Are charges for towing and transporting motor vehicles subject to NY sales tax?

Plain-English summary

The petitioner repairs vehicles and heavy equipment and also operates tow trucks, heavy wreckers, and flatbed transports. It asked whether its towing and transportation charges are taxable. The Office of Counsel split the answer by why the vehicle is being moved:

• Towing a disabled/inoperative vehicle for repair = taxable. Towing an inoperative or disabled vehicle (by tow truck or flatbed) so that repair or maintenance can be performed is a constituent part of the maintenance service and is taxable under Tax Law 1105(c)(3) -- whether or not the tow provider itself does the repairs, and whether or not the towing is separately stated (Vecchio, TSB-A-97(10)S; Daley, TSB-A-97(8)S).
• Recovery services = taxable. Dislodging a vehicle and returning it to the roadway, or removing a disabled vehicle from the roadway, keep the vehicle in a "condition of fitness, efficiency, readiness, or safety" -- so they're repair/maintenance and taxable (1105(c)(3); 20 NYCRR 527.5(a)(3)). It doesn't matter whether tow truck or flatbed is used.
• Transporting an operable vehicle/equipment as a carrier = not taxable. Simply moving a vehicle or equipment that can be operated (or other property) from one place to another as a common or contract carrier -- e.g., flatbedding a classic car to a show, moving a forklift between facilities, or hauling a repossessed vehicle -- is not an enumerated taxable service (20 NYCRR 526.5(g)). The petitioner holds DOT and ICC carrier authority for this.
• But vendor delivery charges are taxable. A "receipt" includes any charge by a vendor to its customer for shipping or delivering property it sold or serviced -- even if separately stated (Tax Law 1101(b)(3)). So towing/transportation that delivers property (including property the vendor repaired) to the customer is taxable.
• Exemptions and rate. If a customer claims exemption from tax on a taxable tow, it must give the proper certificate: Resale Certificate (ST-120) if the vehicle is used exclusively for rental; Exempt Use Certificate (ST-121) if used directly and predominantly in production (1105-B(b)); or ST-121.1 for a tractor/trailer/semitrailer over 26,000 lbs (1115(g)). The tax rate is generally set by where the vehicle is delivered to the customer (or its designee).

What this means for you

Tow operators, repair shops, and haulers

The deciding question is why you're moving the vehicle. Towing a broken-down vehicle for repair/maintenance is taxable -- even if you don't do the repair and even if you list the tow separately. Recovery work (winching, roadway removal) is taxable maintenance too. But hauling a working vehicle or equipment as a common/contract carrier (car to a show, forklift between sites, repossession) is not taxable -- unless the haul is really your delivery of property you sold or serviced, which is taxable as part of your receipt.

Collect the right certificate

For exempt customers, get the matching form up front -- ST-120 (resale/rental), ST-121 (production use), or ST-121.1 (heavy tractor-trailers) -- and charge tax based on the delivery location.

Common questions

Q: I only tow -- I don't do the repairs. Is towing a broken-down car still taxable?
A: Yes. Towing a disabled/inoperative vehicle for repair or maintenance is taxable under 1105(c)(3) regardless of who performs the repair, and regardless of separate statement.

Q: I flatbed a running classic car to a car show. Taxable?
A: No. Transporting an operable vehicle as a common/contract carrier isn't an enumerated taxable service -- unless it's actually your delivery of property you sold or serviced.

Q: Is winching a car out of a ditch taxable?
A: Yes. Recovery services that restore a vehicle to a fit/operable condition are taxable maintenance.

Citations and references

• Tax Law section 1105(c)(3) (maintaining/servicing/repairing tangible personal property)
• Tax Law section 1101(b)(3) (receipt includes shipping/delivery charges)
• Tax Law section 1105-B(b) (production-use exemption)
• Tax Law section 1115(g) (services on tractors/trailers/semitrailers over 26,000 lbs)
• 20 NYCRR 526.5(g)(1) and 526.5(g)(3) (transportation/delivery charges)
• 20 NYCRR 527.5(a)(3) (maintenance services)
• TSB-A-97(10)S (Michael Vecchio); TSB-A-97(8)S (Henry Daley)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2010.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a10_25s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Counsel
Advisory Opinion Unit

