Are textbooks sold by a banking-industry trade school's local chapter exempt from New York sales tax as college textbooks?

Plain-English summary

The Capital Region Chapter of the American Institute of Banking (AIB) -- the educational division of the American Bankers Association -- is a 501(c)(3) not-for-profit professional school that teaches finance-industry employees and awards its own diplomas and certificates. It asked, on essentially identical facts to a companion petition filed by another AIB chapter, whether its textbook sales qualify for New York's sales tax exemption for college textbooks.

New York exempts textbooks bought by college students only when the course is offered at an "institution of higher education" -- meaning a school recognized and approved by the Regents of the State University of New York, or accredited by a nationally recognized accrediting agency. Petitioner is neither. It does receive favorable course evaluations from the American Council on Education (ACE), which makes credit recommendations that colleges and universities can (and sometimes do) accept for transfer credit -- Petitioner had articulation agreements with four local colleges and SUNY Empire State College. But the Department drew a sharp line: ACE is an evaluation and recommendation service, not an accrediting agency, so its recommendations don't satisfy the statute's accreditation requirement no matter how many colleges actually honor them. As a result, Petitioner's textbook sales to its own students remain fully taxable.

What this means for you

Professional and trade schools, corporate training divisions, and industry institutes

Getting your courses reviewed and recommended by the American Council on Education (or a similar credit-recommendation service), and even having outside colleges accept those courses for transfer credit, does not make your school an "institution of higher education" for New York's textbook exemption. You need your own Regents recognition or accreditation from a nationally recognized accrediting agency -- a credit-recommendation service is not a substitute.

Bookstores and vendors serving trade/professional schools

If you sell textbooks to students of a school that isn't itself Regents-recognized or accredited, don't assume the college-textbook exemption applies just because the school's courses are respected or transferable elsewhere. Confirm the school's own accreditation status, not just whether other colleges accept its credits.

Accountants and tax professionals

This ruling and its same-day companion, TSB-A-99(12)S (another AIB chapter, Regional New York, on essentially identical facts), both apply Tax Law § 1115(a)(34)(ii)'s two-part definition of "institution of higher education" -- Regents recognition/approval, or accreditation by a nationally recognized accrediting body -- and reach the same result: a favorable ACE evaluation and transfer-credit acceptance by other schools isn't accreditation of the school itself.

Common questions

Q: Why doesn't the American Council on Education's recommendation count as accreditation?
A: ACE evaluates courses and issues credit recommendations that other colleges may choose to honor; it isn't itself a nationally recognized accrediting agency, and its recommendations don't confer accreditation on the school offering the course.

Q: Would the exemption apply if Petitioner became Regents-recognized or independently accredited?
A: Yes -- the exemption turns on whether the school itself meets the statutory definition of "institution of higher education," which either type of formal recognition would satisfy.

Q: Does it matter that four local colleges and SUNY Empire State College accept Petitioner's courses for transfer credit?
A: No -- other schools' willingness to grant transfer credit doesn't change Petitioner's own accreditation status under Tax Law § 1115(a)(34)(ii).

Citations and references

Statutes and regulations:

• Tax Law § 1105(a) (imposition of sales tax)
• Tax Law § 1115(a)(34) (college textbook exemption)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1999.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a99_14s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-99(14)S
Sales Tax
March 1, 1999

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S980929A

On September 29, 1998, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Capital Region Chapter, American Institute of Banking, Inc., 1 Pine West
Plaza, Washington Avenue Extension, Albany, NY 12205.
Petitioner submitted additional facts relating to the Petition on November 4, 1998.
The issue raised by Petitioner, Capital Region Chapter, American Institute of Banking, Inc.,
is whether sales of its textbooks are exempt from sales tax under Section 1115(a)(34) of the Tax
Law.
Petitioner submitted the following facts as the basis of this Advisory Opinion.
American Institute of Banking (AIB) is the educational division of the American Bankers
Association, headquartered in Washington, DC. There are fifty-seven AIB chapters throughout the
United States. Petitioner, a regional chapter of AIB, is a 501(c)(3) tax exempt, not-for-profit
professional school for finance industry employees. It provides a course of study that leads to
diplomas and certificates.
Petitioner is not an institution of higher education recognized and approved by the Regents
of the State University of New York. However, Petitioner receives college credit recommendation
from the American Council on Education (ACE). ACE evaluates courses offered by organizations
that provide courses to their employees, members or customers and makes credit recommendations
for formal educational programs. The credit recommendations are intended to guide colleges and
universities as they consider awarding credit to persons who have successfully completed college
level instruction. Petitioner has articulation agreements with four local colleges as well as the State
University of New York Empire State College. Many of the courses offered by Petitioner have been
recommended by ACE and accepted for college transfer credit by regional colleges and the State
University of New York Empire State College. Students who complete Petitioner’s courses and
wish to receive college credit must make a formal request for credit with the college or university
from which they wish to receive credit.
Applicable Law and Regulations
Section 1105(a) of the Tax Law imposes a tax on the receipts from every retail sale of
tangible personal property, except as otherwise provided.

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TSB-A-99(14)S
Sales Tax
March 1, 1999

Section 1115 of the Tax law provides, in part:
(a) Receipts from the following shall be exempt from the tax on retail sales
imposed under subdivision (a) of section eleven hundred five and the compensating
use tax imposed under section eleven hundred ten:
*

*

*

(34) Textbooks purchased by full and part time college students for their
courses; provided, however, that upon purchase such a student shall present a valid
student identification card, and such a textbook shall be required for a course being
taken by such student at an institution of higher education. For purposes of the
subdivision the term:
(i) "Textbooks" includes only those books specifically written, designed or
produced for educational, instructional or pedagogical purposes.
(ii) "Institution of higher education" shall mean any institution of higher
education, recognized and approved by the regents of the university of the state of
New York or accredited by a nationally recognized accrediting agency or association
accepted as such by the regents of the university of the state of New York, which
provides a course of study leading to the granting of a post-secondary degree,
certificate or diploma.
Opinion
Petitioner is a not-for-profit school of continuing education for the banking industry which
offers courses which may lead to a certificate, degree or diploma. Petitioner’s courses have been
evaluated by ACE, which makes recommendations which are used by colleges and universities to
determine whether a student may receive college credit for courses taken at other institutions. Many
of Petitioner’s courses are recommended for college credit by ACE and accepted at colleges and
universities, including the State University of New York Empire State College.
Section 1115(a)(34) of the Tax Law provides an exemption from sales tax for purchases of
college textbooks for courses given at institutions of higher education. For purposes of Section
1115(a)(34), an "institution of higher education" is any institution of higher education recognized
and approved by the Regents of the State of New York, or accredited by a nationally recognized
accrediting agency or association. Petitioner has indicated that it is not recognized and approved by
the Regents of the State of New York. In addition, Petitioner is not accredited by a nationally
recognized accrediting agency. ACE is an evaluation agency which makes recommendations for

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TSB-A-99(14)S
Sales Tax
March 1, 1999

college credit for courses, but is not an accrediting agency. Although many of Petitioner’s courses
are accepted for college credit when formally transferred to a college or university, Petitioner does
not meet the accrediting test required by Section 1115(a)(34)(ii). Therefore, Petitioner’s sales of
textbooks to students enrolled in its courses for use in its courses do not qualify for the exemption
from sales tax for college textbooks under Section 1115(a)(34) of the Tax Law.

DATED: March 1, 1999

NOTE:

/s/
John W. Bartlett
Deputy Director
Technical Services Bureau

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.