Does federal law (the FAAAA) preempt NY sales tax on interstate movers' storage-in-transit lasting more than 30 days?

Plain-English summary

An association of household-goods moving companies challenged, on federal preemption grounds, the Department's policy that "storage-in-transit" by an interstate mover is subject to New York sales tax when it lasts more than 30 days. In a typical interstate move, a national van line may store the customer's goods on either end before final delivery; if storage runs past the mover's tariff limit, responsibility passes to the local storage company. New York's Tax Law 1105(c)(4) taxes the service of storing property not held for resale, and the Department's policy (TSB-M-82(22)S) makes storage-in-transit taxable for the full period if it exceeds 30 days. The movers argued the FAAAA (Federal Aviation Administration Authorization Act) preempts this.

The Office of Counsel concluded the policy is not preempted:

• The "price/route/service" clause doesn't reach this tax. The FAAAA (49 USC 14501(c)) bars state laws "related to a price, route, or service" of a motor carrier. But preemption analysis starts with a presumption against it, especially in areas of traditional state regulation like taxation. The petition showed only a tenuous, remote effect on the movers' pricing (it didn't even quantify how many moves involve 30-plus-day storage or how material the tax is), and the tax doesn't require carriers to provide any added service -- distinguishing Rowe v. New Hampshire Motor Transport (where a state law forced carriers to perform extra verification). Compare Morales; Mendonca (prevailing-wage law not preempted despite a claimed 25% price increase).
• The FAAAA's tax clause is separate -- and narrower. The FAAAA has a distinct preemption provision for state taxes, 49 USC 14505, which covers only taxes on passenger transportation in interstate commerce. New York's tax is on storage of property, so 14505 doesn't apply. And the very fact that Congress wrote a separate tax clause shows it didn't intend 14501(c) to reach taxes at all.

So the FAAAA does not preempt New York's tax on movers' storage of property lasting more than 30 days.

What this means for you

Household-goods movers and storage providers

Storage-in-transit that runs past 30 days is taxable in New York for the entire storage period, and federal trucking-deregulation law doesn't shield it. If you provide storage on either end of an interstate move, plan to register, collect, file, and keep records as a vendor on those storage charges. A general "we're an interstate carrier, so we're federally protected" argument won't defeat a tax on the storage service -- the FAAAA's tax clause is limited to passenger transportation.

Customers

Expect New York sales tax on long-term storage-in-transit (more than 30 days) connected with your move.

Common questions

Q: Is storage-in-transit on an interstate move taxable in New York?
A: Yes, if it lasts more than 30 days -- then it's taxable for the full period under 1105(c)(4).

Q: Doesn't federal trucking law (FAAAA) preempt that tax?
A: No. The price/route/service clause is too remote from this tax, and the FAAAA's separate tax clause covers only passenger transportation, not storage of property.

Q: We just store the goods past the mover's limit -- are we the one who collects?
A: Once responsibility passes to the local storage company, it provides the taxable storage service; movers and storage providers should confirm who is the vendor for the storage period.

Citations and references

• Tax Law section 1105(c)(4) (storage of tangible personal property)
• 49 U.S.C. section 14501(c) (FAAAA preemption of motor-carrier price/route/service laws)
• 49 U.S.C. section 14505 (FAAAA preemption of state taxes on passenger transportation)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2011.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a11_16s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-11(16)S
Sales Tax
May 20, 2011

