons, containers, and wrapping and packaging materials and supplies, and components thereof" when a vendor uses them to package tangible personal property for sale and actually transfers them to the purchaser along with the goods.
• Twine, strapping, and wire qualify. Because the distributor uses these materials to package the newspapers it sells and passes them along to the dealers, they fall squarely within the exemption (citing Trans World Music Corporation, TSB-H-81(52)S).
• State and local tax. The exemption applies to both State and local sales taxes.
• How to claim it. The distributor gives its supplier a completed Exempt Use Certificate (Form ST-121) to buy the materials without tax.

What this means for you

Packaging you pass on to the buyer is exempt. If you sell goods and wrap, box, tie, or strap them for the customer — and the packaging goes out the door with the product — the materials you buy to do that packaging are exempt under § 1115(a)(19). That covers humble supplies like twine and wire, not just boxes.

"Transferred to the purchaser" is the test. The exemption is for packaging that leaves with the sold goods. Materials you keep and reuse, or use for something other than packaging goods for sale, are a different question.

Use Form ST-121. Packaging-material exemptions run on the Exempt Use Certificate (ST-121), not the resale certificate. Give your supplier a completed ST-121 to buy exempt.

Common questions

Q: I bundle products I sell with twine and wire. Do I pay tax on those supplies?
A: No. Materials you use to package tangible personal property for sale and transfer to the buyer are exempt under § 1115(a)(19).

Q: Does the exemption cover local sales tax?
A: Yes. The Department said it applies to both State and local sales taxes.

Q: What paperwork do I give my supplier?
A: A completed Exempt Use Certificate (Form ST-121).

Citations and references

Statutes:

• Tax Law § 1115(a)(19) — exemption for cartons, containers, and wrapping and packaging materials and supplies (and components) used by a vendor to package tangible personal property for sale and transferred to the purchaser

Authority cited:

• Trans World Music Corporation, Advisory Opinion (Feb. 25, 1981), TSB-H-81(52)S

Forms referenced:

• Form ST-121 — Exempt Use Certificate

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1982.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a82_44s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-82(44)S
Sales Tax
December 22, 1982

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S821104A

On November 4, 1982 a Petition for Advisory Opinion was received from Gaynor News
Company, Inc., 225 South Fourth Avenue, Mount Vernon, New York 10551.
Petitioner, a newspaper distributor which sells newspapers to news dealers, purchases twine,
strapping and wire to be used in bundling newspapers for delivery. Petitioner inquires as to whether
the receipts from such purchases are subject to tax.
Section 1115(a)(19) of the Tax Law exempts from state and local sales taxes receipts from
the sale of "cartons, containers, and wrapping and packaging materials and supplies, and components
thereof for use and consumption by a vendor in packaging tangible personal property for sale, and
actually transferred by the vendor to the purchaser."
Pursuant to the statutory provision here quoted, Petitioner's described purchases of twine,
strapping and wire may be made without the payment of State or local sales tax. Trans World Music
Corporation, Advisory Opinion, February 25, 1981, TSB-H-81(52)S. In order to avail itself of such
exemption Petitioner must present to its supplier a properly completed Exempt Use Certificate, Form
ST-121.

DATED: December 3, 1982

s/FRANK J. PUCCIA
Director
Technical Services Bureau

ROBERT W. BOUCHARD, ACTING COMMISSIONER
GABRIEL B. DiCERBO , DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR
TP-8 (8/82)