The New York State Department of Taxation and Finance (DTF) recently issued Advisory Opinion TSB-A-24(1)S in response to a request for an advisory opinion. The Petitioner sought clarification on whether sales tax is imposed on its receipts from the sales and installations of commercial lighting fixtures.
The DTF concluded that the Petitioner must pay sales or use tax on fixtures sold on an installed basis if the installation occurs in New York. The Petitioner must also collect sales tax on fixtures sold without installation when the fixtures are delivered within New York State.
Sales Tax Implications for Fixture Sales
The Petitioner is a New York-based corporation selling commercial lighting fixtures. They sometimes offer installation services. Orders are processed through the company's New York office. The fixtures are sourced from affiliated manufacturers in Europe. After completing a sale, the fixtures are transported to customers. When customers arrange for shipment, the Petitioner does not have information about the shipping method or delivery location.
The company provided two representative purchase orders. One included installation of the fixtures, and the other did not. Both purchase orders identified the place where the fixtures would ultimately be delivered and installed.
Sales Tax Obligations Based on Transportation Arrangements
The DTF's analysis focused on where the transfer of possession and control of the fixtures occurred. The key factors were whether the Petitioner arranged the transportation and whether the point of delivery was within New York State.
If the Petitioner was involved in delivering the fixtures to a New York destination, the sales would be considered to be taxable because they occurred within the state. Conversely, if the customer took possession outside New York and arranged all transportation without the Petitioner's involvement, the sales were not subject to New York sales tax.
Situations Where Sales Tax Is Assessed
When the Seller Arranges All Transportation with Common Carriers
In this scenario, the customer takes title to the fixture at the European factory dock. The Petitioner arranges all transportation using common carriers to deliver the fixture to the installation site in New York State.
Per New York Tax Law §1101(b)(3), a "sale" includes any transfer of title or possession of tangible personal property. Tax Law § 1101(b)(7) defines the "point of delivery" or "point at which possession is transferred" as the location where the purchaser or their designee obtains control of the property.
Since the Petitioner arranges the transportation and the fixtures are delivered to a New York destination, the point of delivery is within New York State. Thus, the Petitioner must collect New York State and local sales tax on these transactions.
When the Seller Arranges All Transportation with Private and Common Carriers
Here, the customer takes title at the European factory dock. The Petitioner arranges all transportation. A private carrier transports the fixture from the factory to the European seaport. From there, it’s delivered by common carriers to New York State. The Petitioner's role in arranging transportation to a New York destination establishes the point of delivery within the state.
Per Tax Law §§ 1101(b)(3) and 1101(b)(7), and under the imposition of sales tax in § 1105(a), the Petitioner must collect sales tax because the transfer of possession occurs in New York when the fixtures are delivered to the customer.
When the Seller Arranges All Transportation with Common and Private Carriers
In this scenario, the customer takes title at the European factory dock, and the Petitioner arranges all transportation. Common carriers transport the fixture to the New York port. A private carrier delivers it to the installation site in New York State. The Petitioner's involvement in arranging transportation to the final destination in New York makes the point of delivery within the state.
According to Tax Law §§ 1101(b)(3) and 1101(b)(7), the sale is deemed to occur in New York. Therefore, the Petitioner must collect New York State and local sales tax on selling the fixtures delivered and installed within the state.
Situations Where Sales Tax Is Not Assessed
When the Customer Arranges All Transportation with Common Carriers
In this case, the customer takes title to the fixture at the European factory dock and arranges all transportation using common carriers to deliver the fixture to the installation site. The installation site may be within or outside New York State.
Under Tax Law § 1101(b)(3), since the sale and transfer of title and possession occur outside New York. Tax Law § 1101(b)(7) states that the point of delivery is where the purchaser obtains control of the property. Since the Petitioner does not participate in transportation within the state, the sale is not subject to New York sales tax.
When the Customer Arranges All Transportation with Private and Common Carriers
Here, the customer takes title at the factory dock in Europe and arranges transportation using a private carrier to the European seaport and common carriers after that to the installation site. Since the Petitioner transfers title and possession outside New York and is not involved in the transportation, the sale is not subject to New York sales tax.
When the Customer Arranges All Transportation with Common and Private Carriers
In this scenario, the customer takes title at the European factory dock and arranges all transportation. Common carriers transport the fixture to the New York port, and a private carrier delivers it to the installation site. The Petitioner has no role in the transportation within New York State, does not transfer possession within the state, and does not participate in the delivery. Therefore, the sale is not subject to New York Sales Tax.