When a corporate wellness consultant bundles nontaxable coaching, handouts, workshops, textbooks, and on-site massage into one yearly package price, is the whole charge taxable, or just the textbooks?

Plain-English summary

Dr. Joan Coff, a corporate health consultant, sells year-long workplace wellness programs to client companies. Each program bundles four pieces into one all-inclusive yearly charge: (1) needs assessment and phone coaching, plus a wellness calendar with monthly handouts; (2) four one-hour wellness workshops with printed handouts; (3) a textbook for each employee, which Dr. Coff buys from a vendor and already pays sales tax on; and (4) twelve days of on-site chair massage by a contracted massage therapist. Clients can, however, buy the textbooks alone without the rest of the program.

New York doesn't tax consulting, coaching, or massage services as such (they're not on the list of taxable enumerated services), so the core wellness program is a nontaxable service. The handouts and wellness calendar are just incidental freebies bundled into that nontaxable service — not sold separately, not priced separately, and not something a client could opt out of — so they ride along tax-free (though Dr. Coff herself owes tax on the paper and printing supplies she buys to make them, since she isn't reselling them to the client). The textbooks are different: because Dr. Coff also offers them for sale on their own, apart from the wellness program, they're treated as an actual taxable sale of tangible personal property, not an incidental extra. Under New York's "bundling" rule, when a package mixes taxable property (the books) with exempt services (the program) for one combined price, tax applies to the ENTIRE price unless the taxable portion is separately stated on the bill in a reasonable amount — in which case only that separately stated textbook charge is taxed. Because Dr. Coff will now be reselling the textbooks (rather than using them herself), she can buy them tax-free from her vendor going forward, but she must register as a sales tax vendor and collect and remit tax on her own sales of the books (and on the massage services if she ever expands into New York City, which has its own separate city tax on massage).

What this means for you

Service providers who bundle materials or products into a service package

If you sell a nontaxable service and separately offer some of the accompanying materials for standalone sale, structure your invoice to separately state a reasonable charge for that taxable item — otherwise New York taxes your entire bundled price, even the parts that would have been exempt on their own. Freebies that are never sold apart from the service and add no discernible separate value stay exempt as merely incidental to the service.

Corporate wellness, coaching, and training businesses

Coaching, consulting calls, and workshops themselves aren't taxable services in New York, and materials genuinely incidental to delivering them (handouts, a program calendar) don't change that — but be careful the moment you also sell any of those materials on a stand-alone basis, since that can convert them (and, if not separately billed, your whole package) into a taxable sale.

Massage and bodywork providers, especially any expanding into New York City

Massage services generally aren't taxed under the state sales tax, but New York City imposes its own local sales tax specifically on massage and similar services (with an exclusion for medical-related massage). If you only operate outside NYC, this doesn't apply — but check before expanding service there.

Common questions

Q: If I bundle a taxable product with a nontaxable service for one price, is the whole thing automatically taxable?
A: Yes, unless you separately state a reasonable charge for the taxable item on the invoice — then only that stated amount is taxed and the exempt service portion stays exempt.

Q: Are handouts and printed materials that come with a service always tax-free?
A: Only when they're genuinely incidental — not sold separately, not creating a separate charge, and not something the client could decline while still buying the service at a lower price. If materials are also sold on their own, they're treated as a real product sale.

Q: Does a business that resells textbooks or similar materials need to register as a sales tax vendor?
A: Yes — once you're reselling (rather than just using) an item as part of your service, you can buy it tax-free from your supplier with a resale certificate, but you must register to collect and remit tax on your own sales of it.

Q: Is massage therapy always exempt from sales tax in New York?
A: Under the state sales tax generally, yes — but New York City imposes its own separate local sales tax on massage and similar services (excluding certain medical-related massage), so a provider operating in NYC faces different rules than one operating elsewhere in the state.

Citations and references

Statutes and rules:

• Tax Law § 1101(b)(4)(i) (definition of retail sale)
• Tax Law § 1105(a), (c) (tax on tangible personal property and enumerated services)
• Tax Law § 1115(a)(34) (college-student textbook exemption, inapplicable here)
• Tax Law § 1212-A(a)(2); NYC Administrative Code § 11-2002(h) (NYC local tax on massage services)
• 20 NYCRR 526.6 (resale exclusion); 20 NYCRR 527.1(b) (bundled taxable/exempt items sold as a single unit)

Prior advisory opinions relied on:

• PricewaterhouseCoopers LLP, TSB-A-03(11)S; Salomon & Leitgeb CPA's, LLP, TSB-A-97(44)S (bundling rule extended to mixed services/property)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2005.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a05_17s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-05(17)S
Sales Tax
May 26, 2005

Office of Tax Policy Analysis
Technical Services Division
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S040413A

On April 13, 2004, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Dr. Joan Coff, P.O. Box 92, Meridian, NY. Petitioner, Dr. Joan Coff,
provided additional information pertaining to the Petition on June 1, 2004.
The issue raised by Petitioner is whether the services and products she provides to clients
in conjunction with workplace wellness programs are subject to sales tax.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner is a corporate health consultant who provides workplace wellness programs
which include designing, coaching and implementing the programs. While there are four parts to
a program, each program is sold as one package to clients under a yearly service contract.
1.

