Can a uniform-and-medical-gown laundry service buy its inventory of shirts, pants, and gowns (each under $110) tax-free under New York's clothing exemption, and if so, does it still owe local use tax when those items are used at customer locations outside New York City?

Plain-English summary

A New York City-based laundry service company buys large volumes of inexpensive uniform shirts, pants, and medical gowns — none costing $110 or more per item — and supplies them to customers (including doctor's offices, where patients wear the gowns during exams) as part of a weekly pickup-launder-redeliver service. The company keeps ownership of everything; it never sells the uniforms or gowns to its customers. Because the items are fungible and interchangeable (any shirt or gown can go to any customer that week), the company has no practical way to track exactly which item ends up where from week to week. It had been paying sales/use tax on all its uniform and gown purchases and asked two questions: (1) does the clothing exemption apply to these purchases when delivered to its NYC location, and (2) if so, does it still owe local use tax where the items get used outside the city?

Since the laundering service itself isn't taxable, buying uniforms/gowns to use in performing that service isn't a tax-free "resale" purchase — normally that would mean the company owes sales tax on them like any other buyer. But New York's separate clothing exemption for items under $110 (effective March 1, 2000) applies regardless of who's buying or why: the Department's own published list of exempt clothing items already includes occupational uniforms, and treated medical gowns the same way it treats lab coats, pajamas, and robes — all exempt. So every uniform piece and gown here, priced under $110 each, escapes the 4% state tax. Because the goods are delivered to the company's place of business in New York City — which has separately enacted its own local clothing exemption — no NYC local tax or the 1/4% Metropolitan Commuter Transportation District surcharge applies at the point of purchase either.

That's not the end of the story, though. Once the company sends its interchangeable inventory out to customers located in other cities/counties that have not adopted a local clothing exemption, using the items there counts as a taxable "use" in that jurisdiction, and the company (as the entity conducting business there) owes local compensating use tax at that jurisdiction's rate. Since it's practically impossible to trace any specific shirt or gown to a specific delivery location, the Department said it will accept a reasonable allocation based on the company's actual volume of business across its various customer localities — for example, if 20% of a company's clothing volume routinely goes to a locality taxing at 4.5%, and 10% goes to one taxing at 3.25%, that percentage split can be applied instead of trying to trace individual pieces.

What this means for you

Uniform and linen rental/laundry service companies

Purchases of uniforms and similar garments under $110 per item are exempt clothing regardless of the fact that you're buying them as inventory for a laundering service rather than for direct resale — but track where your local delivery point is, since local clothing-exemption adoption varies by city/county.

Companies whose fungible inventory circulates across multiple tax jurisdictions

If you truly can't trace individual interchangeable items to specific delivery locations, a reasonable volume-based allocation across your customer localities is an acceptable substitute for exact tracking — but document your allocation methodology, since the burden of proof rests on you.

Accountants and tax professionals

This opinion is a useful two-part citation: first for the "under $110 clothing exemption applies to a laundry service's own purchases" holding despite the ordinary rule that non-resale service-supply purchases are taxable, and second for the volume-based use-tax-allocation approach when items are genuinely fungible and untrackable by location.

Common questions

Q: If a laundry/uniform service doesn't resell the garments to its customers, are its uniform purchases automatically taxable?
A: They would ordinarily be taxable as non-resale purchases used to perform the (nontaxable) laundering service, but items priced under $110 each separately qualify for New York's clothing exemption regardless of that resale analysis.

Q: Does buying uniforms tax-free at a New York City location mean no tax is ever owed on them?
A: No — using those same items later in a locality that hasn't adopted its own clothing exemption can trigger local compensating use tax in that locality, even though the original purchase was exempt.

Q: How does a business handle use-tax allocation when inventory is completely interchangeable and untraceable by location?
A: The Department will accept a reasonable allocation based on the business's actual volume of activity in each locality, in the absence of records showing the actual movement of specific items.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(7) (use definition); § 1101(b)(15) (clothing/footwear definition)
• Tax Law § 1105(c)(3)(ii) (laundering services exclusion)
• Tax Law § 1107 (NYC additional tax; clothing exemption exception); § 1109(f), (g) (MCTD tax; clothing exemption election)
• Tax Law § 1110(a) (compensating use tax)
• Tax Law § 1115(a)(30) (clothing/footwear under $110 exemption)
• Tax Law § 1210 (local clothing exemption election)
• 20 NYCRR § 526.6(c)(7), § 526.15(b)(2), (c)
• TSB-M-01(02)S (Sales and Use Tax Exemption on Clothing, Footwear..., Feb. 12, 2001); TSB-M-00(1)S; Publication 718-C (Local Sales and Use Tax Rates on Clothing and Footwear, 9/02)

