Can homeowners' association members avoid New York's parking taxes when an independent company, rather than the association itself, operates the association's garage?

Plain-English summary

An attorney representing several New York City homeowners' associations asked whether their members could claim New York's parking-tax exemption in three fact patterns, all involving an independent (unrelated) company operating a garage that the association itself owns:

• Association A: the independent operator leases the garage from the association and charges/collects parking fees directly from members and the public.
• Association B: the operator leases the garage, but the association itself collects monthly fees from its members and passes them to the operator, while the operator charges the public directly.
• Association C: same as Association A (operator charges members directly), but the association is willing to switch to collecting fees itself and remitting them to the operator.

New York's parking tax exemption for homeowners' associations has been expanded by the legislature several times. As of this ruling, the exemption required — for years before February 6, 2001 — that parking charges actually be paid to the association itself by its members. Under that older rule, Associations A and C failed the test, because their members paid the independent operator directly rather than the association; only Association B, where the association itself collected and passed through the fees, qualified. (Members who lived in Manhattan could still separately qualify for the narrower 8% Manhattan parking tax exemption available to Manhattan residents.)

But effective February 6, 2001, a new law (Chapter 588, Laws of 2000) expanded the exclusion to also cover fees paid by members to a person leasing the parking facility from the association — closing the gap that had excluded Associations A and C. So as of that date forward, members of all three associations — A, B, and C — qualify for the full exemption from state and city parking taxes, regardless of whether they pay the association directly or the independent lessee-operator.

What this means for you

Homeowners' and condominium associations that lease out garage operations

If your association owns a garage and leases its operation to an independent third-party operator, your members can now claim the parking-tax exemption on their fees regardless of whether they pay the association or pay the operator directly — as long as your association meets the underlying eligibility requirements (membership limited to owners/residents in a defined geographic area, and the association owning or operating the facility for their use). This is a meaningful expansion from the pre-2001 rule, which required payment to flow through the association itself.

Property managers and garage operators serving HOAs

Confirm the date of any transaction you're analyzing — this ruling illustrates that the same fact pattern can come out differently depending on whether it occurred before or after February 6, 2001. For transactions before that date, the flow of payment (to the association vs. directly to the operator) was outcome-determinative.

Accountants and tax professionals

This is a useful illustration of how frequently the homeowners' association parking exclusion has been amended (1997, 1998, and 2001 legislative changes are all referenced) — always check the effective date of the version of the statute that applied when the specific transaction at issue occurred, rather than assuming today's rule always applied.

Common questions

Q: Does a homeowners' association have to operate its own garage to get the parking-tax exemption for its members?
A: No — as of February 6, 2001, the exemption applies whether members pay the association directly or pay an independent operator who leases the garage from the association, as long as the other eligibility requirements are met.

Q: What are the basic eligibility requirements for the homeowners' association exclusion?
A: The association's membership must consist exclusively of owners or residents of residential units in a defined geographical area (like a housing development, condominium, or cooperative), and the association must own or operate the parking facility located in that area for those owners/residents.

Q: Can other homeowners' associations rely on this ruling?
A: No. This advisory opinion binds the Department only for the associations described in Brad Lee Steinberg's petition on the facts presented. Other associations should confirm their own membership, geography, and payment-flow facts against the current statute.

Citations and references

Statutes and regulations:

• Tax Law § 1105(c)(6), as amended by Ch. 588, Laws of 2000, eff. Feb. 6, 2001 (parking tax; homeowners' association exclusion)
• Tax Law § 1107(c) (NYC Municipal Assistance Corporation parking tax; homeowners' association exclusion)
• Tax Law § 1109(a) (Metropolitan Commuter Transportation District tax)
• Tax Law § 1212-A(a) (local parking tax authorization; Manhattan resident exemption)
• NYC Administrative Code § 11-2049 (NYC parking tax; homeowners' association exclusion)

Prior guidance referenced:

• TSB-M-91(7)S, March 1, 1991 (State and Local Sales Tax Imposed on Parking Fees)
• TSB-M-96(13)S, Nov. 7, 1996 (Change in the New York City Parking Tax Exemption for Manhattan Residents)
• TSB-M-01(3)S, Jan. 26, 2001 (Expanded Exclusion for Parking Charges Paid by Homeowners' Association Members)

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_9s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-01(9)S
Sales Tax
April 12, 2001

