The New York Department of Taxation and Finance recently ruled that convenience fees for credit card purchases are taxable.
The taxpayer was a club that charged a convenience fee when members or other guests made credit card payments on purchases of tangible personal property. Convenience fees are designed to offset lost revenue from the cost of processing credit card payments.
New York taxes the receipts from sales of tangible personal property and certain services. New York defines "receipts" to include expenses incurred by the seller. A convenience fee is an expense of the seller and is therefore part of the taxable receipts. However, when a purchase includes taxable and nontaxable items, tax only applies to the portion of the convenience fee attributable to the taxable items.