Which of the many ground-services a staffing company provides to airlines at an airport — aircraft cleaning and de-icing, equipment repair, janitorial work, security/baggage-verification, wheelchair/cart transport, skycap and baggage handling, and pass-through port fees — are subject to New York sales tax?

Plain-English summary

The petitioner supplies personnel to commercial airlines at airports, billing each airline separately for hours worked (apportioned when several airlines share a terminal), plus a 5% port-fee surcharge. It separately stated 15 categories of charges on its invoices, and asked the Department to sort out which are taxable. The Department went through them one by one:

• Ramp service (emptying lavatories, de-icing) and cabin appearance (cleaning the aircraft) are exempt under the commercial-aircraft exemption (§ 1105(c)(3)(v), § 1115(a)(21)) — but only when performed on a qualifying "commercial aircraft" as defined in § 1101(b)(17); on non-commercial aircraft, the same services are taxable.
• Repair/maintenance of small equipment and vehicles (not the aircraft itself) and repair/maintenance of real property, plus ordinary janitorial service, are all taxable under §§ 1105(c)(3) and (5) regardless of whether the customer is a commercial airline — the aircraft exemption doesn't reach non-aircraft property or general real-property upkeep.
• Security services, "positive claim" (matching checked baggage to passengers), and ticket-checking are all taxable as protective/detective services under § 1105(c)(8) — the Department treats them as within the broad definition of "private investigator" services used in a prior court decision (Compass Adjusters), regardless of whether the customer is a commercial or non-commercial operator.
• Electric cart and wheelchair transport of passengers are not taxable, because the petitioner generally doesn't own the equipment and is just billing for staff hours — this isn't a rental of tangible personal property, and transportation/delivery-type charges aren't an enumerated taxable service.
• Usher/escort, skycap, and baggage-handling services are not taxable at all, because none of them fall within any of New York's enumerated taxable service categories under § 1105(c).
• Port fees and depreciation fees are pure pass-through/overhead charges — they aren't independently taxable or exempt, but simply follow the tax status of whatever underlying service they're billed against: a port-fee surcharge added to a taxable janitorial or security charge is taxable, while the same surcharge added to a non-taxable skycap charge is not.

The petitioner also owes sales tax on its own purchases of tangible personal property used to perform the taxable real-property repair/maintenance services, though it can claim a refund/credit if that property is actually transferred to the customer as part of the taxable service.

What this means for you

Airport ground-handling and staffing companies

Don't assume a blanket exemption because your customers are airlines — the commercial-aircraft exemption reaches only services performed on the aircraft itself (and its own equipment), not real-property upkeep, general equipment repair, or non-aircraft-related services like security and janitorial work. Bill and track each service category separately; that's exactly what let the Department give a clean category-by-category answer here.

Businesses billing pass-through fees or surcharges

A percentage-based surcharge (like this petitioner's 5% port fee) doesn't have its own independent tax status — it inherits the taxability of whatever service or receipt it's added to. If you bill one combined invoice covering both taxable and non-taxable services, separately stating charges (as this petitioner did) is what let each category get evaluated on its own.

Accountants and tax professionals

This opinion is a useful one-stop reference for how New York treats airport ground-services line items — worth keeping on hand any time a client in ground handling, catering, or airport contracting needs a taxability breakdown across many similar-sounding services.

Common questions

Q: Are all services to airlines exempt from New York sales tax?
A: No. The commercial-aircraft exemption only covers services performed on qualifying commercial aircraft (and aircraft-dedicated equipment) — not real-property maintenance, general equipment repair, janitorial work, or security services, which stay taxable regardless of the customer.

Q: Is baggage handling taxable?
A: No — along with skycap and usher/escort services, it doesn't fall within any of New York's enumerated taxable service categories.

Q: Are airport security and baggage-ticket-verification services taxable?
A: Yes, as protective and detective services under Tax Law § 1105(c)(8), based on a broad definition of "private investigator" services drawn from a prior court decision.

Q: How is a percentage surcharge like a port fee taxed?
A: It has no independent tax status — it's taxable when added to a taxable service's charge and not taxable when added to a non-taxable service's charge.