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S000504B

On May 4, 2000, the Department of Taxation and Finance received a Petition for Advisory
Opinion from Brad Lee Steinberg, c/o Law Offices of Brad Lee Steinberg, 60 East 42nd Street, Suite
1344, New York, New York 10165-1399.
The issue raised by Petitioner, Brad Lee Steinberg, is whether the members of the
homeowner’s associations in the three fact patterns described below may claim exemption from the
parking taxes imposed under Sections 1105(c)(6) and 1107(c) of the Tax Law and Section 11-2049
of the Administrative Code of the City of New York.
Petitioner represents several homeowner’s associations located within the City of New York.
Petitioner inquires about the following fact patterns in which an independent company operates a
garage owned by a homeowner’s association.
Fact Pattern 1:
Homeowner’s “Association A” is an association whose membership is comprised exclusively
of owners or residents of residential dwelling units. Association A owns real property and
improvements located within the city of New York, all of which are in a defined geographical area,
i.e., a high-rise residential building. Located within such geographical area are parking garage
facilities owned by Association A and operated for the benefit of the members of Association A and
the general public.
Association A has entered into a written agreement of lease with an independent (non­
related) garage operator whereby such independent garage operator pays monthly rent to Association
A for the right to operate such parking garage facilities. In consideration of such monthly rental
payments, the garage operator charges and collects parking fees and taxes thereon from the members
of Association A and the general public.
Fact Pattern 2:
Same facts as Fact Pattern 1, however, in this case the homeowner’s association
(“Association B”) has entered into a written agreement of lease with an independent (non-related)
garage operator that provides for such independent garage operator to pay monthly rent to
Association B for the right to operate the parking garage facilities. In consideration of such monthly
rental payments, (i) Association B collects monthly parking fees thereon from its members and
thereafter remits such parking fees to the independent garage operator, and (ii) the independent
garage operator charges and collects parking fees and taxes thereon from the general public.

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Fact Pattern 3:
Same facts as Fact Pattern 1 ( i.e., garage operator is charging and collecting parking fees and
taxes from homeowner’s association members); however, the homeowner’s association
(“Association C”) is prepared to collect such monthly parking fees thereon from its members and
thereafter remit such fees to the independent garage operator.
Applicable Authority
Section 1105(c)(6) of the Tax Law, as amended by Chapter 588 of the Laws of 2000,
effective February 6, 2001, imposes sales tax upon receipts from the sales, except sales for resale,
of the services of:
(6) Providing parking, garaging or storing for motor vehicles by persons
operating a garage (other than a garage which is part of premises occupied solely as
a private one or two family dwelling), parking lot or other place of business engaged
in providing parking, garaging or storing for motor vehicles. . . . Provided, however,
receipts for such services paid to a homeowner’s association by its members or
receipts paid by members of a homeowner’s association to a person leasing the
parking facility from the homeowner’s association shall not be subject to the tax
imposed by this paragraph. For purposes of this paragraph, a homeowner’s
association is an association (including a cooperative housing or apartment
corporation) (i) the membership of which is comprised exclusively of owners or
residents of residential dwelling units, including owners of units in a condominium,
and including shareholders in a cooperative housing or apartment corporation, where
such units are located in a defined geographical area such as a housing development
or subdivision and (ii) which owns or operates a garage, parking lot or other place of
business engaged in providing parking, garaging or storing for motor vehicles located
in such area for use (whether or not exclusive) by such owners or residents.
Section 1107 of the Tax Law, as amended by Chapter 588 of the Laws of 2000, effective
February 6, 2001, provides, in part:
(a) General. On the first day of the first month following the month in which
a municipal assistance corporation is created under article ten of the public
authorities law for a city of one million or more, in addition to the taxes imposed by
sections eleven hundred five and eleven hundred ten, there is hereby imposed on such
date, within the territorial limits of such city, and there shall be paid, additional taxes,
at the rate of four percent, which except as provided in subdivisions (b) and (d) of
this section, shall be identical to the taxes imposed by sections eleven hundred five
and eleven hundred ten. . . .

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(b)(8) The tax imposed by subdivision (a) of this section shall not be imposed
on . . . receipts from the services described in paragraph six or seven of subdivision
(c) of section eleven hundred five. . . .
(c) Tax on sale of service of parking, garaging or storing of motor vehicles.
On the first day of the first month following the month in which a municipal
assistance corporation is created under article ten of the public authorities law for a
city of one million or more, in addition to the taxes imposed by sections eleven
hundred five, eleven hundred ten and subdivision (a) of this section, there is hereby
imposed on such date, within the territorial limits of such city, and there shall be
paid, additional taxes at the rate of six percent on receipts from every sale of the
service of providing parking, garaging or storing for motor vehicles by persons
operating a garage (other than a garage which is part of premises occupied solely as
a private one or two family dwelling), parking lot or other place of business engaged
in providing parking, garaging or storing of motor vehicles . . . provided, however,
that receipts for such services paid to a homeowner’s association by its members or
receipts paid by members of a homeowner’s association to a person leasing the
parking facility from the homeowner’s association shall not be subject to the tax
imposed by this subdivision. For purposes of this subdivision, a homeowner’s
association is an association (including a cooperative housing or apartment
corporation) (i) the membership of which is comprised exclusively of owners or
residents of residential dwelling units, including owners of units in a condominium,
and including shareholders in a cooperative housing or apartment corporation, where
such units are located in a defined geographical area such as a housing development
or subdivision; and (ii) which owns or operates a garage, parking lot or other place
of business engaged in providing parking, garaging or storing for motor vehicles
located in such area for use (whether or not exclusive) by such owners or
residents. . . .
Section 1109(a) of the Tax Law provides, in part:
General. In addition to the taxes imposed by sections eleven hundred five
and eleven hundred ten of this article, there is hereby imposed within the territorial
limits of the metropolitan commuter transportation district created and established
pursuant to section twelve hundred sixty-two of the public authorities law, and there
shall be paid, additional taxes, at the rate of one-quarter of one percent, which shall
be identical to the taxes imposed by sections eleven hundred five and eleven hundred
ten of this article. . . .
Section 1212-A(a) of the Tax Law provides, in part:

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Any city in this state having a population of one million or more . . . is hereby
authorized and empowered to adopt and amend local laws imposing in any such city:
(1) a tax on receipts from every sale of the service of providing parking, garaging or
storing for motor vehicles by persons operating a garage (other than a garage which
is part of premises occupied solely as a private one or two family dwelling), parking
lot or other place of business engaged in providing parking, garaging or storing for
motor vehicles, in any county within such city with a population density in excess of
fifty thousand persons per square mile, at the rate of eight per centum, on receipts
from every sale of such services, except receipts from the sale of such services to an
individual resident of such county when such services are rendered on a monthly or
longer-term basis at the principal location for the parking, garaging or storing of a
motor vehicle owned or leased (but only in the case of a lease for a term of one year
or more) by such individual resident. . . .
Section 11-2049 of the New York City Administrative Code, as amended by Chapter 588 of
the Laws of 2000, effective February 6, 2001, provides, in part:
. . .there is hereby imposed within the city of New York, and there shall be
paid, a tax at the rate of eight percent on receipts from every sale of the service of
providing parking, garaging or storing for motor vehicles by persons operating a
garage (other than a garage which is part of premises occupied solely as a private one
or two family dwelling), parking lot or other place of business engaged in providing
parking, garaging or storing for motor vehicles, in every county within the city of
New York with a population density in excess of fifty thousand persons per square
mile, as determined by reference to the latest federal census; provided, however, that
receipts for such services paid to a homeowner’s association by its members or
receipts paid by members of a homeowner’s association to a person leasing the
parking facility from the homeowner’s association shall not be subject to the tax
imposed by this section. For purposes of this section, a homeowner’s association is
an association (including a cooperative housing or apartment corporation) (i) the
membership of which is comprised exclusively of owners or residents of residential
dwelling units, including owners of units in a condominium, and including
shareholders in a cooperative housing or apartment corporation, where such units are
located in a defined geographical area such as a housing development or subdivision;
and (ii) which owns or operates a garage, parking lot or other place of business
engaged in providing parking, garaging or storing for motor vehicles located in such
area for use (whether or not exclusive) by such owners or residents. The tax imposed
on the receipts described in this section is in addition to the tax imposed on such
receipts under subchapter one of this chapter or section eleven hundred seven of the
tax law, as the case may be.

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Technical Services Bureau Memorandum TSB-M-91(7)S, dated March 1, 1991, entitled State
and Local Sales Tax Imposed on Parking Fees June 1, 1990, provides, in part:
The services of parking, garaging and storing motor vehicles are taxable when
provided by an owner or operator of a parking lot, parking garage (except as
otherwise excluded) or any other place engaged in providing parking, garaging or the
storage of motor vehicles. . . .
*

*

*

The tax imposed on parking, garaging and storing is a broadbased tax that
affects nearly any individual, organization, business or governmental entity that
makes a charge for the privilege of parking, or garaging or storing a motor vehicle.
Technical Services Bureau Memorandum TSB-M-01(3)S, dated January 26,
2001, entitled Expanded Exclusion for Parking Charges Paid by Homeowners’
Association Members, provides, in part:
Governor George E. Pataki has signed legislation expanding the exclusion
from state and local sales taxes on receipts from parking charges paid by members
of a qualifying homeowners’ association. Effective February 6, 2001, the exclusion
now includes receipts paid by the members to a person leasing the parking facility
from the homeowners’ association. The exclusion applies to the 4% New York State
tax, all local taxes, the 1/4% Metropolitan Commuter Transportation District tax, the
6% Municipal Assistance Corporation parking tax imposed in New York City, and
the additional 8% Manhattan parking tax.
To be eligible for the exclusion from tax, all of the following conditions must
be met:
•

The homeowners’ association must own or operate the garage,
parking lot, or other parking facility (whether or not it is operated
exclusively for its members).

