Are a billboard-advertising company's charges to clients, its poster-printing costs, its installer's charges, and its billboard-space fee subject to New York sales tax?

Plain-English summary

Spot and Company of Manhattan, Inc. arranges billboard advertising in New York City — on buildings, subway stops, and buses — for its clients. Its full-service package includes designing the poster, hiring a printer, paying the billboard owner for space, and hiring an installer to mount the poster. The company asked the Department to sort out the sales tax treatment of four separate money flows in this arrangement.

The Department addressed each one:

1. The company's fee to its own clients for arranging the display is exempt. This is a classic advertising-agency service — consultation, campaign design, and placement — which New York excludes from tax even though tangible items (the poster) are involved along the way. No sale of tangible personal property happens between the company and its client.
2. The company's own cost of creating the posters (paying a printer) is taxable to the company. Because the company's service to its client isn't taxable, everything it buys to perform that service — including printing services and materials — is a taxable purchase at retail. The company can't treat these as tax-free "for resale," since it's not reselling the posters as such to its client.
3. The installer's charge to the company for mounting posters on the billboard is taxable. Installation of tangible personal property is one of New York's enumerated taxable services, so the third-party installer must charge the company sales tax on its installation fee.
4. The billboard owner's charge to the company for the use of the billboard is exempt. Paying to display an ad on someone else's billboard is a purchase of advertising space, which the Department treats as an exempt advertising service, not a taxable rental of property.

What this means for you

Advertising and billboard-placement agencies

Your fee to clients for the full arrange-and-place service is exempt advertising — but that exemption doesn't extend upstream. You'll pay sales tax on your own purchases of printing, materials, and any taxable services (like installation) you buy to deliver that exempt service, since you can't buy those "for resale" the way a reseller of tangible goods could.

Billboard owners and installation contractors

Charging for billboard space is an exempt advertising-space sale. But if you're hired specifically to physically install posters or displays, that installation charge is a taxable service under § 1105(c)(3), regardless of who owns the finished ad campaign.

Accountants and tax professionals

This ruling is a clean illustration of the advertising-agency exclusion's limits: the exemption covers the agency's OWN fee for the campaign/placement service to its client, but doesn't create a resale exemption for the agency's own upstream purchases used to perform that nontaxable service. Watch for this split whenever a client provides an exempt service but purchases taxable inputs (printing, installation, fabrication) to deliver it.

Common questions

Q: Is a billboard advertising agency's fee to its client taxable?
A: No. A fee for designing and arranging a billboard display is an exempt advertising service, since there's no sale of tangible personal property to the client.

Q: If the agency's fee is exempt, does that mean everything the agency buys is also tax-free?
A: No. Because the agency's own service to its client isn't taxable, its own purchases (printing services, materials, other taxable services) used to perform that service are taxable retail purchases — the agency pays the tax, not the end client.

Q: Is hiring someone to physically install a billboard poster taxable?
A: Yes. Installing tangible personal property is a taxable service under § 1105(c)(3), regardless of who hired the installer or what the underlying campaign is for.

Q: Can another advertising company rely on this exact ruling?
A: No. This Advisory Opinion binds the Department only as to Spot and Company of Manhattan, Inc. and the facts it described. A business with a different fee structure or contracting arrangement should seek its own guidance.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(4)(i) (definition of retail sale)
• Tax Law § 1105(a) (imposition of sales tax)
• Tax Law § 1105(c)(1) (information services / advertising agent exclusion)
• Tax Law § 1105(c)(2) (producing, fabricating, processing, or printing tangible personal property)
• Tax Law § 1105(c)(3) (installing tangible personal property)
• 20 NYCRR 526.6(c) (resale exclusion)
• 20 NYCRR 527.3(b)(5), (c)(2) (advertising agency fees and material purchases)

Prior opinions cited:

• Stillman Advertising Inc., Adv Op Comm T&F, May 26, 1988, TSB-A-88(30)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2008.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a08_1s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-08(1)S
Sales Tax
January 7, 2008

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

PETITION NO. S070108A

On January 8, 2007, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Spot and Company of Manhattan, Inc., 512 7th Avenue, New York,
New York 10018-4604.
The issues raised by Petitioner, Spot and Company of Manhattan, Inc., are:

1. Whether its charges to its clients for arranging billboard displays are subject to sales
   tax.
2. Whether Petitioner's costs in creating billboard posters are subject to sales tax.
3. Whether charges to Petitioner by a third party contractor for installation of the posters
   on a billboard are subject to sales tax.
4. Whether charges to Petitioner by the owner of the billboard for Petitioner's use of the
   billboard are subject to sales tax.
   Petitioner submits the following facts as the basis for this Advisory Opinion.
   Petitioner is hired by its clients to arrange billboard displays for its clients’ products or
   services on various billboards in New York City. The billboards may be of a type that are
   mounted on buildings, installed at subway terminals or bus stops, or installed in subway cars or
   busses. As part of its services, Petitioner designs the billboard poster for its client, arranges for
   and pays the third party owner of the billboard to display its client’s poster on the billboard, hires
   a printer to print the billboard posters, and hires a third party contractor to install the posters on
   the billboards.
   Applicable law and regulations
   Section 1101(b)(4)(i) of the Tax Law defines the term retail sale, in part, to mean:
   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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Sales Tax
January 7, 2008

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.
*

*

*

(c) The receipts from every sale, except for resale, of the following services:
(1)
The furnishing of information by printed, mimeographed or
multigraphed matter or by duplicating written or printed matter in any other manner,
including the services of collecting, compiling or analyzing information of any kind
or nature and furnishing reports thereof to other persons, but excluding the furnishing
of information which is personal or individual in nature and which is not or may not be
substantially incorporated in reports furnished to other persons, and excluding the
services of advertising or other agents, . . .
(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, . . .
*

*

*

(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:
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

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TSB-A-08(1)S
Sales Tax
January 7, 2008

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.
*

*

*

(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.
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 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.
Section 527.3(c)(2) of the Sales and Use Tax Regulations provides:
All purchases of materials by an advertising agency for use in performing its
services are purchases at retail subject to sales tax.

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TSB-A-08(1)S
Sales Tax
January 7, 2008

Opinion
Issue 1
Petitioner asks whether charges to its clients for arranging billboard displays are subject
to sales tax.
In accordance with section 1105(c)(1) of the Tax Law, Petitioner's entire charge to a
client for arranging a billboard display is exempt as a charge for the sale of advertising services.
There is no sale of tangible personal property to Petitioner's customer. The customer is
purchasing a service not subject to sales tax. See Stillman Advertising Inc., Adv Op Comm T &
F, May 26, 1988, TSB-A-88(30)S.
Issue 2
Petitioner asks whether its costs in creating the billboard are subject to sales tax.
Petitioner designs the billboard advertisement for its client and hires a printer to print the
billboard posters. Since Petitioner is engaged in a service not subject to sales tax, all purchases
of tangible personal property used in performing such services are purchases at retail subject to
sales tax. Therefore, any purchases by Petitioner of tangible personal property that is used to
create its billboards are subject to sales tax under section 1105(a) of the Tax Law. See section
1101(b)(4) of the Tax Law, and sections 526.6(c)(7) and 527.3(c)(2) of the Sales and Use Tax
Regulations. Further, Petitioner must pay sales tax on its purchases of any enumerated taxable
services under section 1105(c) of the Tax Law, such as printing services taxable under section
1105(c)(2), that are used to perform Petitioner’s nontaxable service.
Issue 3
Petitioner asks whether charges to Petitioner by a third party for installation of the posters
on a billboard are subject to sales tax.
Petitioner hires a third party contractor to install the posters on the billboards.
Installation services are subject to sales tax pursuant to section 1105(c)(3) of the Tax Law.
Therefore, charges by a third party to Petitioner for installing Petitioner's posters on billboards
are subject to sales tax under section 1105(c)(3) and the third party is required to collect sales tax
from Petitioner on its installation charges.
Issue 4
Petitioner asks whether charges to Petitioner by the owner of the billboard for Petitioner's
use of the billboard are subject to sales tax.

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Sales Tax
January 7, 2008

Petitioner arranges for and pays the third party owner of the billboard to allow Petitioner
to post its client’s advertisement on the billboard. Such payments to the third party owner are
considered to be purchases of advertising space. Sales of advertising space are advertising
services that are not subject to sales tax. See section 1105(c)(1) of the Tax Law, and section
527.3(b)(5) of the Sales and Use Tax Regulations.

DATED: January 7, 2008

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Taxpayer Guidance Division

An Advisory Opinion is issued at the request of a person or entity. It is
limited to the facts set forth therein and is binding on the Department only
with respect to the person or entity to whom it is issued and only if the
person or entity fully and accurately describes all relevant facts. An
Advisory Opinion is based on the law, regulations, and Department
policies in effect as of the date the Opinion is issued or for the specific
time period at issue in the Opinion.