TSB-A-10(25)S
Sales Tax
June 16, 2010

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S091030A

Name and address redacted, asks whether receipts from the service of towing and transporting
motor vehicles are subject to sales tax.
We conclude that the service of towing disabled or inoperative motor vehicles is subject to sales
tax, regardless of whether the towing provider itself performs repairs on the vehicles it tows. Transportation
of motor vehicles, heavy equipment, and other tangible personal property provided by common or contract
carriers is not an enumerated service subject to the sales tax.
Facts
Petitioner operates a business engaged in maintenance and repair of equipment, including cars,
trucks, tractors (as in tractor-trailer vehicles), and other heavy equipment. Petitioner also owns and operates
tow trucks, heavy wreckers for towing large vehicles such as tractors, dump trucks, etc., and flatbed transport
vehicles.
Petitioner tows and transports disabled and inoperative vehicles to his repair facility where repairs
are performed. Petitioner also delivers inoperable vehicles to other repair shops, and to the owners’ vehicle
maintenance facilities. In addition, Petitioner performs long distance transports of vehicles -- for example,
picking up and transporting a vehicle from Brooklyn, New York back to name of city redacted. The long
distance transports are typically billed by distance (by the mile) but also occasionally by the hour based on
the distance/time for the one way trip (e.g., Brooklyn to name of city redacted).
Large vehicles (e.g., trucks, tractors) that could not be transported using flatbed vehicles due to the
size/weight of the transported vehicle, underpass/overpass bridge clearance, etc., out of necessity, are always
transported via a tow using a heavy wrecker.
Petitioner has New York State Department of Transportation (DOT) and ICC carrier licenses and
authorizations.
Opinion
In general, charges for the service of towing disabled and inoperative vehicles are subject to
sales tax. See Michael Vecchio, Adv Op Comm T & F, February 25, 1997, TSB-A-97(10)S; Henry Daley,
Adv Op Comm T & F, February 24, 1997, TSB-A-97(8)S. Charges for the transportation of property, except
to the extent that the charge for a transportation or delivery service is part of a vendor’s receipt from the sale
of taxable property or services, are not subject to sales tax. See sections 526.5(g)(1) and 526.5(g)(3) of the
Sales and Use Tax Regulations.
The towing of an inoperative or disabled vehicle or equipment, either by tow truck or flatbed, so that
repair or maintenance services may be performed on that vehicle or equipment, whether by Petitioner or
another is considered a constituent part of the maintenance service subject to tax pursuant to section

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TSB-A-10(25)S
Sales Tax
June 16, 2010

1105(c)(3) of the Tax Law. The charge for the towing service, whether or not separately invoiced, and
whether or not separately stated on a bill or invoice to the customer for repair or maintenance, is subject to
sales tax under section 1105(c)(3).
Recovery services related to a motor vehicle’s or equipment’s ability to operate properly (e.g.,
dislodging a vehicle and returning it to the roadway, or removing a disabled vehicle from the roadway) are
activities that are related to keeping the motor vehicle or equipment in a condition of fitness, efficiency,
readiness, or safety, and therefore constitute repair or maintenance services to the vehicle or equipment.
Charges for these services are also subject to sales tax. See section 1105(c)(3) of the Tax Law and section
527.5(a)(3) of the Sales and Use Tax Regulations. It is immaterial whether such services are provided by
tow truck or flatbed.
If Petitioner has provided towing service that is subject to tax and its customer is claiming exemption
from sales tax, the customer must provide Petitioner with an appropriate and properly- completed exemption
document. For example, if the customer’s vehicle is used exclusively by the customer for rental purposes,
the customer may provide Petitioner with a properly completed Resale Certificate (Form ST-120) in lieu of
paying sales tax on the charges for towing. If the customer’s vehicle or equipment is used directly and
predominantly in the production of tangible personal property for sale, Petitioner’s towing service will be
exempt from sales tax under section 1105-B(b) of the Tax Law. The customer in that case should provide
Petitioner with a properly completed Exempt Use Certificate (Form ST-121) in lieu of paying sales tax on the
charges for towing. If the customer’s vehicle or equipment is a tractor trailer or semitrailer of which the
gross vehicle weight exceeds 26,000 pounds, the towing services will be exempt under section 1115(g) of the
Tax Law. The customer in that case should provide Petitioner a properly completed Exemption Certificate
for Tractors, Trailers, Semitrailers, or Omnibuses (Form ST-121.1).
The service of transporting property from one location to another is generally not a service upon
which sales tax is imposed. The transportation of a vehicle or equipment (including as an automobile
transporter) from one location to another by Petitioner as a private or common carrier of goods (i.e.,
transportation subject to regulation pursuant to Transportation Law section 2.8 and Article 8 of the
Transportation Law), if not otherwise provided in conjunction with the sale of, or repair, maintenance or
storage services to, the transported property (e.g.; Petitioner is merely flatbedding a classic car to or from a
car show, transporting a forklift from one customer facility to another, or transporting a repossessed vehicle),
constitutes a nontaxable transportation service. Thus, when Petitioner is providing transportation of vehicles
(capable of being operated) or equipment pursuant to its Department of Transportation (DOT) certificate and
ICC permit as a common carrier or contract carrier of goods by motor vehicle, its charges for such
transportation services are not subject to tax.
However, receipts subject to tax includes any charge by the vendor to the purchaser for shipping or
delivery regardless of whether such charges are separately stated (see Tax Law section 1101(b)(3)).
Accordingly, the charges by a vendor for towing or transportation whether by common carrier, contract
carrier or otherwise are subject to sales tax when the towing or transportation relates to the shipping or
delivery of the property (including property upon which taxable services were performed) by the vendor to
its customer.
Generally, the rate of tax to be collected is determined by the location where the vehicle or other
equipment that was the subject of the tow is delivered to the customer (i.e., the vehicle’s owner, operator,
etc.) or the customer’s designee. If the charges for the towing service are billed to the vehicle’s owner,
operator, etc. by the vendor who performed maintenance services upon the towed vehicle, or sold and
installed property in or on the vehicle (e.g., batteries, tires, hoses, belts, etc.), the rate of tax is determined by

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TSB-A-10(25)S
Sales Tax
June 16, 2010

the location where that vendor delivers the repaired vehicle to the customer upon completion of the
maintenance and repair, installation of the property sold, or other taxable sales and services.

DATED: June 16, 2010

NOTE:

/S/
Jonathan Pessen
Director of Advisory Opinions
Office of Counsel

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.