An out-of-state corporation’s charges to its restaurant franchisees located in New York for faxes, online order charges, initial software installation and loyalty rewards hosting are not subject to New York sales tax. However, charges associated with miscellaneous hardware, hardware to support an Internet connection, initial hardware installation and ongoing IT support are all subject to sales tax. Charges associated with shipping are subject to sales tax if the item being shipped is being sold in a taxable transaction. Charges associated with franchise fees and royalty fees are not subject to sales tax. Charges for marketing fees are subject to sales tax because they include tangible personal property and nontaxable services for a single charge.
TSB-A-16(21)S, New York Commissioner of Taxation and Finance, May 27, 2016, ¶408-783