When does a NYC livery company collect sales tax -- on its own affiliated-livery trips or when it refers a job to a black car?

Plain-English summary

The petitioner is a New York City livery company servicing corporate accounts. It asked, across three scenarios, whether it must collect sales tax on its transportation charges, given the exclusion in Tax Law 1105(c)(10) for certain trips.

The key definitions: Tax Law 1105(c)(10) taxes transportation service provided in New York. "Transportation service" (1101(b)(34)) includes livery service by limousine, black car, or other for-hire vehicle with a driver -- but excludes, in a city of 1 million+ (i.e., NYC), an affiliated livery vehicle (AFV). A black car is a for-hire vehicle dispatched from a central facility; an AFV is a TLC-licensed, base-dispatched for-hire vehicle (seating ≤6) charging by flat rate/time/mileage/zones. So black-car/limo trips are taxable, while AFV trips that begin or end in NYC are excluded (1101(b)(38); TSB-M-13(2)S).

The Office of Counsel's three scenarios:

• Scenario 1 -- refer a call to a black car = taxable. The livery base has no AFV available, refers the call to a black-car (BC) base, a black car does the trip, and the livery base bills/collects the fare. Because the ride was by a black car (not an AFV), the fare is taxable transportation service, and the livery base -- as the seller -- must charge/collect tax, register (at least 20 days before providing the taxable service, Tax Law 1134), keep records, file, and remit. It may buy the ride from the BC base for resale with Form ST-120 (otherwise the BC base charges it tax).
• Scenario 2 -- BC base converts to a livery base = not taxable. When a BC base converts to a livery base and its former black cars become AFVs, trips by those AFVs that begin/end in NYC are excluded -- no tax. If it makes no taxable sales, it should file a final return and surrender its Certificate of Authority. But if it will refer calls to a BC base (Scenario 1), it must register and comply.
• Scenario 3 -- livery buys a BC base's assets/name = not taxable. A livery base that buys a BC base's customer list, drivers, and name (and operates under that name as a livery base using AFVs) provides excluded service for trips beginning/ending in NYC -- no tax. Again, if it refers calls to a BC base, it must collect tax and register.

What this means for you

NYC for-hire operators (livery bases, black-car bases)

What's taxed is the type of vehicle that actually provides the ride, not the company's name or history. AFV trips beginning/ending in NYC are excluded; black-car/limo trips are taxable. Converting your license or buying a black-car base's name doesn't make black-car fares disappear -- and referring a job to a black car makes that fare taxable, with you (the biller) responsible to collect.

Register before you refer; buy rides for resale

If you'll refer calls to black-car bases, register for sales tax at least 20 days first and collect on those fares. Buy the referred ride for resale (ST-120) so the black-car base doesn't also tax you.

Common questions

Q: Do I collect tax on my own livery (AFV) trips in NYC?
A: No. Affiliated-livery-vehicle trips beginning or ending in NYC are excluded from taxable transportation service.

Q: I'm a livery base but sent a job to a black car -- is that fare taxable?
A: Yes. Because a black car provided the ride, the fare is taxable, and you (billing the customer) must collect and remit. Buy the ride for resale with Form ST-120.

Q: I converted from a black-car base to a livery base -- am I still taxable?
A: Not on AFV trips beginning/ending in NYC. File a final return and surrender your certificate if you make no taxable sales -- but register again if you'll refer calls to black-car bases.

Citations and references

• Tax Law section 1105(c)(10) (sales tax on transportation service)
• Tax Law section 1101(b)(34) (definition of transportation service / livery)
• Tax Law section 1101(b)(38) (affiliated livery vehicle exclusion)
• Tax Law section 1134 (vendor registration)

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_23s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Counsel
Advisory Opinion Unit

TSB-A-13(23)S
Sales Tax
September 9, 2013

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S101223A

The Department of Taxation and Finance received a Petition for Advisory Opinion from name
and address redacted. Petitioner asks whether a livery company must collect sales tax on its charges to
customers for its transportation service in three separate scenarios, or whether the exclusion in Tax
Law § 1105(c)(10) applies to the livery company’s charges.
We conclude that, under the scenarios described, the service provided by a livery company in
New York City using an affiliated livery vehicle is not subject to sales tax, even if the livery company
had formerly been a black car company that used black cars to provide service. But if a livery
company refers its customer’s call for service to a black car company and the service is provided using
a black car, the service is subject to sales tax, even though the livery company bills its customer for the
service.
Facts
1. A livery company has corporate accounts, which it services throughout New York City. On
occasion, the livery company has more work than its affiliated livery vehicles can service and thus it
refers jobs to black car companies. The livery base receives a request for transportation services from
the customer and the livery base dispatches the call to the black car company. The livery base bills and
collects the fare from the passenger. The livery base pays the black car company which, in turn, pays
its affiliated driver. Must the livery collect sales tax from the passenger?
2. An existing black car company which is subject to, and has been collecting, sales tax,
converts its license issued by the New York City Taxi and Limousine Commission (TLC) to a livery
base license. All of the vehicles that were affiliated with it as a black car company have complied with
all the TLC requirements imposed upon livery vehicles. The former black car - now livery - company
continues to service the same customers it had as a black car company. Is the company now exempt
from collecting sales tax? If so, what notification, if any, must the company provide the Department
that it is no longer a black car base and thus not subject to collecting and remitting sales tax?
3. A livery company purchases the assets of a black car base, including its customer lists, list
of drivers and the black car company’s name. The livery company changes its name to the black car
company name but remains a livery base. All drivers affiliated with the black car company are now
affiliated with the livery company and are in compliance with all regulations imposed by the TLC upon
livery vehicles. The livery base, using the black car company name it purchased, begins servicing the
former black car company’s customers. Is the livery company under any obligation to collect sales tax
for providing transportation services to the former black car company’s customers?

