Have you ever been fabric shopping in the district, and been (a) happily surprised or (b) disappointed that sales tax has or has not been added to your purchase?
Well, I spent some time on the phone with the New York State Sales Tax Information hotline this morning to get to the bottom of this very issue. I needed to make sure I understood it for myself.
Are you sewing for yourself or doing this non-professionally?
There is no sales tax applied if the fabric or notions you are buying are components of an item(s) you will sell for less than $110, OR WILL NOT OFFER FOR SALE AT ALL. The reason I have highlighted NOT OFFER FOR SALE AT ALL, is because making something for yourself or as a gift - therefore NO SELLING PRICE, will not be taxed, regardless of the amount of your fabric/notions purchase. Does the IRS care if you make something WORTH $1000 if you don't sell it at all? Nope. No sales tax. Boom.
Now, there are some "catches" to learn about. And they can get wildly confusing. For example: What you buy in the fabric store has to become part of the item. Is that seam ripper part of the item? Not unless you sew it on!
Need more info?
But... if you are a business:
Sales Tax Information Center 518-485-2889
Find out about registering as a sales tax vendor, filing and paying. See Sales and Use Tax.
Now look at this paragraph, and see if you don't get a headache:
Clothing, footwear, and items used to make or repair exempt clothing sold for less than $110 per item or pair are exempt from the New York State 4% sales tax, the local tax in those localities that provide the exemption, and the ⅜% Metropolitan Commuter Transportation District (MCTD) tax within the exempt localities in the MCTD. The MCTD consists of the city of New York and the counties of Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester. The exemption applies only to clothing and footwear worn by humans. It also applies to most fabric, thread, yarn, buttons, snaps, hooks, zippers, and similar items that become a physical component part of exempt clothing, or that are used to make or repair exempt clothing. The following are not eligible for exemption: • Clothing and footwear that sold for $110 or more per item or pair. • Costumes or rented formal wear. • Items made from pearls, precious or semi-precious stones, jewels, or metals, or imitations thereof, that are used to make or repair clothing eligible for exemption. • Athletic equipment. • Protective devices, such as motorcycle helmets.Also from the same NY government website:
There is no sales tax on an item of clothing or footwear that costs less than $110. An item of clothing or footwear that costs $110 or more is subject to the full 8.875% tax rate. Sales tax is calculated per item, so even if you buy two or more items that add up to $110 or more, you only pay tax on the items that individually cost $110 or more.
The following purchases are exempt from sales tax (longer list on the site):
- Medical equipment and supplies for home use
- Prosthetic aids and devices, hearing aids, and eyeglasses
- Laundry and dry cleaning services
- Shoe repair services
- Some items used to make or repair clothing and footwear
If you are having your fabric and/or notions shipped to another state or country, there are even more complications, rules, and fees to consider. Those things, I'm afraid, you will need to research yourself...
I've looked through my own receipts from the garment district myself. The only thing I've discovered, is that the vendors in the district tend to be consistent with their own policies. Either they tax EVERYTHING or tax NOTHING.
My advice?
Basically, learn and know the rules for your own situation if you want to be properly charged...
