Are an FBO's charges for aircraft community-hangar space and tie-downs subject to NY sales tax as a storage service?

Plain-English summary

The petitioner is a fixed base operator (FBO) at a New York airport. It rents aircraft tie-down slots (outdoor) and space in a community hangar (indoor). The question: are these charges a taxable storage service?

The relevant law:
- Tax Law 1105(c)(4) taxes the service of storing tangible personal property not held for resale; 1105(c)(6) taxes parking/garaging/storing of motor vehicles.
- Rentals of real property are not taxable, even if used for storage -- but only if it's truly a lease (the tenant's use is exclusive of the landlord's access).
- Critically, TSB-M-04(8)S says that hangaring and tie-down of aircraft is not taxable as long as the owner or lessee has regular or immediate access to the aircraft, and that providing parking for aircraft is not an enumerated taxable service.

The Office of Counsel concluded the charges are not taxable:

• The FBO did not establish a real-property lease -- it never showed an operator's use of a tie-down or hangar space was exclusive of the FBO's own right of access. (Operators have no designated transient slot; the FBO retains entry rights for inspection and repairs.)
• But that doesn't make it taxable storage. Because each aircraft operator has immediate access to the aircraft -- 24/7/365 at the tie-downs, and within 45 minutes on request at the community hangar -- the facilities are aircraft parking, not storage.
• Aircraft parking is not a taxable enumerated service (TSB-M-04(8)S; 20 NYCRR 527.6(b)(3)), so the receipts are not subject to sales tax.

What this means for you

Airports, FBOs, and aircraft owners

Charges for tie-downs and hangar space for aircraft generally aren't subject to NY sales tax. The pivotal fact is access: if the owner can get to the aircraft on demand (immediately or within a short window), the arrangement is treated as nontaxable aircraft parking, even if it isn't a formal real-property lease. The lack of an exclusive lease doesn't flip it into a taxable storage service.

When could it be different?

The storage exclusion turns on access. If an arrangement actually denied the owner regular access and looked like warehousing of the aircraft, the analysis could change. Document the operator's around-the-clock or on-request access.

Common questions

Q: Do I owe NY sales tax on hangar rent or a tie-down fee for my plane?
A: Generally no. When you have regular or immediate access to your aircraft, the charge is nontaxable aircraft parking, not a taxable storage service.

Q: Does it matter that the FBO didn't give me an exclusive leased space?
A: No. Even without an exclusive real-property lease, immediate access to the aircraft makes it nontaxable parking under TSB-M-04(8)S.

Q: Is aircraft parking an enumerated taxable service?
A: No. The Department has stated that providing parking for aircraft is not a service enumerated as taxable under section 1105(c).

Citations and references

• Tax Law section 1105(c)(4) (tax on storing tangible personal property)
• Tax Law section 1105(c)(6) (tax on parking/garaging/storing motor vehicles)
• 20 NYCRR section 527.6 (storage; real property rental factors)
• TSB-M-04(8)S (hangaring and tie-downs of aircraft)
• TSB-M-08(14)S (lease/rental of real property for parking, garaging, or storage of motor vehicles)
• TSB-M-86(3)S (taxable status of rental of self-service mini-storage units)

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_56s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-10(56)S
Sales Tax
November 10, 2010

Office of Counsel
Advisory Opinion Unit
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S100224A

