A taxpayer’s sales of electronic books (e-books) are not subject to New York sales and use tax because the e-books are not tangible personal property and do not constitute information services. E-books purchased through the taxpayer’s electronic bookstore are delivered electronically via the Internet to customers and are stored on the customer’s personal electronic devices, including tablets and smart-phones. Customers are then able to view and read the e-books on certain electronic devices.
The taxpayer’s e-books are not tangible and do not include any prewritten computer software. Accordingly, they do not constitute tangible personal property. As to whether the e-books constitute taxable information services, a memorandum issued by the Department of Taxation and Finance (TSB-M-11(5)S) provides that the department’s current position is that electronic publications that meet the memorandum’s definition of an e-book do not constitute information services. (TAXDAY, 2011/04/08, S.29) Here, the taxpayer represents that all of its e-books meet this definition. Based on that representation, the taxpayer’s e-books are not taxable as information services under the department’s current policy.
TSB-A-11(20)S, New York Commissioner of Taxation and Finance, July 8, 2011