Prior rulings and cases referenced:

• Matter of Atlas Linen Supply Co., Inc. v. Chu, 149 AD2d 824
• Matter of Linen Systems for Hospitals, Inc., TSB-D-89(47)S
• Matter of Coyne Industrial Laundry of Schenectady, Inc., TSB-H-83(128)S

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_51s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-02(51)S
Sales Tax
November 6, 2002

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S001023A

On October 23, 2000, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Henry Goldwasser, CPA, M.R. Weiser & Co. LLP, 135 West 50 th Street,
New York, NY 10020. Petitioner, Henry Goldwasser, CPA, submitted additional information
pertaining to the Petition on November 15, 2000.
The issues raised by Petitioner are:
(1) Whether purchases of uniform shirts, pants, and medical gowns, each costing less than
$110, by a laundry service company qualify for exemption from New York State sales and
compensating use tax under Section 1115(a)(30) of the Tax Law if such purchases are delivered to
the company’s place of business in New York City.
(2) If the company’s purchases of uniform shirts, pants, and medical gowns delivered in
New York City qualify for exemption from New York State and local sales taxes under Section
1115(a)(30) of the Tax Law, is the company liable for local use tax on the use of such items in
localities outside of New York City?
Petitioner submitted the following facts as the basis for this Advisory Opinion.
A company is in the laundry service business. The company purchases a high volume of
inexpensive, low-cost uniform shirts, pants, and medical gowns from suppliers and then supplies
its customers with these items in order to provide the service of laundering these items and
delivering fresh ones, generally on a weekly basis. Patients, in doctor’s offices and other medical
facilities, wear the gowns during medical examinations or treatment. Each gown is worn by one
patient and then sent back to the company for laundering. All of the items are interchangeable, and
one may be used in place of another for any given customer. Thus, the company has no means of
tracking exactly when and where each particular item is delivered from week to week.
The uniforms and medical gowns are not sold to the company’s customers. They remain the
company’s property. The company has been paying sales or use tax on its purchases of uniforms
and medical gowns.
Each piece of a uniform is separately purchased. No uniform, piece of a uniform, or medical
gown costs $110 or more when separately purchased. They are delivered to the company at its place
of business in New York City.

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Applicable Law and Regulations
Section 1101(b)(7) of the Tax Law defines “use,” in part, as:
The exercise of any right or power over tangible personal property or over
any of the services which are subject to tax under section eleven hundred ten of this
article or pursuant to the authority of article twenty-nine of this chapter, by the
purchaser thereof, and includes, but is not limited to, the receiving, storage or any
keeping or retention for any length of time, withdrawal from storage . . . or any
consumption of such property or of any such service subject to tax under such
section eleven hundred ten or pursuant to the authority of such article twenty-nine.
...
Section 1101(b)(15) of the Tax Law defines “clothing and footwear,” in part, as:
. . . Clothing and footwear to be worn by human beings, but not including
costumes or rented formal wear. . . .
Section 1105 of the Tax Law provides, in part:
Imposition of sales tax. – . . . there is hereby imposed and there shall be paid
a tax . . . upon:
(a) The receipts from every retail sale of tangible personal property, except
as otherwise provided in this article.
*

*

*

(c) The receipts from every sale, except for resale, of the following services:
*

*

*

(3) . . . maintaining, servicing or repairing tangible personal property . . . not
held for sale in the regular course of business, whether or not the services are
performed directly or by means of coin-operated equipment or by any other means,
and whether or not any tangible personal property is transferred in conjunction
therewith, except:
*

*

*

(ii) any receipts from laundering, dry-cleaning, tailoring, weaving,
pressing. . . .