Q: Can another ground-services company rely on this exact breakdown?
A: Only as a guide. It's limited to this petitioner's specific service descriptions and ownership facts (e.g., not owning the wheelchairs/carts); a company with different facts should confirm with its own advisory opinion request.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(3) (receipt), § 1101(b)(4) (retail sale), § 1101(b)(17) (commercial aircraft)
• Tax Law § 1105(a), § 1105(c)(3) (installing/maintaining tangible personal property, aircraft carve-out), § 1105(c)(5) (real property maintenance), § 1105(c)(8) (protective and detective services)
• Tax Law § 1115(a)(21) (commercial aircraft exemption)
• Tax Law § 1119(c) (refund/credit provisions)
• 20 NYCRR § 526.5 (receipt definition and examples), § 527.7(b) (real property maintenance), § 528.10(b) (airline definition), § 534.5 (refund/credit rules), § 541.2(p) (rental/lease/license to use with an operator)
• TSB-M-80(4)S (commercial aircraft exemption examples list)
• TSB-M-91(4)S (interior cleaning and maintenance services)

Prior rulings and cases referenced:

• Compass Adjusters and Investigators, Inc. v. Commissioner of Taxation and Finance, 197 AD2d 38
• Koepke-Vragel, TSB-A-98(44)S
• Armor Elevator Company, Inc., TSB-A-92(76)S
• Key Bank, N.A., TSB-A-89(40)S
• Jacqueline Holtzman, TSB-A-01(12)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2003.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a03_46s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-03(46)S
Sales Tax
December 29, 2003

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S030618B

On June 18, 2003, the Department of Taxation and Finance received a Petition for Advisory
Opinion from SMS Acquisition, Inc., 7135 Charlotte Pike, Suite 100, Nashville, TN 37209.
Petitioner, SMS Acquisition, Inc., provided additional information pertaining to the Petition on
October 9, 2003.
The issue raised by Petitioner is whether the various services it provides to airlines are
subject to sales tax.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner generally provides personnel to render services at airports solely to commercial
airlines. Charges for such services are computed by the number of personnel and hours worked for
each airline. Charges for maintenance of tangible personal property and real property include the
cost of materials as well as hourly labor charges. Petitioner bills the airlines directly, including a
5% surcharge for port fees.
Where several airlines share the same terminal/concourse area, the hourly charges are
apportioned to each airline. Petitioner receives information from each airline relating to the number
of passengers each airline handled at that facility. Petitioner apportions the services provided at that
facility and bills each airline directly for its proportionate share.
Petitioner separately states charges for the following services on its invoices:
1.
2.
3.
4.
5.
6.
7.
8.

Ramp service - emptying the aircraft’s lavatories and de-icing the aircraft.
Cabin appearance - personnel clean the aircraft.
Repair and maintenance of small equipment and vehicles (not the aircraft) Petitioner provides tangible personal property as well as labor.
Repair and maintenance of real property - Petitioner provides tangible personal
property as well as labor.
Janitorial service - personnel clean areas of the airport.
Security services - personnel guard doors and hangars.
Positive claim - personnel match ticketed baggage with passengers’ tickets.
Ticket checkers - personnel verify that the name on the ticket matches the boarding
passenger.

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9.

10.

11.
12.
13.
14.
15.

Electric cart - passenger movement through concourse of airport; Petitioner does not
own the carts. Sample invoices indicate that the charges are computed solely by the
number of hours worked by Petitioner’s employees.
Wheelchair service - pushing passengers that require wheelchairs; in most instances
Petitioner does not own the wheelchairs. Sample invoices indicate that the charges
are computed solely by the number of hours worked by Petitioner’s employees.
Skycap service - curbside baggage check-in.
Baggage handling - personnel handle baggage after check-in and load baggage into
the aircraft; the baggage conveyors are not owned by Petitioner.
Usher/Escort service - escorting under aged children and passengers without visas
to appropriate area.
Depreciation fee - charge to offset expenses for equipment (fuel, oil, tires, repairs,
etc.) owned by Petitioner and used in performing services to the airline.
Port fee - Petitioner pays a “franchise fee” to the airport and passes that fee onto the
airlines by the application of a five (5) percent surcharge.

