ALBANY, N.Y. (AP) — A midlevel New York court has reversed the state’s Tax Appeals Tribunal and concluded United Parcel Service’s free shipping supplies to customers qualify as promotional materials exempt from state sales and use tax.
UPS, seeking a $2.7 million tax refund, says the boxes, envelopes and labels used to ship items as part of its air freight operation carried labels and logos promoting that service.
The Appellate Division majority says the supplies, provided free as part of a welcome kit to new customers, satisfy the ordinary meaning of “promotional materials” that generally consist of advertising materials and free gifts.
The three justices say they qualify under both categories.
A dissenter says they are clearly shipping supplies, and the Tax Appeals Tribunal’s interpretation was reasonable and should be upheld.
