S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7805
 
                        2025-2026 Regular Sessions
 
                           I N  A S S E M B L Y
 
                              April 11, 2025
                                ___________
 
 Introduced by M. of A. WALKER -- read once and referred to the Committee
   on Ways and Means
 
 AN  ACT  to  amend  the  tax  law,  in relation to establishing a tax on
   digital ads
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section  1.  The tax law is amended by adding a new article 15 to read
 as follows:
                                ARTICLE 15
                            TAX ON DIGITAL ADS
 SECTION 330. FINDINGS AND INTENT.
         331. DEFINITIONS.
         332. IMPOSITION OF TAX.
         333. RETURNS.
         334. TAX PAYMENT.
   § 330. FINDINGS AND INTENT. THE LEGISLATURE  FINDS  AND  DECLARES  THE
 FOLLOWING:
   1.  MANY  GOODS  AND  SERVICES THAT HAVE BEEN TRADITIONALLY SUBJECT TO
 STATE AND LOCAL SALES USE TAXES HAVE AVOIDED  TAXATION  IN  THE  DIGITAL
 ERA.    HOWEVER,  MANY DIGITAL TRANSACTIONS ARE HARDER TO BRING INTO THE
 SALES TAX BASE BECAUSE INSTEAD OF PAYING A MONETARY FEE, CUSTOMERS SOME-
 TIMES BARTER THEIR PERSONAL INFORMATION FOR ACCESS TO DIGITAL PLATFORMS.
 THIS PERSONAL INFORMATION IS IN TURN SOLD FOR USE IN TARGETED ADVERTISE-
 MENTS ON DIGITAL PLATFORMS. TO TAX THIS CONSUMPTION, LEADING TAX  ECONO-
 MISTS  HAVE  SUGGESTED USING THE RECEIPTS EARNED FROM DIGITAL ADVERTISE-
 MENTS AS A PROXY FOR THE VALUE OF THE BARTER.
   2. AS HAS BEEN NOTED BY MANY, INCLUDING THE ORGANIZATION FOR  ECONOMIC
 CO-OPERATION  AND  DEVELOPMENT, THE VALUE OF THE CONSUMPTION PROVIDED BY
 DIGITAL PLATFORMS IS TYPICALLY GREATER AS THE SIZE  OF  ITS  NETWORK  IS
 GREATER.  THE  LEGISLATURE  FINDS THAT THE CONSUMPTION VALUE PROVIDED BY
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD02007-01-5
 A. 7805                             2
              

