New York tax law imposes sales tax on the receipts of every retail sale of tangible personal property.1 A “sale” is defined as “any transfer of title or possession or both, exchange or barter, rental, lease or license to use or consume…conditional or otherwise, in any manner or by any means whatsoever for a consideration or any agreement therefor….”2 The definition of a sale is extremely broad and appears to cover any imaginable scenario.
On Jan. 29, 2014, the New York State Department of Taxation and Finance (DTF) issued an advisory opinion concluding that a substitution of property between a grantor and a grantor trust constituted a transfer for consideration, and therefore the New York sales and use taxes were applicable to the transfer.3 The commissioner held that “[i]f there is consideration given in any form in connection with the transfer, a retail sale of tangible property occurs and sales tax is imposed.”4 Consideration is present if an individual receives something of value in the transfer (i.e., if it’s not a gift, it’s a sale).5
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