A reminder to all software and web developers located in New York: purchasing, renting, or leasing qualified computer hardware exempt is exempt from sales tax if certain qualifications are met. The exemption applies to the purchasers if the services performed on the qualified hardware are predominantly (think 50% or more) involved in the design and development of computer software, websites, or a combination of both services.
New York has a long list of qualifying sales-tax-exempt computer system hardware which can be found here, but the common thread is that most physical components and embedded software are eligible for the exemption. If a taxpayer is in the business of performing the two services above it is in their best interest to complete New York Form ST-121.3 “Exemption Certificate for Computer System Hardware” and present it to the vendor at time of purchase.
Please be aware: New York does not take sales tax exemptions lightly and if a taxpayer is caught erroneously utilizing this exemption the state has recourse in the form of: a penalty equal to 100% of the tax due; a $50 penalty for each fraudulent exemption; and criminal felony prosecution which could result in a jail sentence. We highly recommend that if you are considering utilizing this exemption that you reach out to your respective tax professional.