 
 NETWORKS OF A SMALL SIZE IS NEGLIGIBLE, ESPECIALLY WHEN COMPARED TO  THE
 COMPLIANCE BURDEN THAT WOULD BE IMPOSED ON SMALLER DIGITAL PLATFORMS.
   § 331. DEFINITIONS. AS USED IN THIS ARTICLE, THE FOLLOWING TERMS SHALL
 HAVE THE FOLLOWING MEANINGS:
   1.  THE  TERM "ANNUAL GROSS REVENUES" MEANS INCOME OR REVENUE FROM ALL
 SOURCES IN NEW YORK  STATE,  BEFORE  ANY  EXPENSES  OR  TAXES,  COMPUTED
 ACCORDING TO GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
   2.  THE TERM "ASSESSABLE BASE" MEANS THE ANNUAL GROSS REVENUES DERIVED
 FROM DIGITAL ADVERTISING SERVICES IN THE STATE.
   3. THE TERM  "DIGITAL  ADVERTISING  SERVICES"  INCLUDES  ADVERTISEMENT
 SERVICES ON A DIGITAL INTERFACE, INCLUDING ADVERTISEMENTS IN THE FORM OF
 BANNER ADVERTISING, SEARCH ENGINE ADVERTISING, INTERSTITIAL ADVERTISING,
 AND OTHER COMPARABLE ADVERTISING SERVICES, THAT USE PERSONAL INFORMATION
 ABOUT THE PEOPLE THE ADS ARE BEING SERVED TO.
   4.  THE TERM "DIGITAL INTERFACE" MEANS ANY TYPE OF SOFTWARE, INCLUDING
 A WEBSITE, PART OF A WEBSITE, OR APPLICATION, THAT A  USER  IS  ABLE  TO
 ACCESS.
   5. (A) THE TERM "PERSON" MEANS ANY NATURAL INDIVIDUAL, RECEIVER, TRUS-
 TEE,  GUARDIAN, PERSONAL REPRESENTATIVE, FIDUCIARY, OR REPRESENTATIVE OF
 ANY KIND AND ANY PARTNERSHIP, FIRM, ASSOCIATION, CORPORATION,  OR  OTHER
 ENTITY.
   (B)  THE  TERM "PERSON", UNLESS EXPRESSLY PROVIDED OTHERWISE, DOES NOT
 INCLUDE A GOVERNMENTAL ENTITY OR A UNIT OR INSTRUMENTALITY OF A  GOVERN-
 MENTAL ENTITY.
   6.  THE  TERM  "USER"  MEANS  AN  INDIVIDUAL  OR  ANY OTHER PERSON WHO
 ACCESSES A DIGITAL INTERFACE WITH A DEVICE.
   § 332. IMPOSITION OF TAX. 1. THERE IS HEREBY IMPOSED AND SHALL BE PAID
 A TAX ON THE ANNUAL GROSS  REVENUES  ANY  PERSON  DERIVES  FROM  DIGITAL
 ADVERTISING SERVICES IN THE STATE.
   2. THE TAX IMPOSED SHALL BE APPORTIONED TO THE STATE BY THE APPORTION-
 MENT  FACTOR  DETERMINED  PURSUANT  TO  THIS  SECTION. THE APPORTIONMENT
 FACTOR IS A FRACTION, DETERMINED BY INCLUDING ONLY THOSE  RECEIPTS,  NET
 INCOME,  NET  GAINS,  AND OTHER ITEMS DESCRIBED IN THIS SECTION THAT ARE
 INCLUDED IN THE COMPUTATION OF THE TAXPAYER'S BUSINESS  INCOME  FOR  THE
 TAXABLE YEAR. THE NUMERATOR OF THE APPORTIONMENT FRACTION SHALL BE EQUAL
 TO  THE  SUM OF ALL THE AMOUNTS REQUIRED TO BE INCLUDED IN THE NUMERATOR
 PURSUANT TO THE PROVISIONS OF THIS SECTION AND THE  DENOMINATOR  OF  THE
 APPORTIONMENT  FRACTION  SHALL  BE  EQUAL  TO THE SUM OF ALL THE AMOUNTS
 REQUIRED TO BE INCLUDED IN THE DENOMINATOR PURSUANT TO THE PROVISIONS OF
 THIS SECTION.
   3. (A) THE ANNUAL GROSS REVENUES OF  A  PERSON  DERIVED  FROM  DIGITAL
 ADVERTISING  IN  THE  STATE  SHALL  BE  INCLUDED IN THE NUMERATOR OF THE
 APPORTIONMENT FRACTION. THE ANNUAL GROSS REVENUES OF  A  PERSON  DERIVED
 FROM  DIGITAL  ADVERTISING IN THE UNITED STATES SHALL BE INCLUDED IN THE
 DENOMINATOR OF THE APPORTIONMENT FRACTION.
   (B) THE COMMISSIONER SHALL ADOPT REGULATIONS TO DETERMINE  THE  AMOUNT
 OF REVENUE DERIVED FROM EACH STATE IN WHICH DIGITAL ADVERTISING SERVICES
 ARE PROVIDED.
   4. THE DIGITAL ADVERTISING GROSS REVENUES TAX RATE IS SEVEN PERCENT OF
 THE ASSESSABLE BASE FOR A PERSON WITH ANNUAL GROSS REVENUES DERIVED FROM
 DIGITAL ADVERTISING IN THE STATE EXCEEDING ONE HUNDRED MILLION DOLLARS.
   §  333.  RETURNS.  1. EACH PERSON THAT, IN A CALENDAR YEAR, HAS ANNUAL
 GROSS REVENUES DERIVED FROM DIGITAL ADVERTISING SERVICES IN THE STATE OF
 AT LEAST ONE MILLION DOLLARS SHALL COMPLETE, UNDER OATH, AND  FILE  WITH
 THE COMMISSIONER A RETURN, ON OR BEFORE APRIL FIFTEENTH THE YEAR FOLLOW-
 ING THE EFFECTIVE DATE OF THIS ARTICLE.
 A. 7805                             3
 