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

PETITION NO. S110110A

Petitioner challenges, on Federal preemption grounds, the policy of the Department of Taxation
and Finance that a storage-in-transit service provided by interstate household goods motor carrier lasting
more than 30 days is subject to New York’s state and local sales and use tax on storage (Tax Law §
1105[c][4]). We conclude that the policy is not preempted by Federal law.
Facts
Petitioner, an association of companies in the household goods moving business (“movers”),
gives the following description of the moving business. The national van lines contract for a move from
one state to another. The national van lines have contracts with local movers in each of these states and
arrange for the move on behalf of the customer. The national van line may also arrange for storage of the
customer's goods on either end of the move prior to the final delivery of the goods (“storage-in-transit”)
by entering into contracts with local moving companies that have storage facilities. During the storagein-transit period, the national van line remains liable to the customer for the safe storage of the goods.
Known as household goods motor carriers under Federal law, movers must file tariffs with the
Surface Fleet Board of the Federal Department of Transportation, which tariffs must define the maximum
length of time for which they will provide storage-in-transit services. If storage continues after the
expiration of the maximum storage-in-transit period, the movers generally cease to have responsibility for
the goods, as the responsibility for the goods transfers to the local company performing the storage
service. The tariffs must also state the rate for storage-in-transit services. According to Petitioner, the
average period for which household goods movers will offer storage-in-transit services is 180 days. The
petition does not disclose the percentage of interstate moves that require storage-in-transit for more than
30 days.
Analysis
Tax Law § 1105(c)(4) imposes sales tax on the service of storing tangible personal property not
held for resale in the regular course of business. In TSB-M-82(22)S, the Department stated that storagein-transit is taxable for the full period during which storage occurs if it lasts longer than 30 days.

-2-

TSB-A-11(16)S
Sales Tax
May 20, 2011

Petitioner contends that this policy is preempted by the Federal Aviation Administration
Authorization Act of 1994 (“FAAAA”), Pub.L. No. 103-305, § 601(c), 108 Stat. 1569, 1606, 49 U.S.C.
§§ 14501-14505).1 Specifically, USC section 14501(c)(3) provides that:
[A] State, political subdivision of a State, or political authority of 2 or more States may
not enact or enforce a law, regulation, or other provision having the force and effect of
law related to a price, route, or service of any motor carrier (other than a carrier affiliated
with a direct air carrier covered by section 41713(b)(4) or any motor private carrier,
broker, or freight forwarder with respect to the transportation of property.
Petitioner points out that the Act defines “transportation,” in pertinent part, as follows:
the movement of passengers or property, or both, regardless of ownership or an
agreement concerning use; and services related to that movement, including arranging
for, receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage
(49 USC § 13102[23][B]). Under regulations enacted by the Department of Transportation, interstate
movers must file a tariff with the Surface Transportation Board, stating a charge for storage-in-transit and
the length of time that such storage-in-transit will continue before converting to permanent storage
provided by the warehouse where the goods are being stored and no longer the responsibility of the
interstate carrier.
Whether a Federal law preempts State law is a question of Congressional intent (see Morales v.
Trans World Airlines, Inc., 504 U.S. 374, 383 [1992]). Preemption analysis starts with a presumption
against preemption (see New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins.
Co., 514 U.S. 645, 654 [1995]). This presumption against preemption is stronger in areas of traditional
state law regulation (see Id. at 655). Thus, state laws concerning matters traditionally regulated by states
are preempted only if Congress's intent to suppress state powers is “clear and manifest” (City of
Columbus v. Ours Garage and Wrecker Service, Inc., 536 U.S. 424, 438 [2002]). Where the Federal
statute in question has an express preemption clause, the preemption analysis must start with “the plain
wording of the clause, which necessarily contains the best evidence of Congress' pre-emptive intent”
(Sprietsma v. Mercury Marine, 537 U.S. 51, 62-63 [2002]).
The issue here then is whether the Department’s policy under which storage-in-transit by an
interstate mover lasting beyond 30 days is subject to sales tax violates section 49 USC 14501(c), which
preempts State laws “related to a price, route, or service of any motor carrier.” Section 14501(c) is
identical to the preemption provision in the Airline Deregulation Act (49 USC § 1301 et seq., [ADA]). In
Morales, supra, the Supreme Court interpreted the “relate to” language in the ADA to mean that a State
law that only indirectly affected the rates, routes or services of an air carrier could run afoul of the ADA

The FAAAA was amended by section 103 of the Interstate Commerce Commission
Termination Act of 1995, Pub.L. No. 104-88, 109 Stat. 803, 899 (1995), and recodified at 49
U.S.C. §§ 14501-14505.
1