Applicable law and regulations
Section 1101(b) of the Tax Law provides, in part:
When used in this article for the purposes of the taxes imposed by subdivisions (a),
(b), (c) and (d) of section eleven hundred five and by section eleven hundred ten, the
following terms shall mean:
*

*

*

(3) 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 . . . but excluding any credit
for tangible personal property accepted in part payment and intended for resale. . . .
(Emphasis added)
(4) Retail sale. (i) A sale of tangible personal property to any person for any purpose,
other than (A) for resale as such or as a physical component part of tangible personal
property, or (B) for use by that person in performing the services subject to tax under
paragraphs (1), (2), (3), (5), (7) and (8) of subdivision (c) of section eleven hundred five
where the property so sold becomes a physical component part of the property upon which
the services are performed or where the property so sold is later actually transferred to the
purchaser of the service in conjunction with the performance of the service subject to tax.

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Notwithstanding the preceding provisions of this subparagraph, a sale of any tangible
personal property to a contractor, subcontractor or repairman for use or consumption in
erecting structures or buildings, or building on, or otherwise adding to, altering, improving,
maintaining, servicing or repairing real property, property or land, as the terms real
property, property or land are defined in the real property tax law, is deemed to be a retail
sale regardless of whether the tangible personal property is to be resold as such before it is
so used or consumed. . . . (Emphasis added)
*

*

*

(17) Commercial aircraft. Aircraft used primarily (i) to transport persons or
property, for hire, (ii) by the purchaser of the aircraft primarily to transport such person's
tangible personal property in the conduct of such person's business, or (iii) for both such
purposes. (Emphasis added)
Section 1105(a) of the Tax Law imposes a tax on the receipts from every retail sale of
tangible personal property, except as otherwise provided.
Section 1105(c) of the Tax Law provides, in part:
The receipts from every sale, except for resale, of the following services:
*

*

*

(3) Installing tangible personal property . . . or maintaining, servicing or repairing
tangible personal property . . . not held for sale in the regular course of business . . . whether
or not any tangible personal property is transferred in conjunction therewith, except:
*

*

*

(v) such services rendered with respect to commercial aircraft, machinery or
equipment and property used by or purchased for the use of such aircraft as such
aircraft, machinery or equipment, and property are specified in paragraph twenty-one
of subdivision (a) of section eleven hundred fifteen of this article; . . .
*

*

*

(5) Maintaining, servicing or repairing real property, property or land, as such terms
are defined in the real property tax law, whether the services are performed in or outside of
a building. . . . (Emphasis added)

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*

*

*

(8) Protective and detective services, including, but not limited to, all services
provided by or through alarm or protective systems of every nature, including, but not
limited to, protection against burglary, theft, fire, water damage or any malfunction of
industrial processes or any other malfunction of or damage to property or injury to persons,
detective agencies, armored car services and guard, patrol and watchman services of every
nature . . . whether or not tangible personal property is transferred in conjunction therewith.
(Emphasis added)
Section 1115(a)(21) of the Tax Law exempts from the sales tax imposed by section 1105(a)
of the Tax Law and from the compensating use tax imposed under section 1110:
Commercial aircraft primarily engaged in intrastate, interstate or foreign commerce,
machinery or equipment to be installed on such aircraft and property used by or purchased
for the use of such aircraft for maintenance and repairs and flight simulators purchased by
commercial airlines. (Emphasis added)
Section 1119(c) of the Tax Law provides, in part:
A refund or credit equal to the amount of sales or compensating use tax imposed by
this article and pursuant to the authority of article twenty-nine, and paid on the sale or use
of tangible personal property, shall be allowed the purchaser where such property is later
used by the purchaser in performing a service subject to tax under paragraph (1), (2), (3), (5),
(7) or (8) of subdivision (c) of section eleven hundred five or under section eleven hundred
ten and such property has become a physical component part of the property upon which the
service is performed or has been transferred to the purchaser of the service in conjunction
with the performance of the service subject to tax or if a contractor, subcontractor or
repairman purchases tangible personal property and later makes a retail sale of such tangible
personal property, the acquisition of which would not have been a sale at retail to him but
for the second to last sentence of subparagraph (i) of paragraph (4) of subdivision (b) of
section eleven hundred one. . . .
Section 526.5 of the Sales and Use Tax Regulations provides, in part:
(a) 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. The following subdivisions of this section
discuss elements of a receipt.
*

*

*

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(e) Expenses. All expenses, including telephone and telegraph and other service
charges, incurred by a vendor in making a sale, regardless of their taxable status and
regardless of whether they are billed to a customer are not deductible from the receipts.
Example 1: A photographer contracts with a customer to furnish photographs at $50
each in addition to expenses. The customer is billed as follows:
Photographs (2)
Model fees
Meals
Travel
Props (Flowers)
Total due
Receipt subject to tax is $200