Petitioner name redacted asks whether its receipts from aircraft community hangar rentals and
aircraft tie-downs are subject to New York State sales taxes.
We conclude that Petitioner’s charges for aircraft community hangars and aircraft tie-downs do not
constitute the service of the storage of tangible personal property subject to the sales tax imposed pursuant to
section 1105(c)(4) of the Tax Law.
Facts
Petitioner is a Fixed Base Operator (FBO) at a New York airport. Petitioner has a lease for the
premises and license to operate from the airport authority that runs the airport.
Petitioner claims that, generally, an airport authority may require FBOs operating on their premises
to provide hangar and tie-down facilities for aircraft used in personal or charter services, sell fuel, provide
repair and maintenance services, provide pilot lounges, and various other services and facilities.
Petitioner provides tie-down and hangar facilities for aircraft based at its airport, and for aircraft
based elsewhere that fly into Petitioner’s airport (transient aircraft). As relevant to this Advisory Opinion,
Petitioner provides tie-down facilities and space in community hangars.
Tie-down facilities are outdoor areas located at the airport. Operators of aircraft based at the airport
are given specified slots where they can tie down their aircraft. These customers can move their aircraft to
and from the tie-down area without the assistance of the FBO. Operators of transient aircraft do not have a
specified slot where they can tie down their aircraft. Rather, the FBO brings the aircraft to and from the
transient tie-down lot. In both lots, operators have access to their aircraft around the clock, 365 days a year.
In both lots, operators can only perform maintenance that will not interfere with access of other operators to
their aircraft. Petitioner has written use and occupancy agreements with only one of the operators using its
tie-down facilities.
The community hangar is an indoor facility that is available for private aircraft. Each aircraft in the
community hangar is available to its operator 24 hours a day, 365 days a year. The operator has a key to the
hangar. Although operators might remove their aircraft from the hangar without assistance, that practice is
discouraged due to the possibility of damage to other aircraft in the hangar in close proximity to the aircraft
being moved. On being advised that an aircraft is needed, Petitioner’s employees go to the hangar to retrieve
the aircraft. The aircraft is towed to a departure spot and is ready for the arrival of its operator. Petitioner
assures the aircraft operators that their aircraft will, upon request, be removed from the hangar within 45
minutes, if not sooner, of an operator’s request to have the aircraft available. Operators must leave their
aircraft unlocked to facilitate Petitioner’s ability to retrieve the aircraft upon the operator’s request; however,
the operators retain the keys to the aircraft. Maintenance that might hinder Petitioner’s ability to retrieve
aircraft from the hangar is not permitted. The community hangar is generally used by aircraft operators that

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November 10, 2010

are based at the airport, although the hangar is available for use by operators of transient aircraft. Use of a
community hangar by transient aircraft operators is infrequent.
Petitioner has written use and occupancy agreements with most of its community hangar clients,
except that there might not be written agreements for month to month occupancies. The various agreements
do not designate any particular space that the aircraft operator is to use and do not limit the FBO’s access to
any of the space in the hangar. The agreements generally provide that the client is responsible for the
cleanliness of its space but that the client is generally not responsible for repairs to the space. Clients agree
not to move or start the aircraft or engines while the aircraft is in a hangar. Petitioner is responsible for
towing or repositioning of aircraft into and out of the contracted space, but the client is responsible for
securing the aircraft while positioned in its space. Petitioner retains the right to enter the premises for the
purpose of inspecting the space and for repairs, additions, alterations, etc., and the clients may not impede
Petitioner in those activities. Some of the agreements provide that the client may not perform maintenance
of the aircraft while it is in the hangar, but other agreements permit maintenance, cleaning, and other services
(other than fueling and towing) by the client or a third party of the client’s choosing, if the entity has
adequate insurance coverage. If the agreements permit clients to perform their own aircraft maintenance
services, the agreements require the clients to keep the space clean, and store and stow tools, work stands,
etc. Petitioner charges the client additional fees for the use of added space to stow and store the maintenance
tools. It also restricts noise (playing music on radios, etc.).
The agreements contain extensive provisions relating to the client’s maintenance of insurance
coverage (worker’s compensation, commercial liability, aircraft accident and liability, ground risk and flight
physical damage, property liability, etc.). The agreements specifically state that they are not to be construed
as creating a bailment, and that Petitioner is not to be considered a bailee or have any obligation to maintain
or secure the customer’s property. Furthermore, the agreements provide that they are not to be construed as
granting an interest in real property, or conveying an estate or vesting property rights in the client, and do not
create a landlord-tenant, partnership, agency, joint venture, bailment, trust, or fiduciary relationship. The fee
charged to operators for the use of the hangar space varies depending on a number of factors, including the
size of the aircraft. Otherwise, the operators are treated equally.
Petitioner maintains that the aircraft that use its community hangar or tie down facilities are all flown
at least once a month.
Analysis
Sales tax is imposed on the receipts from the sale of the services of storing all tangible personal
property not held for resale (Tax Law § 1105[c][4]), and the parking, garaging, or storing of motor vehicles
by persons operating garages, parking lots or other places of business engaged in providing parking, garaging
or storing for motor vehicles (Tax Law § 1105[c][6]). Receipts from leases and rentals of real property are
not subject to the sales tax, notwithstanding that the rented property is used by the lessee for what would
otherwise be a taxable purpose, such as for the storage of tangible personal property or for the parking,
garaging or storing of motor vehicles (See Sales Tax Reg. § 527.6[b][2]; TSB-M-08(14)S, Sales Tax
Treatment of a Lease or Rental of Real Property for the Purpose of Parking, Garaging, or Storage of Motor
Vehicles, December 17, 2008; TSB-M-86[3]S, Taxable Status of the Rental of Self-Service Mini Storage
Units, January 16, 1986).
In distinguishing between the existence of a landlord-tenant relationship and the sale of a storage
service, the Department has cited the following factors: whether there is a lease agreement; the purchaser’s
right of access to the premises and to its property maintained therein during normal business hours of the