Petitioner consults with the client and assesses its needs. Petitioner
follows up by consulting with clients by phone for approximately seven
hours per year. Petitioner designs a yearly health calendar and provides
clients with one copy. Each month, a package of information related to
that month’s topic is provided to the client. Clients make copies of the
information (approximately five pages) to pass out to employees.

2

Petitioner provides four health workshops which include a one hour slide
presentation “class.” Attendees receive two pages of printed material
relating to the class.

3

Petitioner provides each employee with a textbook for the workshops.
Petitioner purchases textbooks from a vendor and currently pays sales tax
on these purchases.

4.

Petitioner contracts with a massage therapist to provide 12 days of on-site
chair massage to wellness client companies. Clients are charged a flat rate
per day for this service as part of the yearly contract. Petitioner pays the
contracted therapist.

While Petitioner encourages her clients to purchase the entire package, Petitioner will
allow clients to purchase textbooks separately without the wellness program services. Petitioner
charges her clients a single all-inclusive charge for the wellness program services provided in the
program. This charge will vary based on the number of employees receiving such services.
Petitioner does not plan to service clients in New York City.

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May 26, 2005

Applicable law and regulations
Section 1101(b)(4)(i) of the Tax Law defines the term “retail sale,” in part, as follows:
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. . . .
Section 1105(a) of the Tax Law imposes sales tax upon:
The receipts from every retail sale of tangible personal property, except as
otherwise provided in this article.
Section 1105(c) of the Tax Law imposes sales tax upon the receipts from every sale,
except for resale, of certain enumerated services.
Section 1115(a) of the Tax Law provides, in part:
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:
*

*

*

(34) Textbooks purchased by full and part time college students for their courses;
provided, however, that upon purchase such a student shall present a valid student
identification card, and such a textbook shall be required for a course being taken by such
student at an institution of higher education. For purposes of this subdivision the term:
(i) “Textbooks” includes only those books specifically written, designed or
produced for educational, instructional or pedagogical purposes.
(ii) “Institution of higher education” shall mean any institution of higher
education, recognized and approved by the regents of the university of the state of
New York accredited by a nationally recognized accrediting agency or association
accepted as such by the regents of the university of the state of New York, which
provides a course of study leading to the granting of a post-secondary degree, certificate
or diploma.

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Sales Tax
May 26, 2005

Section 1212-A(a)(2) of the Tax Law authorizes, and section 11-2002(h) of the
New York City Administrative Code imposes, a local sales tax on the receipts from the sale of
“massage services and similar services” in the city of New York, excluding charges for such
services rendered in conjunction with medical and similar services.
Section 526.6 of the Sales and Use Tax Regulations provides, in part:
(a) The term “retail sale” or “sale at retail” means the sale of tangible personal
property to any person for any purpose, except as specifically excluded.
*

*

*

(c) Resale exclusion. (1) Where a person, in the course of his business operations,
purchases tangible personal property or services which he intends to sell, either in the
form in which purchased, or as a component part of other property or services, the
property or services which he has purchased will be considered as purchased for resale,
and therefore not subject to tax until he has transferred the property to his customer.
*

*

*

(2) A sale for resale will be recognized only if the vendor receives a properly
completed resale certificate. See sections 532.4 and 532.6 of this Title.
(3) Receipts from the sale of property purchased under a resale certificate are not
subject to tax at the time of purchase by the person who will resell the property. The
receipts are subject to tax at the time of the retail sale.
*

*

*

(6) Tangible personal property purchased for use in performing services which are
taxable under section 1105(c)(1), (2), (3) and (5) of the Tax Law is purchased for resale
and not subject to tax at the time of purchase, where the property so sold (i) becomes a
physical component part of the property upon which the services are performed, or (ii) is
later actually transferred to the purchaser of the service in conjunction with the
performance of the service subject to tax.
*

*

*

7) Tangible personal property purchased for use in performing a service not
subject to tax is not purchased for resale.
Section 527.1(b) of the Sales and Use Tax Regulations provides, in part:

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Sales Tax
May 26, 2005

Taxable and exempt items sold as a single unit. When tangible personal property,
composed of taxable and exempt items is sold as a single unit, the tax shall be collected
on the total price.
Opinion
Petitioner provides workplace wellness programs. Petitioner designs, coaches and
implements the programs. For a set fee, a program includes phone consulting, a wellness
calendar with monthly handouts, wellness workshops with handouts, a textbook for each
employee and 12 days of on-site chair massage. The program materials and text books are
typically provided to the employees as part of Petitioner’s single all-inclusive charge for the
workplace wellness program. However, the textbooks may be purchased by clients separately
from the program services.
Petitioner’s program offers consulting, instructional, and massage services which are not
among the services enumerated as taxable under section 1105(c) of the Tax Law.
Presumably, the primary purpose of the service described in this Opinion is to provide
clients with a workplace wellness program. The issue is whether the handouts, wellness
calendar, and textbooks are incidental to Petitioner’s provision of this nontaxable wellness
service.
Factors which would indicate that the handouts, wellness calendar, or textbooks provided
by Petitioner to the clients are incidental to the provision of the wellness services include
whether: the handouts, wellness calendar, or textbooks are integrally connected to the provision
of the services; there is no separate charge for the handouts, wellness calendar, or textbooks; the
handouts, wellness calendar, or textbooks may not be purchased without purchasing the other
services or the services may not be purchased without the handouts, wellness calendar, or
textbooks; the value of the handouts, wellness calendar, or textbooks is less than and
incommensurate with the value of the service; and the cost for the services (or substantially
equivalent services) that include the handouts, wellness calendars, or textbooks is the same as the
cost for services sold without the handouts, wellness calendars or textbooks.
Under the circumstances described in this Opinion, it appears that the handouts and
wellness calendars are provided as an incident to the wellness services. They are not sold
separately and Petitioner does not appear to sell packages at a lower price in which such
materials are not provided to clients. Therefore, the handouts and wellness calendars provided to
Petitioner’s clients are incidental to the nontaxable wellness services.
Since the handouts and wellness calendars provided by Petitioner to the clients are
incidental to the wellness services, the purchase of such handouts and wellness calendars, or raw
materials such as paper and ink which become a component of such handouts and calendars, by
Petitioner are subject to the tax imposed by section 1105(a) of the Tax Law. Since Petitioner is

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May 26, 2005

not reselling these items, they are not exempt from tax as purchases for resale. See section
526.6(c)(7) of the Sales and Use Tax Regulations.
However, Petitioner offers the textbooks for sale separately from the rest of the wellness
service package. Thus, it appears that the textbooks are not provided as an incidental part of the
services but are instead sold to the clients. The sale of a textbook is the sale of tangible personal
property subject to tax under section 1105(a) of the Tax Law. Petitioner’s textbooks are not sold
to college students in a manner which makes them eligible for the exemption provided under
section 1115(a)(34) of the Tax Law.
Petitioner is providing clients with textbooks combined with Petitioner’s services. Such
transaction represents a mixed sale of exempt services and taxable property. When tangible
personal property composed of taxable and exempt items is sold as a single unit, the sales tax
must be collected on the total price. See section 527.1(b) of the Sales and Use Tax Regulations.
The rule has been extended to sales of taxable and exempt services and sales of services with
tangible personal property. See PricewaterhouseCoopers LLP, Adv Op Comm T&F, March 25,
2003, TSB-A-03(11)S; Salomon & Leitgeb CPA’s, LLP, Adv Op Comm T&F, July 23, 1997,
TSB-A-97(44)S. Therefore, the entire amount charged to the client would be taxable, unless the
amount charged for the textbooks is separately stated and reasonable. If charged separately (and
the charge is reasonable) the receipt for the books would be taxable and the charges for services
would not be taxable.
As previously mentioned, the sales of the textbooks by Petitioner to her clients are
subject to sales tax as retail sales of tangible personal property. As such, the purchases of
textbooks by Petitioner are excluded from sales tax as purchases for resale. However, to make
purchases for resale Petitioner is required to register as a vendor and Petitioner is required to
collect and remit sales tax on her sales of taxable items and services. See section 1134 of the Tax
Law.
Although Petitioner currently does not intend to service clients in New York City, it
should be noted that massage therapy sessions are subject to New York City sales tax as
provided for in section 1212-A of the Tax Law and section 11-2002(h) of the New York City
Administrative Code. If Petitioner extended her services to clients within New York City, she
would be required to collect the New York City sales tax on such massage services.

DATED: May 26, 2005

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.