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Section 1107 of the Tax Law 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. . . .
(b) Exceptions . . . (9) Except as otherwise provided by law, the exemption
provided for in paragraph thirty of subdivision (a) of section eleven hundred fifteen
relating to clothing and footwear shall not apply.
Section 1109 of the Tax Law provides, in part:
*

*

*

(f) The exemption contained in paragraph thirty of subdivision (a) of section
eleven hundred fifteen of this article shall not apply.
(g) Notwithstanding any other provision of state or local law, ordinance or
resolution to the contrary: (1) in the event that a county, city or school district
located in the metropolitan commuter transportation district imposes taxes pursuant
to the authority of subpart B of part I of article twenty-nine of this chapter and elects
to provide the clothing and footwear exemption authorized in paragraph one of
subdivision (a) of section twelve hundred ten of this chapter, or a city located in such
district in which the taxes provided for in section eleven hundred seven of this article
are in effect elects to provide such clothing and footwear exemption from such taxes
pursuant to the authority of subdivision (k) of such section twelve hundred ten . . .
the exemption provided by paragraph thirty of subdivision (a) of section eleven
hundred fifteen of this chapter shall be applicable in such portion of the metropolitan
commuter transportation district in which such county, city or school district which
elects to provide the clothing and footwear exemption authorized in paragraph one
of subdivision (a) of section twelve hundred ten of this chapter is located, or in a city
located in such district in which the taxes provided for in section eleven hundred
seven of this article are in effect which elects to provide such exemption. . . .
Section 1110(a) of the Tax Law provides, in part:

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Except to the extent that property or services have already been or will be
subject to the sales tax under this article, there is hereby imposed on every person a
use tax for the use within this state . . . except as otherwise exempted under this
article, (A) of any tangible personal property purchased at retail. . . .
Section 1115 of the Tax Law provides, in part:
(a) Receipts from the following shall be exempt from the tax on retail sales
imposed under subdivision (a) of section eleven hundred five and the compensating
use tax imposed under section eleven hundred ten:
*

*

*

(30) Clothing and footwear for which the receipt or consideration given or
contracted to be given is less than one hundred ten dollars per article of clothing, per
pair of shoes or other articles of footwear or per item used or consumed to make or
repair such clothing and which becomes a physical component part of such clothing.
Section 1210 of the Tax Law provides, in part:
. . . any city in this state or county in this state, except a county wholly within
a city, acting through its local legislative body, is hereby authorized and empowered
to adopt and amend local laws, ordinance or resolutions imposing in any such city
or county the following taxes . . .
(a)(1) Either, all of the taxes described in article twenty-eight of this chapter,
at the same uniform rate, as to which taxes all provisions of the local laws,
ordinances or resolutions imposing such taxes shall be identical, except as to rate and
except as otherwise provided herein, with the corresponding provisions in such
article twenty-eight, including the definition and exemption provisions of such
article, so far as the provisions of such article twenty-eight can be made applicable
to the taxes imposed by such city or county and with such limitations and special
provisions as are set forth in this article. However, any local law enacted by any city
of one million or more, imposing the taxes authorized by this subdivision . . . may
omit (A) the exception provided in paragraph three of subdivision (c) of section
eleven hundred five for receipts from laundering, dry-cleaning, tailoring, weaving,
pressing. . . . Any local law, ordinance or resolution enacted by any city, county or
school district, imposing the taxes authorized by this subdivision, shall omit the
clothing and footwear exemption provided for in paragraph thirty of subdivision (a)
of section eleven hundred fifteen, unless such city, county or school district elects
otherwise. . . . (Emphasis added)

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(2) A sale of tangible personal property to a person for use by him in
performing the services of laundering, drycleaning, tailoring, weaving, pressing . .
. subject to the tax imposed under the authority of paragraph (1) of this subdivision,
shall not be deemed a purchase for resale. . . .
*

*

*

(k). . . Any city having a population of one million or more in which the taxes
imposed by section eleven hundred seven of this chapter are in effect, acting through
its local legislative body, is hereby authorized and empowered to elect to provide the
exemption from such taxes for the same clothing and footwear exempt from state
sales and compensating use taxes described in paragraph thirty of subdivision (a) of
section eleven hundred fifteen of this chapter . . . such enactment of such resolution
shall be deemed to be an amendment to such section eleven hundred seven and such
section eleven hundred seven shall be deemed to incorporate such exemption as if
it had been duly enacted by the state legislature and approved by the governor.
(Emphasis added)
Technical Services Bureau Memorandum TSB-M-01(02)S, dated February 12, 2001, entitled
Sales and Use Tax Exemption on Clothing, Footwear, and Items Used to Make or Repair Exempt
Clothing, provides, in part:
Beginning March 1, 2000, clothing and footwear costing less than $110 per
item is exempt from the 4% New York State sales and compensating use taxes. This
exemption does not apply to any locally imposed sales and use taxes unless the
county or city imposing those taxes elects to provide for it. . . . Likewise, the
exemption does not apply to the 1/4% tax imposed by the State in any portion of the
Metropolitan Computer Transportation District (MCTD), unless the county or city
in the MCTD provides an exemption from its own tax, in which case the exemption
will also apply to the 1/4% MCTD tax in that county or city. The MCTD consists
of the city of New York and the counties of Dutchess, Nassau, Orange, Putnam,
Rockland, Suffolk and Westchester.
Opinion
The company Petitioner describes provides a uniform and medical gown supply and
laundering service. Petitioner states that the company only supplies uniforms and medical gowns
to its customers in order to perform its service, generally on a weekly basis, of picking up soiled
items, laundering them, and delivering clean ones.
Tangible personal property, such as uniforms and medical gowns, purchased for use in
performing a laundering service that is not subject to tax are not purchased for resale and are