$100
60
10
25
5
---$200

Example 2: An appliance repairman charges $10 per hour plus expenses when on
a service call. The customer is billed as follows:
3 hrs. at $10
Travel
Parts
Meals
Total due
Receipt subject to tax is $70
*

$30
15
20
5
--$70

*

*

(g)(3) A charge for transporting or delivering property by a transportation or delivery
company to the person or business requesting that the property be transported or delivered
is not a receipt subject to tax, since transportation and delivery are not themselves services
subject to tax.
Section 527.7(b) of the Sales and Use Tax Regulations provides, in part:
(1) The tax is imposed on receipts from every sale of the services of maintaining,
servicing or repairing real property, whether inside or outside of a building.
*

*

*

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(3) When the service of maintaining, servicing or repairing real property is performed
in conjunction with the transfer of title to tangible personal property, the price of the tangible
personal property is also subject to tax.
Section 528.10(b) of the Sales and Use Tax Regulations provides, in part:
(1) An airline is: (i) an air carrier of persons, property and mail operating under a
certificate of public convenience and necessity issued by the Civil Aeronautics Board, or a
foreign air carrier holding an equivalent certificate issued by the carrier's respective
sovereign government;
(ii) an air carrier holding a certificate for all-cargo air service issued by the
Civil Aeronautics Board; or
(iii) an air taxi operator, who is classified by the Civil Aeronautics Board as
a commuter air carrier, or who (a) performs at least five round trips per week
between two or more points, and publishes flight schedules which specify the times
and days of the week and places between which such flights are performed, or (b)
transports mail by air pursuant to contract with the United States Postal Service. . .
.
(2) Air taxi operators and commercial operators of small aircraft holding air taxi
certificates issued by the Federal Aviation Agency, which enable these operators to engage
in carrying passengers or cargo for hire in air commerce, but who are not commuter air
carriers, are not airlines within the meaning of the Tax Law.
Section 534.5 of the Sales and Use Tax Regulations provides, in part:
(a)(1) Authorization. A refund or credit is allowable to the purchaser of tangible
personal property for any New York State or local sales or compensating use tax paid
thereon where such tangible personal property is later used by such purchaser in the
rendering of a service subject to sales tax under paragraph (1), (2), (3) or (5) of subdivision
(c) of section 1105 of the Tax Law, or the compensating use tax under section 1110 of the
Tax Law which is limited to:
*

*

*

(iii) installing, maintaining, servicing, or repairing tangible personal property
...
(iv) maintaining, servicing, or repairing real property or land . . . .

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(2) Limitations. However, a refund or credit of tax paid on tangible personal
property by the purchaser rendering the services outlined in subparagraphs (i) through (iv)
of paragraph (1) of this subdivision is only allowable where:
(i) the tangible personal property has become a physical component part of
the property being serviced; or
(ii) the tangible personal property has been transferred to the purchaser of the
service in conjunction with the rendering of the service subject to tax.
*

*

*

Example 4: A heating repairman paid tax on his purchase of parts to be used
in servicing his customer's heating equipment. When he performs repair work
subject to tax using such parts, he is entitled to a refund or credit of the tax
he paid.
*

*

*

(c) No refund or credit is allowable for tax paid on tangible personal property
purchased by a person performing a nontaxable service.
Section 541.2(p) of the Sales and Use Tax Regulations provides, in part:
(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. . . .
*

*

*

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.

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Technical Services Memorandum, entitled Exemptions for Commercial Aircraft, May 15,
1980, TSB-M-80(4)S, states in part:
The following list contains examples of purchases for qualifying exempt commercial
aircraft and their taxable status, designated by "E" for exempt and "T" for taxable:
Purchases for Qualifying Exempt Commercial Aircraft
Aircraft for use in transporting persons or property for compensation primarily
engaged in intrastate, interstate or foreign commerce.
E
Parts and accessories.

E
*

*

*

De-icing.

E

Initial installation of equipment or accessories on aircraft.

E

Refurbishing interior of aircraft.

E

Food or drink sold to airlines for in-flight consumption.

E

Repairs (labor and parts).

