Taxing Exemptions
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

Stores in the city are assessing customers sales tax on items that are exempt from taxation. So says a new report by the City Council, and we don’t hesitate to believe it. How are merchants supposed to keep things straight in a system where ponchos are exempt from taxation, yet umbrellas are encumbered? While any relief from this irksome levy is welcome to New Yorkers, the rules for exempting clothing and footwear (and items used to make or repair exempt clothing) from the state and local sales taxes are ridiculously complex and illogical (please see accompanying chart). Confusion is bound to result, and taxes are bound to be mis-assessed. The question is how the chairs of the Committee on Oversight and Investigations and the Committee on Consumer Affairs, Eric Gioia and Philip Reed, who signed the report, have managed to sound surprised.
Give Messrs. Gioia and Reed this though, they’ve come to the table with a solution — a bill requiring merchants to post signs near the cash register listing non-taxable items. Businesses will need quite a bit of blank wall space. The exemption list takes up at least a full typed page (“aerobic clothing … antique clothing … aprons …”). We also hope their customers aren’t in a hurry. More complex still is the method for calculating whether one’s purchase falls into the exempt basket monetarily. Generally, items sold for under $110 are exempt. But what if a delivery charge brings the price of an item that was under the $110 mark above it? The customer gets lucky here, for delivery charges are disregarded in this scenario. Does the same go for items put on layaway? It seems not. And don’t even ask about exchanges and coupons.
It is difficult to tell how widespread the problem is. The study found that 60% of stores in Manhattan improperly charge sales tax, 20% in Brooklyn, 20% in the Bronx, 30% in Staten Island, and 40% in Queens. However, the investigation undertaken by the City Council only sampled 10 stores in each borough, making the results somewhat tenuous. And if anything, compliance is improving. Out of four City Council studies on the topic, this most recent found by far the lowest number of stores fouling up their sales tax collecting. Furthermore, citizens can reclaim excise paid in error. According to the New York State Department of Taxation and Finance, one need only fill out Form AU-11, Application for Credit or Refund of Sales or Use Tax. It would be a lot simpler, though, if the city required merchants to post a list of items not exempt from the sales tax, as well as a list of stores carrying such items in New Jersey.