Is a motorcycle escort service for funeral processions — where the escort provider supplies both the motorcycle and driver — subject to New York sales tax as a vehicle rental?

Plain-English summary

Gary F. Karwowski provides motorcycle escorts to funeral directors — a motorcycle and driver who lead a funeral procession from the church to the cemetery (and sometimes past the family's home or business). His driver, not the funeral director, decides the safest route, watches traffic signals at every intersection, and decides whether to stop, proceed, or change lanes or routes. Karwowski hires and fires his own drivers and pays all the operating costs — wages, insurance, tolls. The funeral director never gets to drive or otherwise control the motorcycle.

New York taxes the rental of tangible personal property like vehicles, but a state regulation (20 NYCRR § 541.2(p)) draws a line: when a vehicle comes with a driver, the transaction is presumed to be a nontaxable service rather than a taxable rental if the vehicle's owner keeps "dominion and control" — meaning the owner (not the customer) retains the right to hire/fire the driver, chooses the route, keeps responsibility for the vehicle's operation, and pays all the operating costs. Karwowski's facts checked every one of those boxes, so the Department found he keeps dominion and control of his motorcycles rather than handing them over to funeral directors. That makes his charges a transportation-style service — and since that particular service isn't one of the specific services New York's sales tax law lists as taxable, his charges to funeral directors are not subject to sales tax.

What this means for you

Businesses providing a vehicle together with a driver

Whether your charge is a taxable "rental" or a nontaxable "service" turns on who really controls the vehicle during the job — not on how you label the transaction. If you (the vehicle owner) keep the right to hire/fire the driver, choose the route, and cover all operating costs, you're likely providing a service rather than renting equipment, which matters a great deal for sales tax purposes when the underlying service isn't itself specifically taxed.

Funeral directors and escort/procession service providers

This ruling confirms that hiring a motorcycle escort with driver, structured the way Karwowski structures his business, is not subject to New York sales tax. If your arrangement gives you (the funeral home) more control over the vehicle or driver than described here, the analysis could come out differently.

Accountants and tax professionals

The regulation's five-factor "dominion and control" test (no transfer of possession/control, right to hire/fire drivers, discretion over routes, responsibility for the equipment, and payment of all operating costs) is the key framework here — the same test used across many vehicle-plus-operator fact patterns (e.g., crane rentals with an operator). Confirm which factors are present before classifying a similar transaction.

Common questions

Q: Is hiring a motorcycle (or other vehicle) escort with a driver always exempt from sales tax?
A: Not automatically — it depends on who retains dominion and control of the vehicle. If the customer effectively directs and controls the vehicle and driver, the transaction may instead be treated as a taxable rental.

Q: Does the specific type of vehicle (motorcycle vs. car vs. crane) matter?
A: No — the same dominion-and-control regulatory test applies regardless of the type of vehicle or equipment involved.

Q: Can another escort service provider rely on this ruling?
A: No. It binds the Department only for Gary F. Karwowski on the facts he described. Another provider should confirm its own contract terms and operational facts match before assuming the same result.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(5) (definition of "sale, selling or purchase")
• Tax Law § 1105(a) (tax on retail sales of tangible personal property)
• Tax Law § 1105(c) (tax on enumerated services)
• 20 NYCRR § 541.2(p) (dominion-and-control test for vehicle-plus-driver transactions)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2001.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a01_16s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-01(16)S
Sales Tax
May 23, 2001

