New York Division of Tax Appeals determines separately stated patent license fees not subject to sales tax

July 2014


On June 19 2014, a New York State Division of Tax Appeals administrative law judge (ALJ) held that patent license fees related to the sale of laser medical devices were not subject to sales tax because the licenses were executed independently from the purchases of the lasers, the license fees were separately stated and reasonable in relation to the total price, and the sales agreement clearly stated that patent rights were not part of the sale of the tangible personal property.

Companies granting rights to perform patented procedures together with the sale of tangible personal property in New York, should evaluate their current sales tax filing position based on the reasoning in this decision. [AMO USA, Inc., New York Division of Tax Appeals, Administrative Law Judge Unit, DTA No. 824550, 06/26/2014]

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