- November 14, 1994
- All Branch Managers, Counsel and Agents
- Imposition of New York State Sales Tax on Certain Searches
In a recent letter issued by William Collins, Deputy Commissioner and Counsel to the New York State Department of Taxation and Finance, certain types of searches performed by title companies and agents may be subject to New York State sales taxes as of December 1, 1994. Although the letter excluded "real property searches" from taxation, other services such as judgment, UCC and tax searches would be subject to the imposition of sales tax pursuant to Section 1105(C)(1) of the Tax Law.
There has been no clear direction provided by the Department on this very controversial issue, and as a result, it has created a great deal of confusion in the title industry. Mark Klein, of the law firm of Hodgson, Russ, Andrews, Woods & Goodyear, who has had discussions with the Department on this subject, suggested that a search of the land records which results in the production of an abstract of title, will not be subject to tax. On the other hand, a search which becomes a product in its own right (i.e., a special UCC search or simple name search for judgments) would be taxable.
This Company (along with other industry representatives) is attempting to obtain a clarification of the Department's position on the sales tax issue, as well as a delay in its implementation. Given the results of the recent gubernatorial election, the position of the Department could change. Nevertheless, we should be prepared for the worst case scenario, i.e., that the sales tax will take effect on December 1, and that title companies and agents will be required to collect sales tax on searches which they perform. It is strongly suggested that payment for any special search work be obtained prior to or at the time the search is delivered. Furthermore, it is recommended that all agents register as vendors of search services with the Department of Taxation and Finance prior to December 1 by filing a registration statement. The law firm of Hodgson, Russ, Andrews, Woods & Goodyear has agreed to coordinate the filing of registration statements for all NYSLTA members. For information regarding registration packets, you can write or call Mr. Klein's secretary:
Hodgson, Russ, Andrews, Woods & Goodyear
1800 One M&T Plaza
Buffalo, NY 14203
Should you have any questions regarding this matter, please contact Company
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