Are charges for millwork shop drawing services for custom woodwork on a construction project subject to New York sales tax?

Plain-English summary

Aldo V. Vitagliano, a general contractor on construction projects in New York City and Westchester County, hires an out-of-state firm ("Company X") to prepare millwork shop drawings for custom woodwork like staircases, moulding, and built-in cabinetry. Company X isn't an architect — a licensed architect handles that separately — and Company X doesn't build the millwork either; it just produces the drawings (done off-site) and sends a project manager to on-site meetings to coordinate the design with the construction team. After the drawings are approved, the contractor separately hires a construction company, through a bid process, to actually build the millwork.

The Department ruled that Company X's shop drawings and coordination services are taxable "interior decorating and design services" under Tax Law § 1105(c)(7). That category specifically excludes work that qualifies as the licensed practice of architecture or engineering — but Company X isn't licensed to practice either one, so the carve-out doesn't help it. It also isn't hired to actually construct or install the millwork, so it can't qualify as an exempt capital-improvement construction service either. However, there's a favorable wrinkle for work performed in New York City: the city's own local sales tax on interior decorating and design services was repealed back in 1995, so while State tax (plus the ¼% Metropolitan Commuter Transportation District surcharge) still applies, NYC's local tax does not. If the drawings were ever billed as a standalone product completely separate from any design service, they'd instead be taxed as a straight sale of tangible personal property — same bottom line, different legal label.

What this means for you

General contractors hiring outside design or drafting firms

If you bring in an outside firm purely for design or drafting work (not construction), expect to pay sales tax on those charges as interior decorating/design services — unless the firm is a licensed architect or engineer performing licensed architectural/engineering work, or is actually performing the construction itself (which could instead be an exempt capital improvement).

Millwork, drafting, and design firms serving NY construction projects

Charging sales tax on shop-drawing and design-coordination work is required for NY-delivered projects, but remember the NYC carve-out: interior decorating and design services aren't subject to New York City's local sales tax, even though they're deep in NYC-focused construction contracts. Only State tax and the MCTD surcharge apply.

Accountants and tax professionals

The controlling distinction is licensed architecture/engineering (exempt) vs. unlicensed design/drafting (taxable under § 1105(c)(7)), further separated from actual capital-improvement construction/installation labor under § 1105(c)(3)/(5). Watch for the standalone-drawings scenario, which the Department treats as a straight tangible-property sale under TSB-A-98(43)S rather than a design service — same taxability, different statutory hook.

Common questions

Q: Are millwork shop drawings taxable if the drafting firm isn't a licensed architect?
A: Yes — they're taxable interior decorating and design services under § 1105(c)(7) unless performed by a licensed architect or engineer practicing within their license.

Q: Does New York City's local sales tax apply to these design services?
A: No. NYC repealed its local sales tax on interior decorating and design services in 1995, so only New York State tax (plus the MCTD surcharge) applies to work delivered in the city.

Q: What if the drawings are sold as a standalone product without any design service attached?
A: Then they're taxed instead as a straight retail sale of tangible personal property, delivered in New York (including NYC) — with the same underlying tax result.

Q: Would the analysis change if the drafting firm also built the millwork?
A: Potentially — construction/installation labor that qualifies as a capital improvement is treated differently (and can be exempt) under § 1105(c)(3)/(5), separate from the design/drafting charges addressed here.

Q: Can any contractor rely on this ruling for their own millwork drafting arrangement?
A: No. It's binding only on this specific petitioner's facts and can't be relied on by any other taxpayer.

Citations and references

Statutes, regulations, and guidance:

• Tax Law § 1105(c)(7) (interior decorating and design services)
• Tax Law § 1105(c)(3), (5) (installation/repair services, distinguished)
• Education Law § 7301, § 7201 (licensed architecture/engineering exceptions)
• Dept. Notice N-90-16 (Interior Decorating and Design Services)
• TSB-M-95(13)S (Repeal of NYC's Local Tax on Interior Decorating and Design Services)

Prior opinions cited:

• TSB-A-98(43)S, New York Society of Renderers, July 1, 1998

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_30s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-08(30)S
Sales Tax
July 21, 2008