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S001016A

On October 16, 2000, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Gary F. Karwowski, 5 Ardsley Circle, Churchville, New York 14428.
The issue raised by Petitioner, Gary F. Karwowski, is whether or not motorcycle funeral
escorts are subject to New York State and local sales and use tax.
Petitioner submits the following facts as the basis for this Advisory Opinion.
Petitioner provides motorcycle escorts to funeral directors. Petitioner provides the funeral
director with a motorcycle and a driver. The motorcycle driver escorts the funeral procession to the
church and from the church to the place of interment.
The motorcycle driver determines the safest route and leads the funeral procession,
monitoring all traffic control devices at all intersections, and determining whether to stop or proceed,
change lanes, or change routes. In some instances, the family of the deceased requests the
motorcycle escort to drive by the family’s residence or business. That route is determined by the
escort as well. In summary, the motorcycle escort determines the itinerary of the procession with
respect to the route to be taken.
At no time is the funeral director allowed to drive or otherwise take control or possession of
the motorcycle. Petitioner maintains the right to hire and fire the drivers, and pays all operating
expenses, including drivers’ wages, insurance and tolls.
Applicable Law & Regulations
Section 1101 (b)(5) of the Tax Law defines “sale, selling or purchase” as:
Any transfer of title or possession or both, exchange or barter, rental, lease
or license to consume (including, with respect to computer software, merely the right
to reproduce), conditional or otherwise, in any manner or by any means whatsoever
for a consideration, or any agreement therefor, including the rendering of any service,
taxable under this article, for a consideration or any agreement therefor.
Section 1105 of the Tax Law provides, in part:

-2­
TSB-A-01(16)S
Sales Tax
May 23, 2001
Imposition of sales tax.–On and after June first, nineteen hundred seventy­
one, there is hereby imposed and there shall be paid a tax of four percent upon:
(a) The receipts from every retail sale of tangible personal property, except
as otherwise provided in this article.
Section 1105(c) of the Tax Law imposes tax upon the receipts from every sale, except for
resale, of certain enumerated services.
Section 541.2(p) of the Sales and Use Tax Regulations provides:
Rental, lease and licence to use. (1) The terms “rental, lease and license to
use” refer to all transactions in which there is a transfer of possession of tangible
personal property without a transfer of title to the property.
(2) For the purposes of this Part, when a rental, lease or license to use a
vehicle or equipment includes the services of a driver or operator, such transaction
is presumptively the sale of a service, rather than the rental of tangible personal
property, where dominion and control over the vehicle or equipment remain with the
owner or lessor of the vehicle or equipment. Dominion and control remain with the
owner or lessor of the vehicle or equipment when pursuant to an agreement or
contract the lessor:
(i) does not transfer possession, control and/or use of the
equipment or vehicle to the lessee during the term of the agreement
or contract;
(ii) maintains the right to hire and fire the drivers and
operators;
(iii) uses his own discretion in performing the work (even
though the lessee may designate the area where material is to be
picked up and delivered) and generally selects his own routes;
(iv) retains responsibility for the operation of the equipment
or vehicle; and
(v) directs the work, pays all operating expenses, including
drivers’ and/or operators’ wages, insurance, tolls and fuels.

-3­
TSB-A-01(16)S
Sales Tax
May 23, 2001

Whether a transaction is a sale (license to use, rental or lease) of a vehicle or
equipment or is the sale of a service, such as a transportation service, must be
determined in accordance with the facts and circumstances of the particular
transaction and provisions of the agreement between the contractor and his customer.
Example 6: A company enters into an agreement to lease a crane, together
with the services of the operator of the crane. The operator will take
instructions from the company’s foreman, and the company determines the
working hours and locations. The operator’s wages are separately stated.
This transaction is within the definition of a sale, as the transfer of possession
has occurred by reason of the company foreman’s right to direct and control
the operator’s use of the equipment. The separately stated operator’s wages
are excludable from the taxable receipts.
Opinion
Petitioner provides motorcycle escorts to funeral directors in which he supplies both the
motorcycles and drivers. Petitioner’s drivers determine the routes, monitor traffic devices and
determine whether to stop or proceed. Petitioner maintains the right to hire and fire the drivers, and
pays all operating expenses, including drivers’ wages, insurance and tolls. Based on these facts,
Petitioner does not relinquish dominion and control of the motorcycles to its customers. Petitioner,
therefore, is not renting the motorcycles to funeral directors but is supplying a service that is not one
of the enumerated services in Section 1105(c) of the Tax Law. Petitioner’s charges to funeral
directors for this service are not subject to sales tax.

DATED: May 23, 2001

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist III
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.