Summary of 2023 sales and other tax type changes

the expansion of the definition of adult-use cannabis product,
clarification on when the Tax Department may refuse or revoke an adult-use cannabis certificate of registration, and
inclusion of a penalty for unregistered distributors and an increase in civil penalties for illicit cannabis.

For more information, see Adult-use cannabis products tax and Subscribe to Adult-use cannabis to receive updates by email when new information is available on the Tax Department’s website.

[Part UU of Chapter 56 of the Laws of 2023; Tax Law §§ 492(a), 492(g), 494, 496, 496-c, 496-d, 496-e, and 1801(a)(9)]

Increase in the excise tax rate on cigarettes and little cigars, and floor tax return requirement (Article 20)

Effective September 1, 2023, the New York State excise tax on cigarettes and little cigars increased by $1.00 per pack of 20.

If you are a retail dealer, wholesale dealer, or cigarette stamping agent and owe the cigarette floor tax, you must file Form CG-11, Cigarette Tax Floor Tax Return, and pay the tax due by November 20, 2023.

For more information, see:

Notice N-23-2, New York State Excise Tax on Cigarettes to Increase on September 1, 2023
Notice N-23-3, New York State Excise Tax on Little Cigars to Increase on September 1, 2023
Form CG-11 and its instructions

[Part S of Chapter 59 of the Laws of 2023; Tax Law §§471 and 471-a]

Increased civil penalty for refusal to comply with cigarette and tobacco products inspections (Article 20)

If you are a retail dealer of cigarettes or tobacco products, you must allow the Tax Department to examine your books, invoices, equipment and inventory when requested. If you refuse, the Tax Department may revoke your retail dealer certificate of registration as follows:

First violation—Your certificate of registration may be revoked for one year.
Second violation within five years—Your certificate of registration may be revoked for up to three years.
Third and subsequent violation within seven years—Your certificate of registration may be revoked for up to 10 years.

Any person who sells cigarettes and tobacco products at retail without possessing a valid certificate of registration and refuses to allow an inspection, will be subject to a penalty, after notice and an opportunity for a hearing, of up to:

$4,000 for the first refusal, and
$8,000 for a second or subsequent refusal within three years of a prior refusal.

[Part T of Chapter 59 of the Laws of 2023; Tax Law §§474 and 480-a]

Elimination of the congestion surcharge registration requirement (Article 29-C)

Effective May 3, 2023, the registration requirement for the congestion surcharge was eliminated. As of this date, those subject to the congestion surcharge do not need to obtain or renew a Congestion Surcharge Certificate of Registration .

Any registration fees paid before May 3, 2023, will not be refunded.

For more information, see Congestion surcharge.

[Part P of Chapter 59 of the Laws of 2023; Tax Law §1299-C]

Amendment to motor fuel and diesel motor fuel requirements (Articles 12-A, 13-A, and 28)

Effective for sales of motor fuel and diesel motor fuel on or after September 1, 2023, distributors must pay any of the following taxes that have not already been assumed or paid on any quantity of these fuels for any reason, including, but not limited to, the expansion of fuel due to temperature fluctuation:

motor fuel excise tax,
petroleum business tax, and
prepaid sales tax

These taxes must be remitted to the Tax Department with the motor fuel, diesel motor fuel, and prepaid sales tax returns filed for the period when the sale was made.

[Part Q of Chapter 59 of the Laws of 2023; Tax Law §§ 285-a(4), 285-b(5), 308(j), and 1102(g)]

Extension of the vending machine exemption for candy, fruit drinks, soft drinks and bottled water (Article 28)

The exemption for certain candy, fruit drinks, soft drinks and bottled water sold from vending machines is extended to May 31, 2024.

Currently, candy, fruit drinks, soft drinks and bottled water are exempt if:

sold for $1.50 or less from vending machines that accept cash and/or coins only, or
sold for $2.00 or less from vending machines that accept forms of payment other than cash and/or coins, whether or not it also accepts cash and/or coins.

For more information, see Tax Bulletin Food Sold from Vending Machines (TB-ST-280).

[Part R of Chapter 59 of the Laws of 2023; Tax Law §§ 1105(a), 1105(d)(i)(3), and 1115(a)(1)]

Extends various commercial property and sales tax incentives in Lower Manhattan for four years (Article 28)

The sales and use tax (sales tax) exemptions on certain purchases of tangible personal property and services related to leased commercial office space in two eligible areas in lower Manhattan (Eligible Area A and Eligible Area B) are extended for four years.

For Eligible Area A, the date a qualifying commercial lease must be entered into by was extended to September 1, 2027. The sales tax exemptions for Eligible Area A continue to apply until December 1, 2028.

For Eligible Area B, the date a qualifying commercial lease must be entered into by was extended to September 1, 2029. The sales tax exemptions for Eligible Area B continue to apply until December 1, 2030.

For information about this exemption, including a description of Eligible Area A and Eligible Area B, see TSB-M-05(12)S, Sales and Use Tax Exemptions on Certain Purchases of Tangible Personal Property and Services for Leased Commercial Office Space in Lower Manhattan.

[Part AA of Chapter 55 of the Laws of 2023; Tax Law § 1115(ee)]

Extension of reduced real estate transfer tax rate for real estate investment trusts (Article 31)

The reduced real estate transfer tax rate for conveyances of real property to real estate investment trusts (REIT) is extended to September 1, 2026.

To understand which REIT transfers qualify for the reduced rate, see Form TP-584-REIT, Combined Real Estate Transfer Tax Return and Credit Line Mortgage Certificate for Real Estate Investment Trust Transfers.

[Part U of Chapter 59 of the Laws of 2023; Tax Law §§ 1402(b)(2)(B) and 1201(b)(xi)]

Waste tire management fee (Environmental Conservation Law Article 27; Tax Law Article 28)

The waste tire management fee is extended until December 31, 2025. In addition, the way you report and pay your waste tire management fee has changed.

Effective for the filing periods beginning on or after March 1, 2023, you may no longer file a separate waste tire management fee return each quarter. Instead, you must report and pay the waste tire management fee on your sales tax return.

The due dates for filing and paying the waste tire management fee are now consistent with the sales tax filing periods. For sales tax filing periods and due dates, see Filing Requirements for Sales and Use Tax Returns.

[Part MM of Chapter 58 of the Laws of 2022; Tax Law Article 28; Environmental Conservation Law Article 27]

Menstrual products (Article 28)

The sales tax law was amended to replace the words or variations of the words feminine hygiene products and sanitary napkins with the words or a variation of words menstrual products and pads, respectively.

The exemption from state and local sales and use taxes for these products is otherwise unchanged.

[Chapter 650 of the Laws of 2023; Tax Law § 1115(a)(3-a)]

Allow the Tax Department to appeal certain Tax Appeals Tribunal decisions (Article 40)

The Tax Department can now seek judicial review of Tax Appeals Tribunal decisions involving interpretations of:

the state or federal constitution,
federal law,
laws of other states,
international law, or
legal matters that are beyond the reach of the state legislature.

Interest and penalty will not accrue from the date the Tax Department appeals a Tribunal decision until 15 days after a final decision is issued.

[Part V of Chapter 59 of the Laws of 2023; Tax Law § 2016]

Updated: January 4, 2024