United States

New York: No Sales Tax Consequences for Bathroom App

May 01, 2017
From KPMG TaxWatch

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Recently, the New York Department of Taxation and Finance addressed whether there are any sales tax consequences associated with an innovative business idea. The taxpayer at issue is in the process of developing a mobile phone application or app that would match users with bathrooms—for a fee of one to two dollars. The app would be provided free of charge to smartphone users. Once downloaded, users could use the app to purchase a ticket to use a bathroom at a participating location such as a bar or restaurant. The taxpayer would collect the fee from customers and subsequently pay a portion of the fee to the participating location.

The Department concluded that the taxpayer’s proposed business idea would not have any sales tax consequences. The app, although tangible personal property, would not be subject to sales tax because it would be provided to users free of charge. In addition, matching users with bathrooms is not a specifically enumerated service or an admission to a taxable amusement under New York law. The advisory opinion did not address any potential use tax consequences. Please contact Judy Cheng at 212-872-3530 with questions.

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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.