Is a sign painter's charge for painting temporary advertising on car dealers' windshields and building windows subject to New York sales tax?

Plain-English summary

A sole proprietor hired by car dealers to hand-paint advertising copy -- price, options, and other details -- directly on the windshields of cars held for sale (washable off before the car is sold) asked whether his charges are taxable. He also sometimes paints similar advertising copy directly on the windows of dealers' buildings.

The Department worked through several possible categories before landing on the right one. It's not a nontaxable "advertising agency" service, because the painter doesn't consult on campaigns or place ads with media -- he just paints. It's not a taxable "maintaining/servicing" of tangible personal property either. Instead, painting on the windshields is "printing or imprinting" tangible personal property -- normally a taxable service -- but New York only taxes that service when performed for someone who furnishes the property and does not hold it for resale. Since the cars are the dealer's inventory held for resale, the printing/imprinting service on them is excluded from tax. Painting the same kind of copy directly onto a building's windows is different in kind -- it's a service to real property, not personal property, and New York's tax on real-property services doesn't reach printing or imprinting work performed on real property at all, so that's untaxed too. The painter's own purchases of paint, brushes, and drop cloths remain ordinary taxable retail purchases either way, and if he ever sells finished signage (rather than painting directly onto the customer's property) or paints a customer's own vehicle or property not held for resale, that work becomes taxable.

What this means for you

Sign painters, window artists, and similar service providers

The tax status of your work depends heavily on whose property you're painting and why they hold it: painting directly onto inventory a customer holds for resale (like a dealer's cars) is untaxed, and painting directly onto a building's real property (like storefront windows) is untaxed too -- but painting a customer's own non-resale property, or selling a finished sign as a product, is taxable. You still owe tax on your own supplies (paint, brushes, drop cloths) regardless.

Automobile dealers and other resale-inventory businesses

If you hire someone to paint temporary advertising directly onto vehicles or merchandise you're holding for sale, that charge shouldn't carry sales tax -- but confirm the painter isn't instead selling you physical signage, which would be a taxable sale of tangible personal property.

Accountants and tax professionals

This is a clean three-way sort: (1) printing/imprinting on property held for resale -- excluded from tax under § 1105(c)(2); (2) printing/imprinting directly on real property -- not covered by § 1105(c)(2) at all, and not "maintaining" real property either; (3) the painter's own material purchases -- always a taxable retail purchase since none of his services here are taxable enough to trigger the resale exclusion on his supplies.

Common questions

Q: Is painting advertising on a dealer's cars-for-sale taxable?
A: No -- because the cars are held for resale, not purchased by the dealer for its own use, the printing/imprinting service performed on them is excluded from sales tax.

Q: Is painting the same kind of advertising directly on a building's windows taxable?
A: No -- that's a service to real property, and New York's tax on printing/imprinting services doesn't reach work performed on real property.

Q: Does the painter owe tax on his own paint and supplies?
A: Yes -- his purchases of paint, brushes, drop cloths, etc. are ordinary taxable retail purchases regardless of whether his services to customers are taxable.

Q: What if the painter instead sells finished signs, or paints a customer's own (not-for-resale) property?
A: Both are taxable -- selling signage is a taxable sale of tangible personal property, and painting property not held for resale is a taxable printing/imprinting service.

Citations and references

Statutes and guidance:

• Tax Law § 1101(b)(4) (retail sale)
• Tax Law § 1105(a), (c)(2), (c)(3), (c)(5) (retail sales; producing/fabricating/printing services; installing/maintaining tangible personal property; maintaining real property)
• 20 NYCRR 526.6(c) (resale exclusion for materials used in a taxable or nontaxable service)
• 20 NYCRR 527.3(b)(5) (advertising agency services)
• TSB-H-81(102)S (Ruth Outdoor Advertising Co., Apr. 3, 1981)

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_24s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-05(24)S
Sales Tax
June 22, 2005

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

PETITION NO. S040714B

On July 14, 2004, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Steve Elliot, 1567 Wayne Port Road, Macedon, New York, 14502.
The issue raised by Petitioner, Steve Elliot, is whether charges for painting temporary
signage on automobile windshields and buildings for automobile dealers are subject to sales tax.
Petitioner submits the following facts as the basis for this Advisory Opinion.
Petitioner, a sole proprietor, is hired by automobile dealers to paint advertising copy on
the windshields of automobiles for sale. The painting includes the listing of price, automobile
options and any other information requested by the dealer and can be washed off by Petitioner’s
customer when the automobile is sold. Petitioner may also paint similar advertising copy on the
windows of the automobile dealers’ buildings.
Applicable law and regulations
Section 1101(b)(4) of the Tax Law defines retail sale, in part, as follows:
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. . . . (Emphasis added.)
Section 1105 of the Tax Law provides, in part:
Imposition of sales tax On and after June first, nineteen hundred seventy-one,
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.
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(c) The receipts from every sale, except for resale, of the following services:

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(2) Producing, fabricating, processing, printing or imprinting tangible personal
property, performed for a person who directly or indirectly furnishes the tangible
personal property, not purchased by him for resale, upon which services are performed.
(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 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. . . .
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(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. . . .
Section 526.6(c) of the Sales and Use Tax Regulations provides, in part:
(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.
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Example 9: A painter purchases plastic drop cloths and sandpaper and after
painting a customer's premises, leaves the used drop cloths and sandpaper at the
premises. The drop cloths and sandpaper, even though limited or no use after the
painting, have not been purchased for resale as they are items used by the painter
in performing a taxable service. The drop cloths and sandpaper are not actually
transferred to the purchaser of the service in conjunction with the performance of
the service.
(7) Tangible personal property purchased for use in performing a service not
subject to tax is not purchased for resale.
Example 10: A shoe repairman purchases leather to be used for resoling shoes.
His purchase of the leather is not a purchase for resale, even though the leather

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will be transferred to the customer in connection with the performance of the
service because the service he is performing is not taxable.
Section 527.3(b)(5) of the Sales and Use Tax Regulations provides, in part:
(5) Fees for the services of advertising agencies or other persons acting in a
representative capacity are excluded from the tax. Advertising services consist of
consultation and development of advertising campaigns, and placement of advertisements
with the media without the transfer of tangible personal property. . . .
Example 5: An advertising agency is hired to design an advertising program and
to furnish art work and layouts to the media. The fee charged by the agency to its
client for this service is not subject to the tax. However, if the layout and art work
is sold by the advertising agency prior to use by it to the customer for his use, the
advertising agency is making a sale of tangible personal property which is subject
to sales tax.
Opinion
Petitioner is hired by automobile dealers to paint advertising copy on the windshields of
automobiles held for sale. The services provided by Petitioner do not constitute advertising
services as described in section 527.3(b)(5) of the Sales and Use Tax Regulations as Petitioner
does not act in a representative capacity, consult or develop advertising campaigns, or place
advertisements with the media. The services provided by Petitioner do not constitute
maintaining, servicing or repairing tangible personal property within the meaning and intent of
section 1105(c)(3) of the Tax Law. Petitioner’s services may, nevertheless, be subject to sales
tax under section 1105(c)(2) of the Tax Law as producing, fabricating, processing, printing or
imprinting tangible personal property. See Matter of Ruth Outdoor Advertising Co., Dec St Tax
Comm, April 3, 1981, TSB-H-81(102)S. However, section 1105(c)(2) of the Tax Law provides
that tax is imposed on such services performed for a person who directly or indirectly furnishes
the tangible personal property, not purchased by him for resale. The property on which
Petitioner performs his services is held for resale. Therefore, Petitioner’s services are excluded
from the tax imposed under section 1105(c)(2) of the Tax Law and the charges for such services
are not subject to sales tax.
Where Petitioner performs his services on real property, for example, by painting
advertising copy on windows in his customer’s building, such services likewise do not constitute
maintaining, servicing or repairing within the meaning and intent of section 1105(c)(5) of the
Tax Law. See Matter of Ruth Outdoor Advertising Co., supra. Moreover, section 1105(c)(2)
does not impose tax on printing or imprinting services performed on real property. Accordingly,
were Petitioner to paint advertising copy on the windows of a customer’s building, charges for
such service would not be subject to sales tax.

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Petitioner’s purchases of materials (paint, brushes, drop cloths, etc.) used to perform his
services are retail purchases of tangible personal property subject to sales tax under section
1105(a) of the Tax Law. See section 526.6(c) of the Sales and Use Tax Regulations. Provided
that Petitioner does not make sales of tangible personal property (e.g., sell signage in the form of
tangible personal property) or taxable services (e.g., paint placards or signs provided by his
customer), he would not be required to register for sales tax purposes.
It is noted that if Petitioner paints or repaints tangible personal property for the
customer’s use (as distinguished from his service of printing or stenciling property held by his
customer for sale), receipts from the sale of such service are subject to sales tax under section
1105(c) of the Tax Law. If Petitioner sells signage to a customer for the customer’s use, such
sale is subject to sales tax as a sale of tangible personal property under section 1105(a) of the Tax
Law.

DATED: June 22, 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.