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therefore not excluded from sales or compensating use tax under Section 1101(b)(4)(i) of the Tax
Law. See Matter of Atlas Linen Supply Co., Inc. v Chu, 149 AD2d 824; Matter of Linen Systems
for Hospitals, Inc. , Dec Tax App Trib, August 24, 1989, TSB-D-89(47)S. See also Section
526.6(c)(7) of the Sales and Use Tax Regulations. However, effective March 1, 2000, clothing
costing less than $110 per item is exempt from the 4% New York State sales and compensating use
taxes. See Section 1115(a)(30) of the Tax Law. TSB-M-00(1)S, supra, contains a partial list of
clothing and footwear items that are taxable or exempt. Uniforms (occupational, military, scouting,
sport) are listed as exempt items in TSB-M-00(1)S, supra, and are not taxed for New York State
sales tax purposes, if the uniforms cost less than $110 each. Medical gowns are similar to some of
the other products listed as exempt items in TSB-M-00(1)S, supra, such as lab coats, pajamas, robes,
and sleepwear. Accordingly, the company’s purchases of uniforms and medical gowns costing less
than $110 per item are not subject to the 4% New York State sales or compensating use tax.
Local jurisdictions are also authorized to enact the clothing and footwear exemption. See
Sections 1210(a)(1) and (k) of the Tax Law. Likewise, there is an exemption from the 1/4% tax
imposed in cities and counties located in the Metropolitan Commuter Transportation District
(MCTD), if the city or county in the MCTD provides an exemption from its own tax.
See Section 1109(g) of the Tax Law. New York State Department of Taxation and
Finance Publication 718-C, Local Sales and Use Tax Rates on Clothing and Footwear, 9/02,
provides information on where the local tax (and the MCTD 1/4% tax) is applicable. New York
City has enacted the clothing and footwear exemption and is currently a location where no tax
applies. Therefore, since the uniforms and medical gowns in this case are delivered to the
company’s place of business in New York City, purchases of such uniforms and medical gowns are
not subject to the 4% local portion (New York City) of the sales tax nor to the 1/4% MCTD sales
tax imposed in this area.
With regard to Issue (2), the delivery to and pick-up of uniforms and medical gowns
from customers located in cities and counties which have not enacted local clothing and footwear
exemptions constitutes a use by the company in such jurisdictions within the meaning and intent of
Section 1101(b)(7) of the Tax Law. See Matter of Coyne Industrial Laundry of Schenectady, Inc.,
State Tax Commission, July 1, 1983, TSB-H-83(128)S. The company, in the conduct of business
there, is a resident of such jurisdictions. See Section 526.15(b)(2) and (c) of the Sales and Use Tax
Regulations. Accordingly, the company’s use of the uniforms and medical gowns in jurisdictions
which have not enacted local clothing and footwear exemptions is subject to the compensating use
tax imposed under Section 1110 of the Tax Law at the local rates set forth in Publication 718-C,
supra, as well as the 1/4% tax imposed in jurisdictions located in the MCTD area
In this case the uniforms and medical gowns are fungible and interchangeable and the nature
of their use is such that it is impossible to effectively and efficiently track the actual use of each item
of clothing in any particular locality. Under these circumstances, in the absence of other evidence
showing that particular items are used in particular jurisdictions, the Department will accept a
reasonable allocation based on the company’s volume of business in the different localities to

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establish the respective jurisdictions in which the items are used. For example, assume that, for
every 10,000 items of clothing the company purchases, 2000 pieces of clothing are routinely used
in Nassau County (4 1/2 % rate), 7000 pieces in New York City (exempts clothing), and 1000
pieces in Orange County (3 1/4 % rate). In this example, given the circumstances here, the
Department would accept an allocation under which 20% of the clothing is subject to tax at the
Nassau County rate of 4 1/2 % and 10% of the clothing is subject to tax at the Orange County rate
of 3 1/4 %.

DATED: November 6, 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.