New York: Laser Sales Exemption Decision Overturned
NY: New York State Tax Appeals Tribunal (TAT) reversed the decision of an Administrative Judge(ALJ) who wrongly found that a dermatology manufacturer (taxpayer) prohibited the sale of Excimer: Laser equipment was non-taxable. The taxpayer made lasers available to physicians under a user agreement at no upfront cost; however, the taxpayer sold the treatment codes to the physicians. The ALJ determined that taxpayer sales of treatment codes based on usage agreements are not subject to sales tax because these agreements do not constitute leases or licenses to use the laser equipment.
The Department of Taxes appealed the ALJ’s finding, arguing that the transactions in question were taxable because the user agreements involved a transfer of possession of tangible personal property for consideration in the form of treatment fees. The TAT found that the ALJ ignored the language in the usage agreements, which clearly stated that the taxpayer’s customers were licensed to use the excimer laser equipment. The taxpayer transferred ownership of your laser equipment in exchange for compensation through payments for customers’ purchase of treatment codes. This enabled the customers to use the laser device for treatments.
Therefore, the TAT found no contradiction between the form and content of the user agreements and their execution. In addition, contrary to the taxpayer’s contention that the true purpose of the user agreements was to provide integrative therapy services, the taxpayer’s customers sold therapeutic services using the instruments made available to them. Consequently, the department granted the application, and the ALJ’s decision was overturned.
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