Can a vendor collect the 4% state sales tax using its own bracket schedule instead of the one the Tax Commission prescribes?

Plain-English summary

J. E. Vanderbilt & Co., Inc. asked whether a vendor may collect the 4% State sales tax using a bracket schedule different from the one the Tax Commission promulgated.

The Department held the vendor must use the prescribed schedule — no deviation.

• The tax is 4% statewide. Section 1105 imposes a statewide sales tax of four percent.
• The Commission sets the collection schedule. To avoid making vendors collect fractions of a cent, § 1132(b) directs the Tax Commission to prescribe by regulation the amounts to be collected from customers, and it may provide that no tax is collected below a stated sum.
• The schedule is 20 NYCRR 530.14. For a 4% tax: on purchases of $1 or more, the tax is 4% of the price, with a fraction of a cent dropped if under a half-cent and rounded up to a full cent if a half-cent or more; on purchases under $1, a fixed table applies — none on $0.01–$0.12, 1¢ on $0.13–$0.33, 2¢ on $0.34–$0.58, 3¢ on $0.59–$0.83, and 4¢ on $0.84–$0.99.
• It's mandatory. The regulation requires collecting the tax by that schedule "and at no other rate," so the vendor must compute the tax at 4% under it. No provision of the Tax Law permits a different schedule.

What this means for you

Use the official bracket schedule exactly. Vendors don't get to design their own rounding or bracket method for the state sales tax. The Tax Commission's schedule (20 NYCRR 530.14) is the required method, and the Department will not accept a substitute.

The under-$1 brackets are fixed cents, not a percentage. For small sales, the tax is the flat amount in the bracket table, and there's a de minimis floor (no tax up to $0.12). Program your point-of-sale system to the published brackets rather than applying a raw 4% and rounding your own way.

This is a compliance rule, not a planning choice. There's no statutory room to deviate. If your system's rounding differs from the schedule, correct it to match 20 NYCRR 530.14.

Common questions

Q: Can I round the sales tax my own way to avoid fractions of a cent?
A: No. Section 1132(b) puts the rounding/bracket method in the Tax Commission's hands, and 20 NYCRR 530.14 requires collecting the tax by that schedule "and at no other rate."

Q: How is the tax figured on a sale under $1?
A: By the fixed bracket table — no tax up to $0.12, 1¢ on $0.13–$0.33, 2¢ on $0.34–$0.58, 3¢ on $0.59–$0.83, and 4¢ on $0.84–$0.99.

Q: And on a sale of $1 or more?
A: The tax is 4% of the price; drop a fractional cent under a half-cent, and round up to a full cent when the fraction is a half-cent or more.

Citations and references

Statutes, regulations and authority:

• Tax Law § 1105 — imposes the statewide 4% sales tax
• Tax Law § 1132(b) — directs the Tax Commission to prescribe by regulation the schedule of amounts to be collected from customers
• 20 NYCRR 530.14 — the four-percent bracket schedule; tax must be collected by that schedule and at no other rate

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1981.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/h81_85s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-H-81(85)S
Sales Tax
April 21, 1981

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

PETITION NO. S810128B

On January 28, 1981, a Petition for Advisory Opinion was received from J.
E. Vanderbilt & Co., Inc., 41 Demarest Avenue, New City, New York 10956.
The issue raised is whether a vendor may collect the 4% State sales tax by
utilizing a bracket schedule different from that promulgated by the Tax
Commission.
Section 1105 of the Tax Law imposes a statewide sales tax of four per cent.
In order to avoid any requirement that tax in an amount measured in fractions of
a cent be collected, section l132(b) of the Tax Law provides, in relevant part,
that: . . .(b) The tax commission shall by regulation prescribe a method or
methods or a schedule or schedules of the amounts to be collected from customers
in respect to any receipt. . .upon which a tax is imposed by this article. . .
. Such schedule or schedules may provide that no tax need be collected from the
customer upon receipts. . .below a stated sum. . . ." Pursuant to such provision
of law, the Tax Commission has promulgated such a regulation, as follows:
"Reg. Sec. 530.14. Four Percent Bracket Schedule. –- The following is
applicable where a tax of four percent is imposed: Four percent New York State
and combined four percent New York State and local tax
On purchases of one dollar or more, the tax is four per cent of the
purchase price. Where the tax to be paid includes a fraction of one cent, the
fraction shall not be paid where it is less than one-half cent and a full cent
shall be paid where the fraction is one-half cent or more.
On purchases of less than one dollar the following schedule is applicable:
Amount of
Sale
$0.01 to $0.12
.13 to
.33
.34 to
.58
.59 to
.83
.84 to
.99

Tax to Be
Collected
None
l¢
2¢
3¢
4¢" 20 NYCRR 530.14.

Inasmuch as the provision of the Sales and Use Tax Regulations set forth
above requires the collection of tax according to the schedule set forth therein,
and at no other rate, Petitioner must compute tax due at the rate of 4% pursuant
to such schedule. The Tax Law contains no provision which would permit a
deviation from this requirement.

DATED: April 6, 1981

s/LOUIS ETLINGER
Deputy Director
Technical Services Bureau

JAMES H. TULLY, JR., COMMISSIONER
LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR
TP-8 (4/80)