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New York Assembly proposes retail delivery fee in budget
March 2023
In brief
The New York Assembly has proposed in its budget tax bill (A. 3009B, Part JJ) a $0.25 fee on each “delivery transaction” made within New York, beginning September 1, 2023.
The takeaway: The Assembly budget proposal has several provisions not included in the Governor’s Executive Budget or the Senate budget proposal, including the retail delivery fee and a proposed sales tax on digital products. These provisions will be negotiated between the Governor, Assembly, and Senate. The final budget, while due by April 1, may be delayed in light of differing views among these parties.
For consideration: Colorado has implemented a similar retail delivery fee program (see PwC’s Insight for more information). The Colorado fee has proven difficult to collect due to tax technology hurdles and complexity in applying a transaction tax to “deliveries.” The New York proposal could raise similar issues and introduce additional complexities by excluding various products, purchasers, and modes of transportation from the fee.
In detail
Fee, registration requirements
A “delivery transaction” is defined as a transaction that results in the delivery of “personal tangible property” from a retail sale. The bill provides that the fee “shall be passed along to the purchaser and separately stated on any receipt that is provided to such purchaser.” However, liability for the fee would remain with the seller, including a marketplace provider and marketplace seller (unless the marketplace provider collects the fee on the marketplace seller’s behalf).
The fee would include new registration requirements for fee-payers and provisions for the suspension or revocation of such registrations for various causes, including willfully violating any provisions under the retail delivery fee article or any related rule or regulation. Every person liable for the fee would be required to file a return (separate from the sales tax return) on a monthly basis.
The bill includes a penalty equal to 200% of the total fee liability on any person that fails to pay the fee when due. The penalty would not apply if “it is shown that such failure is due to reasonable cause and not due to willful neglect.”
Exclusions
The fee would not be imposed on deliveries of:
- Drugs and medicines intended for use, internally or externally, in the cure, mitigation, treatment, or prevention of illnesses or diseases in human beings, medical equipment, including component parts thereof, and supplies required for such use or to correct or alleviate physical incapacity, and products consumed by humans for the preservation of health but not including cosmetics or toilet articles notwithstanding the presence of medicinal ingredients therein or medical equipment, including component parts thereof, and supplies, other than such drugs and medicines, purchased at retail for use in performing medical and similar services for compensation.
- Diapers intended for human use including disposable, reusable, adult, and children's diapers.
- Baby formula intended for feeding infants.
- Any food or food products.
The fee also does not apply to “any purchaser using the supplemental nutrition assistance program, special supplemental nutrition program for women, infants and children, or any successor programs as full or partial payment for the items purchased where all items purchased in the delivery transaction are purchasable using such programs.”
Further, the fee’s provisions would not apply to any delivery transaction related to:
- Operating over a rural route and engaging exclusively in the transportation of US mail under contract; or
- [Vehicles] owned and operated by the United States, New York, or any other state or any county, city, town, or municipality in New York or any other state or by any agency or department thereof.
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