Sales Tax on product protection plans?

Question

Can stores charge sales tax on the protection plans they offer with their products?
For example: Cordless Phone=$30, Protection plan=$7, can they charge tax on the whole purchase including the plan which would be $37, or on just the phone price of $30?

I live in NY state

Answer 1

The taxation of service contracts varies by state.

Also, it is not the the "can" charge sales tax; it is that they "must" charge sales tax. The store doesn't keep that money. It gets remitted to the state.

Answer 2

Different states handle this differently. What state are you in? In PA, it is taxable.