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

PETITION NO. S070604A

On June 4, 2007, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Aldo V. Vitagliano, 150 Purchase Street, #9, Rye, New York 10580.
Petitioner, Aldo V. Vitagliano, submitted additional information pertaining to the Petition on
June 19, 2007.
The issue raised by Petitioner is whether the charges for millwork shop drawing services
as described below are subject to sales tax.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner, acting in the capacity of general contractor on several construction projects on
properties located in New York City and Westchester County, enters into an agreement with an
entity (Company X) located outside New York State for Company X to perform millwork shop
drawing services for Petitioner. Millwork shop drawing services relate to the design of custom
woodwork; e.g., staircases, moulding, and built-in cabinetry. Company X does not provide
architectural services; an architect is on the construction team to provide architectural services.
The services will include performing shop drawings with personnel at a location outside of
New York State and providing a millwork project manager to attend the site project meeting in
New York. At the site project meeting, the millwork project manager will work with the
construction team, including architects and designers, to coordinate and prepare the
implementation of the construction using the designs from the shop drawings. Petitioner, the
project architect, and the project designer review and approve the drawings. After the drawings
are approved, Petitioner, through a bid process, selects a contractor to perform the millwork
construction services. During the construction period, Company X’s millwork project manager
will participate in periodic supervision of the millwork at the construction site.
Applicable law and regulations
Section 1105 of the Tax Law imposes a tax on the following:
(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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TSB-A-08(30)S
Sales Tax
July 21, 2008

(7) Interior decorating and designing services, (whether or not in conjunction with
the sale of tangible personal property), by whomsoever performed, including interior
decorators and designers, architects or engineers; notwithstanding the foregoing, such
services shall not include services which consist of the practice of architecture, as defined
in section seventy-three hundred one of the education law, or the practice of engineering,
as defined in section seventy-two hundred one of the education law, if the services are
performed by an architect or engineer having a license or permit under the education law.
Department of Taxation and Finance Notice entitled New York State Sales and Use Tax
on Interior Decorating and Design Services, N-90-16, provides, in part:
Beginning June 1, 1990, charges for interior decorating and design services
relating to real property located in New York State and any interior decorating and design
services delivered into New York State are subject to state and local sales and use tax. . . .
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Persons required to charge and collect sales tax on interior decorating and design
services include interior decorators, interior designers, interior consultants, convention or
special events decorators, and anyone else who renders such services. Interior decorating
and design services include, but are not limited to: the preparation of layout drawings;
furniture arranging; design and planning of furniture, fixtures and other furnishing which
are not permanently attached to a building or structure; selection, purchase and
arrangement of surface coverings, draperies, furniture, furnishings and other decorations;
or any similar service. (Emphasis added)
New York City=s tax on interior decorating and design services was repealed by Chapters
297 and 298 of the Laws of 1995, effective December 1, 1995. See Technical Services Bureau
Memorandum Repeal of New York City=s Sales Tax on Interior Decorating and Design Services,
December 1, 1995, TSB-M-95(13)S.
Opinion
Company X performs millwork shop drawings and provides a project manager to
supervise the millwork for Petitioner’s construction projects in Westchester County and
New York City.
Interior decorating and design services are specifically enumerated services subject to
sales tax under section 1105(c)(7) of the Tax Law. The service of interior decorating and design
does not include services which consist of the practice of architecture or engineering by a person
licensed to practice architecture or engineering under the Education Law. The preparation of
millwork shop drawings and the provision of a manager to supervise the installation of such
millwork in real property located within this State constitute interior decorating and design
service under section 1105(c)(7) of the Tax Law. Company X in the present case is not an

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TSB-A-08(30)S
Sales Tax
July 21, 2008

architect. Petitioner does not engage Company X to provide architectural and engineering
services. Likewise, Company X is not hired to perform construction or installation of the
millwork, services that might qualify as a capital improvement to real property, and, therefore,
not be subject to tax pursuant to sections 1105(c) (3) and 1105(c)(5) of the Tax Law. The
services performed by Company X constitute interior decorating and design services which are
subject to New York State and local sales taxes pursuant to section 1105(c)(7) of the Tax Law,
provided the millwork is for the interior of the building or structure. See New York State Sales
and Use Tax on Interior Decorating and Design Services, N-90-16, supra. However, interior
decorating and design services delivered in New York City are not subject to the local New York
City sales tax. See Repeal of New York City’s Sales Tax on Interior Decorating and Design
Services, TSB-M-95(13)S, supra.
Therefore, charges for millwork shop drawing services relating to interior millwork are
interior decorating and design services subject to New York State and local sales and use tax.
The charges for services of interior decorating and design delivered in New York City are
subject to New York State sales and use tax (including the ¼% tax imposed on behalf of the
Metropolitan Commuter Transportation District), but are not subject to New York City sales and
use taxes.
To the extent that the charge to the customer represents the separate sale of drawings
without the inclusion of design services, it would be considered the sale of tangible personal
property subject to both State and local sales tax where the property is delivered in New York
State (including within New York City). See New York Society of Renderers, Adv Op Comm
T&F, July 1, 1998, TSB-A-98(43)S.

DATED: July 21, 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.