Is renting sophisticated temporary event structures taxable, and can the company accept a resale certificate from an event planner?

Plain-English summary

The petitioner provides sophisticated temporary structures -- event tents with lighting, heating, or air conditioning -- to house weddings and marketing events, often contracting through an event planner. Its staff sets up, operates (e.g., tall glass sidewalls, awnings, commercial HVAC with no user controls), and removes the structures. It asked (1) whether its charges are taxable and (2) whether it may accept a resale certificate from an event planner.

Taxable rental. Sales tax applies to receipts from the rental of tangible personal property (Tax Law 1105(a); "sale" includes a rental/lease/license to use, 1101(b)(5)). Possession transfers when the customer gets custody or the right to use, control, or direct the use of the property (20 NYCRR 526.7(e)(4)). Here the host controls the event (who attends, the order of ceremonies), uses the structure for the event, can direct where it goes (within reason), and bears the risk of loss -- compelling signs of possession (TSB-A-12(12)S). That the petitioner's staff must operate certain parts (sidewalls, HVAC) does not negate the customer's control. So the rental charges are taxable.

Resale certificates. Sales for resale are not retail sales (Tax Law 1101(b)(4)(i)(A)). A vendor that in good faith accepts a properly completed exemption certificate within 90 days is relieved of liability; "good faith" means no knowledge it is false or fraudulent (20 NYCRR 523.2; Saf-Tee Plumbing). Applying that:

• Event planner who re-rents the structure to a host = a resale; the petitioner may accept Form ST-120.
• Caterer who rents the structure to use in performing catering = not a resale (a caterer's purchases used in catering are taxable, 527.8(f)(2)(i)); the petitioner may not knowingly accept ST-120 and must charge tax.
• Event planner acting "as agent" for the host = the agent's acts are the host's acts, so the sale is deemed made directly to the host (no resale); the petitioner may not knowingly accept ST-120 from such an agent.
• The petitioner is not required to investigate or police its customers; it may accept a properly completed certificate as long as it has no knowledge the certificate is false or fraudulent.

What this means for you

Event / tent / equipment rental companies

Renting structures or equipment where the customer controls the event, directs placement, and bears risk of loss is a taxable rental -- even if only your crew operates the technical parts. Collect tax unless a valid resale basis applies.

Accepting resale certificates

Take Form ST-120 only where the customer is genuinely reselling/re-renting (e.g., an event planner re-renting to a host). Do not accept it from a caterer using the item in its service, or from a planner who is the host's agent (the sale is treated as made to the host). If you accept a properly completed certificate in good faith and timely, you are protected -- you need not police your customers.

Common questions

Q: Our staff operates the tent's HVAC and sidewalls -- doesn't that mean we keep possession? A: No. The host still controls the event, directs the structure's location, and bears risk of loss, so possession passed to the customer and the rental is taxable.

Q: An event planner gave us a resale certificate -- can we accept it? A: Yes, if the planner is re-renting the structure to the host. No, if the planner is acting as the host's agent (the sale is deemed direct to the host).

Q: Can a caterer give us a resale certificate for the tent? A: No. A caterer's purchases used in performing catering are not for resale; you must collect tax and may not knowingly accept ST-120.

Q: Do we have to verify our customer's resale claim?
A: No. You need not investigate or police customers; accepting a properly completed certificate in good faith (no knowledge it is false) protects you.

Citations and references

• Tax Law section 1105(a) (sales tax on tangible personal property)
• Tax Law section 1101(b)(5) (definition of sale; rental/lease/license to use)
• Tax Law section 1101(b)(4)(i)(A) (sale for resale)
• 20 NYCRR section 526.7(e)(4) (transfer of possession)
• 20 NYCRR section 527.8(f)(2)(i) (caterer's purchases not for resale)
• 20 NYCRR section 523.2 (good-faith acceptance of exemption certificate)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2013.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a13_19s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-13(19)S
Sales Tax
July 15, 2013

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

PETITION NO. S121005A

The Department of Taxation and Finance received a Petition for Advisory Opinion from name and address redacted. Petitioner asks if its charges for providing certain sophisticated temporary structures are subject to sales tax, and if so, whether it may accept a properly completed resale certificate tendered in good faith by an event planner. We conclude that Petitioner’s charges for providing these temporary structures are sales of tangible personal property subject to State and local sales taxes. We further conclude that Petitioner may accept a properly completed resale certificate tendered in good faith by a customer under the conditions described in this Advisory Opinion. Facts Petitioner’s offerings include sophisticated temporary structures to house various events, including marketing events and weddings. Petitioner is often engaged by an event planner who contracts with Petitioner and other subcontractors, on behalf of or as agent for the sponsor or host of the event. The temporary structures frequently involve sophisticated lighting, heating, or air conditioning equipment. Petitioner’s staff sets up and removes the structures and related equipment and is present at the event to properly and safely operate certain aspects of the equipment. The presence of Petitioner’s staff is necessary to provide services to the structure during the event. For example, a structure may use glass sidewalls that range in height from 13 to 28 feet above ground, or large awnings, both of which must be opened or closed by Petitioner’s staff. Petitioner’s trained technicians would also be required to install and operate large commercial HVAC systems, which have no user-operable controls. A sample “General Services Agreement” between Petitioner and a customer provides, in part that the location of the equipment is subject to the customer’s “reasonable approval” and that the customer “assumes all risk of loss or damage to the equipment while it is in [customer’s] possession.” Analysis Tax Law § 1105(a) imposes sales tax on the receipts from every retail sale of tangible personal property, unless specifically exempt under another provision of law. Section 1101(b)(5) of the Tax Law defines “sale” as any transfer of title or possession or both, rental, lease or license to use or consume, conditional or otherwise, in any manner or by any means whatsoever for a consideration. The terms “rental”, “lease” and “license to use” refer to all transactions in

