Are a lighting designer's interior and exterior lighting-design services subject to NY sales tax, and does it matter that the work is supervised by a licensed architect or engineer?

Plain-English summary

The Petitioner designs interior and exterior lighting systems for new construction and renovation of commercial and residential buildings. It works under the supervision of third-party licensed architects and engineers, who review and fold the Petitioner's layouts and specifications into their own certified drawings. The systems are permanently installed and built to meet New York's Energy Conservation Construction Code and Building Code light-level requirements (a prerequisite to a Certificate of Occupancy). The Petitioner also does project management, budgeting, model making, and energy analysis without separate charge -- all part of the design service.

The Office of Counsel concluded:

• Interior lighting design is taxable. Section 1105(c)(7) taxes "interior decorating and designing services... by whomsoever performed," including by architects or engineers. The Petitioner's interior lighting design falls squarely within it.
• Supervision/incorporation doesn't change that. It is taxable whether sold to the building owner or directly to an architect/engineer, and the fact that an architect or engineer supervises the Petitioner or incorporates the work into certified drawings does not matter. The statute carves out only the actual practice of architecture/engineering performed by the licensed professional -- not this designer's service.
• Exterior lighting design is NOT taxable -- it falls outside section 1105(c)(7).
• Mixed billing: one combined charge for interior + exterior = the whole charge is taxable. If they are separately stated and the exterior charge is reasonable, the exterior portion is not taxable.
• New York City: NYC does not impose its local sales tax on interior decorating/design (Tax Law 1210(a)(4)(iv)). Interior design delivered in NYC is subject to State sales tax + the MCTD tax, but not the NYC local tax.

What this means for you

Lighting / interior designers

Your interior lighting (and interior decorating/design) services are taxable under 1105(c)(7) -- collect tax. It doesn't help that an architect or engineer signs off on, supervises, or absorbs your work into their stamped drawings. Only the licensed professional's own architecture/engineering practice is excluded.

Split interior vs. exterior on the invoice

Exterior lighting design is not taxable. To avoid tax on the exterior portion, separately state it and keep the exterior charge reasonable relative to the whole; otherwise a single lump charge for both is fully taxable.

New York City carve-out

If you deliver interior design in NYC, charge State + MCTD tax but not the NYC local sales tax -- NYC is excluded from taxing interior decorating and design.

Common questions

Q: My interior design work is supervised by a licensed architect -- is it still taxable?
A: Yes. Supervision by, or incorporation into the certified drawings of, an architect or engineer does not exempt your interior-design service. Only the licensed professional's own architecture/engineering practice is excluded.

Q: Is exterior lighting design taxable?
A: No. It is outside section 1105(c)(7). Separately state it (with a reasonable charge) so it isn't swept into a taxable lump sum.

Q: I deliver interior design in New York City -- do I charge NYC tax?
A: No NYC local tax on interior design. Charge State sales tax and the MCTD tax only.

Q: Can I rely on this opinion?
A: It binds the Department only as to the petitioner. Use it as guidance and confirm your own facts.

Citations and references

• Tax Law section 1105(c)(7) (sales tax on interior decorating and designing services)
• Tax Law section 1210(a)(4)(iv) (NYC excluded from taxing interior decorating/design)
• Education Law section 7301 (practice of architecture)
• Education Law section 7201 (practice of engineering)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2015.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a15_27s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-15(27)S
Sales Tax
July 10, 2015

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

PETITION NO. S110311A

The Department of Taxation and Finance received a Petition for an Advisory Opinion
from REDACTEDREDACTEDREDACTEDREDACTEDREDACTEDREDACTEDREDACTE
(“Petitioner”). Petitioner asks whether its lighting and design services for interior and exterior
lighting systems for commercial and residential properties are subject to New York State and
local sales taxes. We conclude that Petitioner’s lighting design services are subject to state and
local sales taxes.
Facts
Petitioner is in the business of providing lighting design services for residential and
commercial projects for new construction and renovation. Petitioner performs its work under the
supervision of third-party licensed architects and engineers who review and incorporate
Petitioner’s work into their own certified drawings. The systems Petitioner designs are
permanently installed and designed to meet code requirements for levels of illumination, power
consumption and control. Petitioner communicates this information to the architect by way
layouts and specifications. The lighting controls and fixtures designed by Petitioner are “hard
wired” to the underlying structure. Management of energy in the design is a requirement of the
New York State Energy Conservation Construction Code, which, together with the New York
State Building Code, establishes the required light levels. Compliance with these codes, as they
relate to the lighting systems, is a prerequisite to the issuance of a Certificate of Occupancy.
These two codes also define the requirements for the “safeguarding of life, health, property and
public welfare.”
Petitioner also performs project management, budgeting, model making (at the request of
the architect or client) and energy analysis. Petitioner does not charge separately for these extra
services. They are part of the design service that Petitioner provides.
Analysis
Tax Law § 1105(c)(7) imposes sales tax on receipts from the sale, except for resale, of
interior decorating and designing services (whether or not in conjunction with the sale of tangible
personal property), by whomsoever performed, including interior decorators and designers,
architects or engineers. Such services shall not include services that consist of the practice of
architecture, as defined in Education Law § 7301, or the practice of engineering, as defined in
Education Law §7201, if the services are performed by a licensed architect or engineer.
Petitioner’s interior lighting design services constitute interior decorating and design
services subject to tax under Tax Law § 1105(c)(7). Petitioner’s receipts from the sale of these
services are subject to sales tax, regardless of whether they are sold to building owners who hire

TSB-A-15(27)S
Sales Tax
July 10, 2015

-2-

an architect or engineer separately, or sold directly to an architect or engineer. The incorporation
of Petitioner’s design work into the design prepared by an architect or engineer does not affect
the taxability of Petitioner’s service (See TSB-M-10(5)S and TB-ST-400). Nor does the fact that
the interior designer’s services may be supervised by an architect or engineer affect the taxability
of those services.
Exterior lighting design services are not subject to sales tax because they are not within
the ambit of Tax Law § 1105(c)(7). If Petitioner performs interior and exterior lighting services
for a single charge, the entire charge will be subject to sales tax. See TSB-A-14(30)S. However,
if Petitioner separately states the charges for interior and exterior lighting design services, and
the charge for the exterior design services is reasonable in relation to the overall charge, the
charge will not be subject to sales tax. See TSB-A-97(44)S.
The local sales tax imposed by New York City does not apply to interior decorating and
design services. If Petitioner’s services are delivered in New York City, they will be subject to
New York State sales tax, including the tax imposed on behalf of the Metropolitan Commuter
Transportation District. However, they are not subject to the local sales tax imposed by New
York City pursuant to the authority of Article 29 of the Tax Law. See Tax Law § 1210(a)(4)(iv);
TSB-M-95(13)S.

DATED: July 10, 2015

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.