-3-

TSB-A-11(16)S
Sales Tax
May 20, 2011

(see Id. at 385-386). The Court acknowledged, however, that it was possible for a State law to affect an
air carrier's fares in “too tenuous, remote, or peripheral a manner” to have preemptive effect (Id. at 390).
The movers already separately charge for storage-in-transit. The only issue is whether the State
can tax the storage service. The petition does not supply facts that would justify the conclusion that
application of the sales tax would have more than a de minimis effect on pricing. The petition does not
quantify the percentage of interstate moves that require storage-in-transit lasting longer than 30 days.
Moreover, the petition does not set forth facts that would establish that the addition of sales tax would be
material in relation to a mover’s typical charge for an interstate move. In addition to requiring movers to
collect sales tax on their storage-in-transit charges, the Department’s policy would require Petitioner to
comply with all the duties of a vendor, i.e., registering for sales tax purposes, filing returns, and
maintaining proper records. While these additional duties would impose some costs on movers, the
additional costs seem “too tenuous and remote” from movers’ rates, routes, or services to be preempted
by section 14501(c) (see Californians For Safe & Competitive Dump Truck Transp. v. Mendonca, 152
F.3d 1184, 1187 [3d Cir 1998] cert. denied 526 U.S. 1060 [1999][holding that California’s prevailing
wage law was not preempted by the FAAAA notwithstanding the defendant’s contention that complying
with the law would increase its prices by 25%, compel it to use independent contractors, and re-direct and
re-route equipment to compensate for lost revenue]; DiFiore v. American Airlines, Inc., 561 F.Supp.2d
131 (D.Mass. 2008][Massachusetts Tips Law that made air carrier’s baggage handling fee illegal found
not to violate ADA]). Moreover, applying the State’s sales tax to a mover’s storage charges is not the
type of economic regulation of interstate carriers that was the target of the FAAAA (see City of Columbus
v. Ours Garage & Wrecker Service, Inc., supra, 536 U.S. at 440 [2002]).
Against this conclusion petitioner relies on the Supreme Court’s decision in Rowe v. New
Hampshire Motor Transport Ass'n, supra, which held that section 14501(c) preempted a Maine law
insofar that it required Maine tobacco retailers to only ship their tobacco products by those carriers who,
before releasing the products to the addressees, could verify certain information about the recipients,
including that they were of legal age to consume the tobacco products. This case is distinguishable,
however. Whereas the Maine law clearly required motor carriers to provide an additional service to
customers, the Department's imposition of sales tax on storage lasting longer than 30 days does not
require carriers to provide any additional services to the customer.
In any event, petitioner's assumption that the preemption provision in the FAAAA that applies to
a State tax provision is section 14501(c) appears faulty. The FAAAA has a separate preemption
provision for State taxes, 49 USC section 14505, which provides:
A State or political subdivision thereof may not collect or levy a tax, fee, head
charge, or other charge on-(1) a passenger traveling in interstate commerce by motor carrier;
(2) the transportation of a passenger traveling in interstate commerce by motor
carrier;

-4-

TSB-A-11(16)S
Sales Tax
May 20, 2011

(3) the sale of passenger transportation in interstate commerce by motor carrier;
or
(4) the gross receipts derived from such transportation.
Thus, the only State tax provisions that the FAAAA preempts are tax provisions that apply to
transportation of passengers. Here, because the tax at issue is a sales and use tax that only applies to
storage of property, section 14505 does not apply. More significantly, the fact that Congress considered it
necessary to add a preemption provision that applies specifically to State taxes makes clear that Congress
did not intend for section 14501(c) to apply to taxes.
In sum, the FAAAA does not preempt the Department's policy that a mover's charges for storage
of tangible personal property lasting more than 30 days are subject to sales tax under Tax Law §
1105(c)(4).

DATED: May 20, 2011

/S/
DEBORAH LIEBMAN
Deputy Counsel

NOTE:

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.