E

*
*
*
Baggage train charge - transport baggage between aircraft or terminal.

E

Baggage conveyor charge - transport baggage between aircraft or baggage train.

E

Baggage handling charge.

E

Aircraft cleaning charge.

E

*
*
*
Fresh water charge for the service of placing fresh water on aircraft.

E

Lavatory service truck charge - used to remove refuse from aircraft, but not from
airport holding tanks.
E
Power stairs charge - used by passengers and crew to board and leave aircraft.

T

Garbage disposal charge - to remove garbage from aircraft, but not trash removal from
terminals or dumpsters.
E
Tickets, labels, tags.

T

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*

*

*

Uniforms.

T

Manuals, guides and advertising materials.

T

Technical Services Memorandum, entitled New York State Sales and Use Tax on
Interior Cleaning and Maintenance Services, January 22, 1991, TSB-M-91(4)S, states in
part:
Effective June 1, 1990, a combined state and local sales tax is imposed on all
charges for interior cleaning and maintenance services performed in New York State,
regardless of whether performed on an as-needed (short-term) basis or long-term
contractual basis.
*

*

*

Interior cleaning and maintenance services include ordinary janitorial
services such as: dusting furniture, pictures, windowsills and ledges; vacuuming
furniture and carpets; cleaning, disinfecting, and deodorizing bathrooms and
bathroom fixtures; stripping, washing, waxing and buffing floors; cleaning
appliances; cleaning ashtrays; changing linens; oiling door hinges; replacing light
bulbs; replacing washers in faucets; adjusting thermostats; cleaning or changing
filters; reading gauges and lubricating equipment; and cleaning outlets from stoves,
ovens and plumbing fixtures. Interior cleaning and maintenance does not include
services that are ordinarily viewed as “repair” services.
Opinion
Petitioner provides personnel that render services at airports for airlines. Charges are
separately stated and billed directly to the airlines. Charges are generally computed based
on the number of hours Petitioner’s personnel work for the airlines plus a surcharge for port
fees. Charges for maintenance of tangible personal property and real property include the
cost of materials as well as hourly labor charges.
Sales tax is imposed on the services of maintaining, servicing or repairing tangible
personal property. See section 1105(c)(3) of the Tax Law. Section 1105(c)(3)(v) of the Tax
Law provides an exemption for the maintenance and repair of commercial aircraft as
specified in sections 1101(b)17 and 1115(a)(21) of the Tax Law.
Since Petitioner performs its services solely for commercial airlines, Petitioner’s
charges for emptying the aircraft’s lavatories and de-icing the aircraft (ramp services) and

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cabin appearance (items 1 and 2) are exempt under section 1105(c)(3)(v) of the Tax Law,
if such services are performed upon qualifying commercial aircraft. See TSB-M-80(4)S,
supra. Equipment used in performing such services also qualifies for exemption under
section 1115(a)(21) of the Tax Law. However, if these services are performed on non­
commercial aircraft, the charges are subject to tax under section 1105(c)(3). In such case,
equipment used to perform such services is also taxable.
Petitioner’s charges for repair and maintenance of real and tangible personal property
(other than commercial aircraft), as well as its janitorial services (items 3, 4 and 5), are
subject to sales tax whether or not provided to persons engaged in the operation of
commercial aircraft. See sections 1105(c)(3), (5) of the Tax Law, and TSB-M-91(4)S,
supra. When such services are performed in conjunction with the transfer of tangible
personal property, the price of the tangible personal property is also subject to tax.
Therefore, Petitioner’s entire charge for maintenance, repair and janitorial services is
taxable. See section 527.7(b)(3) of the Sales and Use Tax Regulations. However, to the
extent that the machinery or equipment being serviced is used in the repair and maintenance
of a commercial aircraft (e.g., repairing equipment used to de-ice a commercial aircraft),
then services to such machinery or equipment are exempt from sales tax pursuant to section
1105(c)(3)(v) of the Tax Law.
Petitioner is required to pay sales tax on the purchase of tangible personal property
used in providing repairs and maintenance services to real property. See section
1101(b)(4)(i) of the Tax Law. To the extent that the property is actually transferred to the
customer in conjunction with a taxable repair and maintenance service, Petitioner may claim
a refund or credit of sales tax paid on the purchase of such property. See section 1119(c) of
the Tax Law. Petitioner is not entitled to a refund or credit of tax paid on the purchase of
tangible personal property used in providing repairs and maintenance services to the extent
that the tangible personal property is consumed by Petitioner in the performance of the
services and is not transferred to the customer in conjunction with the repair and
maintenance service. See sections 534.5(a)(2), (c) of the Sales and Use Tax Regulations.
Also see Koepke-Vragel, Adv Op Comm T&F, July 1, 1998, TSB-A-98(44)S; Armor
Elevator Company, Inc., Adv Op Comm T&F, November 4, 1992, TSB-A-92(76)S.
Section 1105(c)(8) of the Tax Law imposes sales tax on protective and detective
services. In Compass Adjusters and Investigators, Inc. v Commissioner of Taxation and
Finance, 197 AD2d 38, the court indicated that "among the detective and protective services
covered by Tax Law § 1105(c)(8) are those provided by detective agencies, but the Tax Law
contains no definition of detective services or detective agency." In this regard, the Court
found it appropriate to equate the terms "detective services" and "detective agencies" to the
"broad definition of private investigator" found in section 71 of Article 7 of the General
Business Law. Section 71(1) of such law provides, in part:

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"Private investigator" shall mean and include the business of private
investigator and shall also mean and include . . . investigations for the purpose of
obtaining information with reference to any of the following matters,
notwithstanding the fact that other functions and services may also be performed for
fee, hire or reward; crime or wrongs done or threatened against the government of
the United States of America or any state or territory of the United States of America;
the identity, habits, conduct, movements, whereabouts, affiliations, associations,
transactions, reputation or character of any person, group of persons. . . .
(Emphasis added)
In the present case, the positive claim, ticket checker and security services (items 6,7
and 8) performed by Petitioner’s personnel are protective in nature. Alternatively, these
services fall within the scope of the above definition used by the Court in Compass Adjusters
and Investigators, Inc., supra. Petitioner’s services are not expressly excluded from this
definition by any of the provisions of Article 7 of the General Business Law. Accordingly,
receipts from Petitioner’s positive claim, ticket checker and security services are subject to
State and local sales taxes under section 1105(c)(8) of the Tax Law, whether provided to a
commercial or non-commercial customer.
Petitioner’s employees provide transportation for passengers by means of electric
carts and wheelchairs depending on the passengers’ needs. In most instances Petitioner does
not own the equipment and thus simply provides the personnel to operate the equipment.
In the few instances where Petitioner owns some wheelchairs, it does not transfer title or
possession of the equipment to the airline. The equipment is used by Petitioner’s employees
in transporting passengers within the terminal areas and customers are billed by the number
of hours Petitioner’s employees are committed to such tasks. Therefore, Petitioner’s charges
for these services (items 9 and 10) are not subject to sales tax. See section 526.5(g)(3) of
the Sales and Use Tax Regulations.
Section 1105(c) of the Tax Law imposes tax on the receipts from certain enumerated
categories of services. Inasmuch as Petitioner’s usher/escort services, sky cap services and
baggage handling services (items 11, 12 and 13) do not come within the scope of any of the
services taxed by section 1105(c) of the Tax Law, Petitioner’s separately stated charges for
these services are not subject to sales tax. See Key Bank, N. A., Adv Op Comm T&F,
November 6, 1989, TSB-A-89(40)S; Jacqueline Holtzman, Adv Op Comm T&F, April 17,
2001, TSB-A-01(12)S.
Petitioner’s charge for port and depreciation fees (items 14 and 15) are merely
“overhead” costs and expenses of Petitioner which are passed along to the airlines. Thus,
such charges are part of Petitioner’s receipts. See section 1101(b)(3) of the Tax Law and
section 526.5(e) of the Sales and Use Tax Regulations.

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Therefore, when the port fee percentage is applied to the sale of the repair and
maintenance of real and tangible personal property, janitorial services, and security services
(items 3 through 8), the total charge, including the surcharge, is subject to tax. When the
surcharge is applied to the sale of nontaxable services, the total charge, including
the surcharge is not subject to tax. When the charges for depreciation fees relate to
equipment used to perform nontaxable services, such charges are not subject to tax.
However, charges for depreciation fees which relate to equipment used to perform taxable
services (items 3 through 8) are an expense of providing such taxable services, and such
charges are part of the receipt subject to tax.

DATED: December 29, 2003

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.