   2.  (A)  EACH PERSON THAT REASONABLY EXPECTS THE PERSON'S ANNUAL GROSS
 REVENUES DERIVED FROM DIGITAL  ADVERTISING  SERVICES  IN  THE  STATE  TO
 EXCEED ONE MILLION DOLLARS SHALL COMPLETE, UNDER OATH, AND FILE WITH THE
 COMMISSIONER  A  DECLARATION  OF  ESTIMATED  TAX,  ON  OR  BEFORE  APRIL
 FIFTEENTH OF THAT YEAR.
   (B)  ANY  PERSON REQUIRED TO FILE A DECLARATION OF ESTIMATED TAX FOR A
 TAXABLE YEAR PURSUANT  TO  PARAGRAPH  (A)  OF  THIS  SUBDIVISION,  SHALL
 COMPLETE AND FILE WITH THE COMMISSIONER A QUARTERLY ESTIMATED TAX RETURN
 ON OR BEFORE JUNE FIFTEENTH, SEPTEMBER FIFTEENTH, AND DECEMBER FIFTEENTH
 OF SUCH YEAR.
   3. ANY PERSON REQUIRED TO FILE A RETURN PURSUANT TO THIS SECTION SHALL
 FILE  WITH THE RETURN AN ATTACHMENT THAT STATES ANY INFORMATION THAT THE
 COMMISSIONER REQUIRES TO DETERMINE ANNUAL GROSS  REVENUES  DERIVED  FROM
 DIGITAL ADVERTISING SERVICES IN THE STATE.
   4.  ANY PERSON REQUIRED TO FILE A RETURN UNDER SUBDIVISION TWO OF THIS
 SECTION SHALL MAINTAIN RECORDS OF DIGITAL ADVERTISING SERVICES  PROVIDED
 IN  THE STATE AND THE BASIS FOR THE CALCULATION OF THE DIGITAL ADVERTIS-
 ING GROSS REVENUES TAX OWED.
   § 334. TAX PAYMENT. 1. EXCEPT AS PROVIDED IN SUBDIVISION TWO  OF  THIS
 SECTION,  EACH  PERSON  REQUIRED  TO  FILE  A RETURN UNDER SECTION THREE
 HUNDRED THIRTY-THREE OF THIS ARTICLE SHALL PAY THE  DIGITAL  ADVERTISING
 GROSS  REVENUES TAX WITH THE RETURN THAT COVERS THE PERIOD FOR WHICH THE
 TAX IS DUE.
   2. ANY PERSON REQUIRED TO FILE  ESTIMATED  DIGITAL  ADVERTISING  GROSS
 REVENUES  TAX  RETURNS UNDER PARAGRAPH (B) OF SUBDIVISION TWO OF SECTION
 THREE HUNDRED THIRTY-THREE OF THIS ARTICLE SHALL PAY:
   (A) AT LEAST TWENTY-FIVE PERCENT OF THE ESTIMATED DIGITAL  ADVERTISING
 GROSS REVENUES TAX SHOWN ON THE DECLARATION OR AMENDED DECLARATION FOR A
 TAXABLE YEAR:
   I.  WITH  THE DECLARATION OR AMENDED DECLARATION THAT COVERS THE YEAR;
 AND
   II. WITH EACH QUARTERLY RETURN FOR THAT YEAR; AND
   (B) ANY UNPAID DIGITAL ADVERTISING GROSS REVENUES  TAX  FOR  THE  YEAR
 SHOWN ON THE PERSON'S RETURN THAT COVERS THAT YEAR WITH THE RETURN.
   §  2.  The  tax law is amended by adding a new section 1816 to read as
 follows:
   § 1816. DIGITAL AD TAX. ANY WILLFUL ACT  OR  OMISSION  BY  ANY  PERSON
 WHICH  CONSTITUTES  A  VIOLATION  OF ANY PROVISION OF ARTICLE FIFTEEN OF
 THIS CHAPTER SHALL CONSTITUTE A MISDEMEANOR.
   § 3. This act shall take effect immediately and shall apply to taxable
 years beginning on and after January 1, 2026.