•

The homeowners’ association must be an association that has a
membership comprised exclusively of owners or residents of
residential dwelling units (such as single-family homes, condominium
units, or cooperative housing or apartments).

•

The dwelling units must be in a defined geographical area, such as a
housing development or subdivision, and the parking facility must be
located within that defined geographical area.

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•

The members must pay the parking charges to the homeowners’
association, or to a person leasing the parking facility from the
homeowners’ association.

Parking charges paid to a homeowners’ association or to a person leasing the
parking facility from the homeowners’ association, by association members, for
parking services that are not provided under the above conditions and charges paid
by persons other than association members remain subject to state and local sales
taxes. . . .
Opinion
Effective December 1, 1997, receipts from parking charges paid by homeowner’s association
members to a qualifying homeowner’s association that operated the parking facility where services
are provided are excluded from the 4% state sales tax and the 1/4% tax imposed within the
Metropolitan Commuter Transportation District. Effective September 12, 1998, the exclusion from
taxes for parking charges paid to a homeowner’s association by its members was expanded to
include the 6% Municipal Assistance Corporation parking tax imposed in New York City and the
additional 8% Manhattan parking tax (whether or not the member qualifies as a Manhattan resident),
as well as to allow the exclusion where the association owns or operates the parking facility.
Effective February 6, 2001, the exclusion from taxes for parking charges paid to a qualifying
homeowner’s association was further expanded to exempt from state and local sales tax receipts for
parking services paid by members of a qualifying homeowner’s association to a person leasing a
parking facility from such association. See Sections 1105(c)(6), 1107(c) and 1109(a) of the Tax Law
and Section 11-2049 of the Administrative Code of the City of New York.
Central to Petitioner’s inquiry for all three fact patterns described in this Petition is the
statutory requirement prior to February 6, 2001 that the parking charges must be paid to the
homeowner’s association by its members in order for the members to be eligible to claim the parking
tax exemption. In such cases where an independent third party operates a parking garage owned by
such an association, the issue arises whether that condition is met.
The 1997 legislation allowed the parking tax exemption only when the parking charges were
paid to a qualifying homeowner’s association and the garage was operated by the association. The
1998 legislation allowed the exemption when the association either owns or operates the garage, but
the law continued to require that the parking charges be paid to the association. Therefore, prior to
February 6, 2001, the exclusions from sales tax on parking charges as provided for in Sections
1105(c)(6), 1107(c) and 1109(a) of the Tax Law and Section 11-2049 of the New York City
Administrative Code did not apply where the members of a homeowner’s association paid the
parking charges to an independent garage operator, even though the association owned the parking
facility. Since the parking charges are paid by the members of Homeowner’s Associations A and
C directly to the independent garage operators, they were not excluded, prior to February 6, 2001,

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under the homeowner’s association provisions in the Tax Law from the State or New York City sales
taxes on parking. However, if the member’s primary residence is in Manhattan, the parking receipts
may have been exempt, pursuant to Section 1212-A(a)(1) of the Tax Law, from the 8% Manhattan
additional parking tax. See Technical Services Bureau Memorandum, Change in the New York City
Parking Tax Exemption for Manhattan Residents, November 7, 1996, TSB-M-96(13)S.
Accordingly, prior to February 6, 2001, the members of Homeowner’s Associations A and C could
not claim exemption from the 4 1/4% New York State or the 6% New York City sales tax, and could
only claim exemption from the 8% additional Manhattan parking tax if they were qualified
Manhattan residents (see TSB-M-96(13)(S), supra; TSB-M-01(3)S, supra).
However, it was possible prior to February 6, 2001, for an association that owns a parking
garage to enter into an agreement with a third party garage operator, as contemplated by the
legislature, which would come within the purview of the exclusion. Such is the case in Petitioner’s
Fact Pattern 2, where, under the terms of the agreement, Homeowner’s Association B collects the
monthly parking charges from its members and remits the payments to the garage operator. The
member is paying the association for garage space owned by the association, even though another
entity is operating the garage. Accordingly, since Homeowner’s Association B meets all of
the statutory criteria required for the exclusion, parking charges paid by its members were exempt
from all sales taxes prior to February 6, 2001 (see TSB-M-01(3)S, supra).
As of February 6, 2001, Sections 1105(c)(6) and 1107(c) of the Tax Law and Section 11- 049
of the New York City Administrative Code permit the exemption to apply to receipts collected from
members of a homeowner’s association when paid to the homeowner’s association or when paid to
a person leasing the parking facility from the homeowner’s association. Therefore, as of February 6,
2001, the members of Homeowner’s Associations A and C, as well as the members of Homeowner’s
Association B, meet all of the statutory criteria required for the exclusion and may claim exemption
from all sales taxes (see TSB-M-01(3)S, supra).

DATED: April 12, 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.