Can an off-airport parking lot avoid sales tax on part of its fee by labeling a fixed percentage of the charge as a separate, nontaxable 'transportation' charge for shuttling customers to the airport?

Plain-English summary

Allright New York Parking runs an off-airport lot near the Greater Rochester International Airport, offering customers a parking space plus a shuttle ride to and from the terminal. Neither parking nor transportation is sold on its own — you can't buy just the shuttle ride, and you can't buy parking without it. From 1995 to early 1997, Allright collected sales tax on its entire charge. Starting in February 1997, it began splitting each receipt: 30% labeled "Nontaxable" (attributed to transportation) and 70% labeled "Taxable" (attributed to parking, with tax charged only on that portion).

The Department rejected the split. Because the 30%/70% breakdown was just a fixed percentage of whatever the customer happened to pay for parking — not an independent price for the shuttle ride itself — it didn't reflect any real, separately negotiated value for transportation. The Department's own math illustrated the problem: a customer parking 3.5 hours was charged $0.67 for "transportation," while a customer parking over three days was charged $6.00 for the identical round-trip shuttle ride. If five customers arrived together and parked three hours, each would be charged only about $0.13 for the same ride. That's not how a real transportation charge behaves — it shows the "transportation" line was just a percentage carve-out of the parking bill, not a genuine, established fee for a separate service.

Since customers have no reason to use the shuttle unless they're also parking there, and Allright doesn't sell transportation without also charging for parking, the two are really one integrated service: parking with shuttle access included. New York taxes the full "receipt" for a taxable service regardless of how it's broken out on the bill, unless a charge is genuinely for something separately provided and priced. Here it wasn't, so the entire charge — parking and shuttle together — is subject to sales tax.

What this means for you

Parking lot and shuttle operators

You can't shrink your taxable base just by re-labeling part of your existing bundled charge as "transportation" or another nontaxable service. To exclude a charge from tax, it needs to reflect a real, independently priced service that a customer could reasonably decline or that has its own established value — not a percentage slice of an otherwise-taxable charge.

Airport-adjacent parking businesses generally

If your transportation service is inseparable from your parking service (customers only use the shuttle because they parked with you, and you don't sell the shuttle on its own), expect the whole bundled charge to be taxed as a single service, even if you itemize the receipt.

Accountants and tax professionals

This is a useful precedent for testing any "separately stated" carve-out: look at whether the carved-out charge is priced independently of the taxable charge, and whether the item/service could realistically be purchased on its own. A percentage-of-total pricing structure, without more, signals a single bundled receipt rather than two distinct charges.

Common questions

Q: Does itemizing "transportation" as a separate line on the receipt make it nontaxable?
A: Not by itself. The Department looks at whether the charge reflects a real, independently priced service — not just a formula applied to the taxable charge.

Q: What made the transportation charge look fake here?
A: It was calculated purely as 30% of the parking fee, so identical shuttle rides cost wildly different amounts ($0.67 to $6.00) depending only on how long the customer parked, and neither service was sold without the other.

Q: If a lot genuinely charged a flat, independent shuttle fee, would that change the answer?
A: The opinion doesn't rule that out — the problem here was specifically that the fee wasn't independently priced and the services weren't independently offered. A genuinely separate, flat transportation charge could be analyzed differently, but that isn't the fact pattern presented.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(3) (definition of "receipt")
• Tax Law § 1105(c)(6) (tax on parking, garaging, or storing motor vehicles)
• 20 NYCRR § 526.5(a) (definition of "receipt")

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2002.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a02_41s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-02(41)S
Sales Tax
July 26, 2002

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S010307A

On, March 7, 2001, the Department of Taxation and Finance received a Petition for Advisory
Opinion from Allright New York Parking, Inc., 1100 Brooks Avenue, Rochester, New York, 14624.
The issue raised by Petitioner, Allright New York Parking, Inc., is whether the separate
statement of charges by the operator of an “off-airport parking lot” for transportation to the airport,
where the transportation charge is calculated at a fixed percentage of the total charge to the
customer, constitutes a separate charge for nontaxable transportation service.
Petitioner submits the following facts as the basis for this Advisory Opinion.
In 1995, Petitioner opened an off-airport parking facility at 1100 Brooks Avenue in the Town
of Gates (Rochester) serving the patrons of the Greater Rochester International Airport. Petitioner
provides its customers with parking facilities during the time that those customers are traveling by
air. Petitioner also provides its customers with transportation to and from the nearby airport.
Neither parking nor transportation is independently offered for sale by Petitioner to its customers.
The original facility of 900 parking spaces was expanded by an additional 300 spaces in July, 1997,
for a total of 1,200 spaces. From the outset of operations in 1995, Petitioner collected and remitted
the New York State sales tax on its total charge for parking at its lot and transporting its customers
to and from the airport.
Commencing February 1997, Petitioner separated its charges on customer receipts,
designating 30% of its periodic (daily, weekly, monthly) fee as the nontaxable component,
attributable to transportation. The remaining 70% of its periodic fee was designated as the charge
for parking and the sales tax due on such charge. Petitioner provided sample receipts. One receipt
showed a total charge of $ 2.25 for approximately three and a half hours of parking. This amount
was broken out into a “Nontaxable” charge of $ 0.67, a “Taxable” charge of $ 1.46, and sales tax
in the amount of $ 0.12. Another receipt showed a total charge of $ 20.00 for approximately three
days and seven hours of parking. This amount was broken out into a “Nontaxable” charge of $ 6.00,
a “Taxable” charge of $ 12.96, and sales tax in the amount of $ 1.04. Petitioner states that this
itemization is reflected on signage at the facility. Customer questions, if any, relative to the
foregoing are routinely referred to the Project Manager for a full explanation of the charges and
services available.
Applicable Law and Regulations
Section 1101(b)(3) of the Tax Law provides, in part:

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Sales Tax
July 26, 2002

Receipt. The amount of the sale price of any property and the charge for any
service taxable under this article . . . valued in money, whether received in money
or otherwise, including any amount for which credit is allowed by the vendor to the
purchaser, without any deduction for expenses or early payment discounts and also
including any charges by the vendor to the purchaser for shipping or delivery . . .
regardless of whether such charges are separately stated in the written contract, if
any, or on the bill rendered to such purchaser and regardless of whether such
shipping or delivery . . . is provided by such vendor or a third party, but excluding
any credit for tangible personal property accepted in part payment and intended for
resale. . . .
Section 1105(c) of the Tax Law imposes the sales tax upon receipts from the sales, except
sales for resale, of certain enumerated services.
Section 1105(c)(6) of the Tax Law provides, in part, for the imposition of sales tax on
parking as follows:
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, this
paragraph shall not apply to such facilities owned and operated by a public
corporation, as defined by section sixty-six of the general construction law, other
than a public benefit corporation, as defined by such section sixty-six, created by
interstate compact or at least half of whose members are appointed by the governor,
or any agency or instrumentality of a municipal corporation or district corporation
as defined by such section sixty-six. . . .
Section 526.5(a) of the Sales and Use Tax Regulations provides, in part:
Definition. The word receipt means the amount of the sale price of any
property and the charge for any service taxable under articles 28 and 29 of the Tax
Law, valued in money, whether received in money or otherwise . . . .
Opinion
Petitioner is the vendor of the service of parking or garaging motor vehicles. Petitioner’s
parking facility exists to service patrons of the Greater Rochester International Airport. Petitioner
provides its customers with parking facilities during the time that those customers are traveling by
air. Petitioner also, as part of its parking service, provides its customers with transportation to and
from the nearby airport. Customers have no reason to avail themselves of Petitioner’s
“transportation” service if they are not utilizing Petitioner’s parking facility. It is unlikely that

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Sales Tax
July 26, 2002

customers would use Petitioner’s parking facility unless they had access to transportation to and
from the Greater Rochester International Airport. Petitioner does not contend that the customers
who use its parking facility are not also patrons of the Greater Rochester International Airport. Nor
does Petitioner contend that it shuttles its customers to locations other than the Greater Rochester
International Airport. Petitioner does not offer its shuttle service to persons who are not customers
of its parking facility. Therefore, Petitioner’s charge for parking and shuttle service appears to be
a charge for the integrated service of parking or garaging motor vehicles and shuttling its customers
to the airport and back.
Petitioner has designated 30% of its charges for use of the parking facility as exempt charges
for transportation service. A receipt for parking for three and a half hours for a total charge of $2.25
designates $.67 as Non-Taxable (transportation), $1.46 as Taxable (parking) and $.12 as sales tax,
while a receipt for parking for 79 hours (three days and seven hours) designates $6.00 as NonTaxable (transportation), $12.96 as Taxable (parking) and $1.04 as sales tax. Based on these sample
receipts submitted by Petitioner, one customer is apparently charged $.67 for shuttle service from
the parking facility to the airport and back while the second customer is apparently charged $6.00
for the same shuttle service. In addition, if five customers arrived in a single car and parked for
three hours, the charge to each customer for shuttle service (using the above receipt information)
would amount to $0.67 divided by five customers or about $0.13 per customer. Yet the customer
who arrives alone and parks for three days and seven hours pays $6.00 for the identical shuttle
service. These examples indicate that Petitioner does not have an established charge for round trip
transportation from its facility to the airport.
Clearly, a charge based on 30% of the total amount paid by the customer for parking does
not represent a charge for transportation services. This charge does not reasonably reflect the value
to the purchaser of parking services of any transportation service that may be provided by Petitioner.
Furthermore, Petitioner does not offer to sell a transportation service without also charging its
customers for parking, since the charge for transportation is only determined as a percentage of the
charge for parking. Neither service is independently offered for sale to customers. Therefore,
Petitioner is charging its customer a taxable charge for parking or garaging motor vehicles and is
liable for and must collect tax on the entire receipt.

DATED: July 26, 2002

NOTE:

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

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