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 ExcimerLaser 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.


About Davis Davis & Harmon LLC – Sales Tax Experts: Headquartered in Dallas, Texas, Davis Davis & Harmon LLC – Sales Tax Experts specializes in sales/use tax refund recovery and audit defense. Our team of consultants is comprised of former Big 4 sales tax consultants and state sales tax auditors. Each of our consultants has 15 to 20 years of experience, providing our clients with access to a highly specialized team of sales/use tax professionals. At Davis Davis & Harmon, LLC, we are committed to maintaining the highest standards in our talent pool. We work hard to meet our clients’ needs by ensuring that you view our firm as an extension of your company and a member of your team.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.