In an advisory opinion, the New York State Department of Taxation and Finance has concluded that a California seller’s sales of e-books are not subject to sales and use tax (TSB-A-11(20)S).     The e-books available for download are primarily copyrighted materials, licensed for distribution by the seller. While formatting and layout of the text in the e-books may differ from the printed version, the informational content will not differ in any substantial respect. Like the printed counterparts, the e-books may be updated in subsequent printings (e.g., to correct typos), but are otherwise static. Also like the printed versions, the e-books may be republished in future editions, but the purchase of updated copies is generally a separate transaction, unrelated to the prior purchases of earlier editions.     Because these e-books are not tangible and do not include any prewritten software, they are not tangible personal property.   A recent announcement of policy (TSB-M11[5]S) sets forth the state Department of Taxation’s definition of an e-book:  

• The purchase of the product does not entitle the customer to additional goods and services, and any revisions made to the e-book are for the limited purpose of correcting errors
• The product is provided in a single download
• The product is advertised or marketed as an e-book (or similar term)
• If the intended or customary use of the product requires that it be updated, or that a new or revised edition be issued (e.g., an almanac), the revisions are not issued more frequently than once each year, and
• The product is not designed to work with software other than the software necessary to make the e-book legible on a reading device.

  Because the seller’s e-books meet this definition, New York State concludes that they are not taxable as informational services.      

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