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TSB-A-13(19)S
Sales Tax
July 15, 2013

which there is a transfer for a consideration of possession of tangible personal property without transfer of title to the property. See 20 NYCRR § 526.7(c)(1). “Transfer of possession” with respect to a rental, lease or license to use is defined in the sales tax regulations as meaning that one of the following attributes of property ownership has been transferred: (i) custody or possession of the tangible personal property, actual or constructive; (ii) the right to custody or possession of the tangible personal property; (iii) the right to use or control or direct the use of tangible personal property. 20 NYCRR § 526.7(e)(4). Here, Petitioner transfers possession of the temporary structure to its customer, because the customer has the right to use, control, or direct the use of the structure. The host of a wedding or other event has control over the event (e.g., deciding who may attend the event, the order of ceremonies, etc.), and the host and guests have the ability to use the structure to participate in the activities offered at the event. The host has the ability, within reasonable limits, to direct the location of the structure. While only Petitioner’s staff may operate certain aspects of the equipment, such as side walls, louvers and HVAC equipment, the host and his or her guests use the structure to participate in the event without assistance from Petitioner’s staff. The agreement between Petitioner and the customer also provides that the customer bears the risk of loss or damage to the equipment while in the customer’s possession. The customer’s right to select the persons who will use the structure, to decide when and where the structure will be used, and the customer’s liability for damage to the structure while it is in his or her possession are compelling indications that the customer has possession of the temporary structures. See TSB-A-12(12)S. The presence of Petitioner’s employees to operate certain aspects of the structure and address problems if they occur does not negate the customer’s control over the property. Accordingly, charges by Petitioner for the rental of these temporary structures are subject to sales tax. Under Tax Law § 1101(b)(4)(i)(A), sales for resale and sales for use in performing certain taxable services are not retail sales and are not subject to tax. The Sales and Use Tax Regulations provide that a vendor who in good faith accepts from a purchaser a properly completed exemption certificate within 90 days after delivery of the property or the rendition of the service is relieved of liability for failure to collect the sales tax with respect to that transaction. An exemption certificate is “accepted in good faith” when a vendor has “no knowledge that it is false or is fraudulently presented.” 20 NYCRR § 523.2; see also, Saf-Tee Plumbing v. State Tax Commission, 77 AD2d 1 (3rd Dep’t 1980). Rental by Petitioner of a temporary structure to an event planner who re-rents the structure to an event host may be excluded from sales tax as a sale for resale. If Petitioner, in good faith, timely accepts properly completed Form ST-120, Resale Certificate, from a customer, it is not required to collect sales tax. However, purchases of tangible personal property or services used or consumed by a caterer in performing catering services are not purchased for resale and are subject to sales tax. See 20 NYCRR § 527.8(f)(2)(i). If a caterer

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TSB-A-13(19)S
Sales Tax
July 15, 2013

rents a temporary structure from Petitioner, it may not tender Form ST-120 for that rental. Petitioner may not knowingly accept a resale certificate under these circumstances and must collect sales tax from the caterer for the rental. The petition also states that, in some cases, the event planner acts “as agent for the sponsor or host of an event. . . .” If the event planner is the agent of the host, it is not renting the structure for resale because the agent’s acts are considered to be the acts of his or her principal (i.e., the host). In that situation, the agent would not be reselling the equipment to the principal; the sale to the agent would be considered a sale directly to the host. Accordingly, an event planner acting “as agent” for the host may not tender Form ST-120 for the rental of a temporary structure from Petitioner. Petitioner may not knowingly accept a resale certificate from an agent under these circumstances and must collect sales tax from the agent for the rental. However, Petitioner is not under a duty to investigate or police its customers. See Saf-Tee Plumbing, supra. Petitioner may timely accept a properly completed resale certificate from its customer as long as Petitioner does not have knowledge that such certificate is falsely or fraudulently offered.

DATED: July 15, 2013

NOTE:

/S/
DEBORAH R. LIEBMAN
Deputy 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. The information provided in this document does not cover every situation and is not intended to replace the law or change its meaning.