Most Party City Items Are Tax Exempt, New York Court Says

A majority of disputed items sold by Party City Corp. stores were identified as clothing or footwear in sales receipts and are therefore eligible for a sales and use tax exemption, the New York Division of Tax Appeals said in an opinion released Thursday.

Upon reviewing Party City receipts that included inventory descriptions, an administrative law judge identified hundreds of products as clothing items with a price tag under $110, which are exempted from the sales tax under Tax Law Section 1115(a)(30). The state tax agency was wrong to identify all of the 350 disputed materials as costume items, ...