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TSB-A-13(23)S
Sales Tax
September 9, 2013

Analysis
Section 1105(c)(10) of the Tax Law imposes sales tax on receipts from every sale, except for
resale, of transportation service, whether the charge is paid in this state or out of state so long as the
service is provided in this state. As relevant here, Tax Law § 1101(b)(34) defines “transportation
service” as the service of transporting, carrying or conveying a person or persons by livery service;
whether to a single destination or to multiple destinations; and whether the compensation paid by or on
behalf of the passenger is based on mileage, trip, time consumed or any other basis. Livery service
means service provided by limousine, black car or other motor vehicle, with a driver, but excluding, in
a city of one million or more in this state, an affiliated livery vehicle. Black car means a for-hire
vehicle dispatched from a central facility. "Affiliated livery vehicle" means a for-hire motor vehicle
with a seating capacity of up to six persons, including the driver, other than a black car or luxury
limousine, that is authorized and licensed by the taxi and limousine commission of a city of one
million or more to be dispatched by a base station located in such a city and regulated by such taxi and
limousine commission; and the charges for service provided by an affiliated livery vehicle are on the
basis of flat rate, time, mileage, or zones and not on a garage to garage basis.
Thus, transportation service provided by a black car or limousine is included in the definition
and charges for that service are subject to sales tax. However, service provided by an affiliated livery
vehicle (AFV) that either begins or ends in New York City is excluded from the definition, and charges
for such AFV service are not subject to sales tax. See Tax Law § 1101(b)(38); Revised Policy
Concerning the Application of the Sales Tax Exclusion for Certain Transportation Services Provided
by an Affiliated Livery Vehicle in New York City, TSB-M-13(2)S.
In scenario number 1, a livery base receives a request from one of its customers for
transportation service in New York City. The livery base does not have an AFV available to provide
the service and decides to refer the call to a black car (BC) base. The livery base then calls the BC
base, which dispatches the call to a BC driver affiliated with the BC base. The driver that gets the call
picks up the customer in a BC and drives the customer to his/her destination. The livery base bills and
collects the fare from its customer, and pays some amount to the BC base that dispatched the driver to
provide the service. Because the service was provided using a black car, not an AFV, the service is
within the definition of transportation service and is subject to sales tax. As the seller of the
transportation service, the livery base must charge and collect sales tax from the customer. Because
the livery base is providing a service subject to sales tax, it must register for sales tax purposes, keep
records, file returns, remit tax, and do all the other things a sales tax vendor must do under Article 28
of the Tax Law. Section 1134 of the Tax Law requires the livery base to register for sales tax purposes
at least 20 days before it provides a taxable transportation service. Note also that that the livery base
may purchase the service from the BC base exempt from sales tax as a purchase for resale. In order to
do so, the livery base must provide the BC base a properly completed Form ST-120, Resale
Certificate. Otherwise, the BC base must collect sales tax from the livery base on the charge that the
BC base makes to the livery base for that service.
In scenario number 2, a BC base “converts” to a livery base, and the black cars formerly
affiliated with the BC base become AFVs and affiliate with the new livery base. The new livery base
provides transportation service to customers of the former BC base. Because that new service is
provided using AFVs, the service is excluded from the definition of transportation service if the service

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TSB-A-13(23)S
Sales Tax
September 9, 2013

either begins or ends in New York City, and the charges for the service are not subject to sales tax. If
the former BC base no longer sells any transportation service subject to tax or conducts any business
for which it is required to be registered for sales tax purposes with the Tax Department, then it must
file a final sales tax return and terminate its sales tax registration. See, TB-ST-265 Filing a Final Sales
Tax Return, and TB-ST-25, Amending or Surrendering a Certificate of Authority. If the new livery
base does not make any taxable sales and does not provide any service subject to sales tax, it need not
register with the Tax Department for sales tax purposes. But if the new livery base will refer calls to a
BC base, as described in scenario number 1, then the new livery base must register for sales tax
purposes at least 20 days prior to referring such calls and otherwise comply with the requirements of
Article 28 applicable to vendors of taxable services.
In scenario number 3, a livery company purchases the assets of a BC base, including its
customer lists, drivers’ list, and name. The livery company then changes its name to be the same as the
name of the BC base. The BC drivers formerly associated with the BC base change their affiliations to
the livery base, in compliance with all TLC regulations. The livery company, under its new name,
provides service to customers of the former BC base. That service, provided by the livery base using
its newly affiliated drivers using AFVs, would not be subject to sales tax if the service begins or ends
in New York City. However, as in the prior scenarios, if the livery base refers calls to a BC base, the
livery base would be required to collect sales tax on its charges to its customers and thus must register
for sales tax purposes and otherwise comply with sales tax requirements.
We also note that the livery company’s purchase of the assets of the BC base would be a bulk
sale, transfer, or assignment under Tax Law § 1141(c). Among other things, § 1141(c) requires the
livery company to file Form AU-196.10, Notification of Sale, Transfer, or Assignment in Bulk (see
also Form TP-153, Notice to Prospective Purchasers of a Business or Business Assets) at least 10 days
before closing on the purchase of the assets. If the livery company fails to comply with any of the §
1141(c) requirements, it would become liable for any outstanding sales and compensating use tax
liabilities owed by the BC base, up to the greater of the purchase price or fair market of the assets
purchased, including real property and intangible personal property such as the customer lists, drivers’
list, and company name.

DATED: September 9, 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.