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Tax Law

New York Bill Would Expand Sales Tax Base to Digital Advertising Services

On April 13, 2020, legislation (S.8166) was introduced in the New York State Senate that would expand the sales tax base to digital advertising services. “Digital advertising services” is defined as “advertisement services on a digital interface, including advertisements in the form of banner advertising, search engine advertising, interstitial advertising, and other comparable advertising services which markets or promotes a particular good, service, or political candidate or message.”

S.8166 is the second digital advertising tax bill to be introduced in the New York State Senate this session. In March, legislation (S.8056) was introduced that would establish a tax similar to the digital advertising gross revenues tax that recently passed the Maryland General Assembly. But, unlike S.8056, the sales tax expansion would not be limited to advertisements “that use personal information about the people the ads are being served to.” Rather, the tax base is advertisements that “market” or “promote” “a particular good, service, or political candidate or message.” (This language was previously used in Nebraska’s attempt to expand its sales tax base to digital advertisements.)

If passed, the tax’s revenue would be paid into a special fund for providing zero interest refinancing of eligible undergraduate education loans by the higher education services corporation. The act would sunset after 5 years.