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premises; responsibility for maintaining the space (payment for utilities services, cleaning, trash removal,
etc.); exclusivity of the right to occupy the space (with either the owner/landlord being excluded during the
tenancy or the person whose property is being stored having no access to the warehouse or its property); and
whether the tenant has insurable interests in the premises (See Sales Tax Reg. § 527.6; TSB-M-08[14]S,
supra; TSB-M-04(8)S, Summary of 2004 Budget Legislation and Other Recently Enacted Legislation
Relating to Sales and Compensating Use Taxes, December 3, 2004; TSB-M-86[3]S, supra)
In TSB-M-04(8)S, supra, the Department stated the following in respect of hangaring and tie-downs
of aircraft:
It should be noted that unless otherwise exempt, the storage of tangible personal
property is subject to sales tax. However, in certain cases, where the owner or lessee of the
tangible personal property has unlimited control or access to the place where the property is
stored, the charge for such renting or leasing real property is not subject to sales tax. See
TSB-M-86(3)S, Taxable Status of the Rental of Self-Service Mini-Storage Units. Therefore,
the leasing or renting of a hangar or other real property to park the aircraft, and the parking
of aircraft in or on hangars, ramps or tiedowns is not subject to sales tax, provided the
owner or lessee of the aircraft has regular or immediate access to the aircraft. Also, the
service of providing parking for aircraft is not a service enumerated as subject to sales tax
under section 1105(c) of the Tax.
Thus, the Department has treated tie-downs and the hangaring of aircraft under appropriate circumstances as
the non-taxable rental of real property or an unenumerated service, and has not treated them as a taxable
storage service under section 1105 of the Tax Law.
Here, Petitioner has not established that its agreements with aircraft operators to use either the tie
down facility or the community hangar constitute leases of real property because it has not shown that an
aircraft operator’s use of a space in those facilities is exclusive of Petitioner’s right of access. Nonetheless,
because an aircraft operator has immediate access to his or her aircraft in both facilities, those facilities
appear to constitute aircraft parking, rather than storage, and aircraft parking is not taxable (TSB-M-04[8]S,
supra; Sales Tax Reg. § 527.6[b][3]).

DATED: November 10, 2010

NOTE:

/S/
DANIEL SMIRLOCK
Deputy Commissioner and 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.