Is the purchase of commercial vessels delivered in New York subject to sales tax, and on the full price?

Plain-English summary

A New York corporation agreed in July 2014 to buy three commercial sightseeing ships from an out-of-state seller. Each ship cost more than $230,000, was built outside New York, and was delivered to the buyer in New York in early 2016 for exclusive use in New York. It asked whether the purchase is subject to New York sales/use tax.

The Office of Counsel concluded the purchase is taxable, but only on the first $230,000 of each vessel:

• Vessels are tangible personal property (Tax Law section 1101(b)(6),(16)), and a sale is taxable where the property is delivered (20 NYCRR 526.7(e)). Because the ships were delivered in New York, the purchase is subject to New York sales tax under Tax Law section 1105(a).
• Effective June 1, 2015, sales tax on a vessel applies only to the first $230,000 of the purchase price (Tax Law section 1115(jj)(1)). Since delivery occurred after June 1, 2015 and each vessel cost over $230,000, the tax is capped at the first $230,000 of each ship's price (see TSB-M-15(2)S).
• Tax is due on transfer of title or possession. If the seller does not (or need not) collect it, a registered buyer reports and remits the tax with the return covering the delivery date; an unregistered buyer files Form ST-130 within 20 days of delivery.

What this means for you

Big-ticket vessels get a partial exemption

Since June 1, 2015, New York taxes a vessel purchase only on the first $230,000 of the price — everything above that is exempt. The delivery date controls whether the cap applies (it applies to deliveries on or after June 1, 2015).

Delivery point still controls taxability

Buying from an out-of-state seller does not avoid New York tax when the vessel is delivered in New York for New York use. The cap limits the amount taxed; it does not remove the New York tax itself.

If the seller doesn't collect, you must self-report

A New York buyer is responsible for reporting and remitting the tax (capped at the first $230,000 per vessel) — on its sales tax return if registered, or on Form ST-130 within 20 days of delivery if not.

Common questions

Q: Each boat cost well over $230,000 — do I pay tax on the whole price?
A: No. Only the first $230,000 of each vessel's purchase price is taxable; the rest is exempt under Tax Law section 1115(jj).

Q: I bought from an out-of-state company — why is there New York tax at all?
A: Because the vessels were delivered to you in New York. A sale is taxable where the property is delivered.

Q: The seller didn't charge tax — what do I do?
A: Report and remit it yourself: on your sales tax return if you are registered, or on Form ST-130 within 20 days of delivery if you are not.

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(a) (sales tax on retail sales of tangible personal property)
• Tax Law section 1115(jj)(1) (vessels taxed only on first $230,000 of purchase price)
• Tax Law section 1101(b)(6),(16) (vessels are tangible personal property)
• 20 NYCRR 526.7(e) (sale taxable where property is delivered)
• 20 NYCRR 525.2(a)(1) (tax due on transfer of title or possession)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2016.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a16_12s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-16(12)S
Sales Tax
April 25, 2016

Office of Counsel

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S150605B

The Department of Taxation and Finance received a Petition for an Advisory Opinion
from REDACTEDREDACTED (“Petitioner”). Petitioner asks if its purchase of commercial
sightseeing ships from a seller located outside New York State for use within New York State is
subject to New York State sales and use tax.
We conclude that Petitioner’s purchase is subject to sales tax but only on the first
$230,000 of the purchase price of each vessel.
Facts
Petitioner, a corporation headquartered in New York, agreed to purchase three
commercial sightseeing ships from a company located outside New York State in July 2014.
Each ship costs in excess of $230,000. The ships were manufactured outside New York and were
delivered to Petitioner in New York in early 2016. The ships will be used exclusively in New
York. The Petitioner entered into a payment agreement in 2014 and was making installment
payments while the work was in process.
Analysis
Sales tax is imposed on retail sales of tangible personal property. See Tax Law § 1105(a).
Vessels are included in the definition of tangible personal property. Tax Law § 1101(b)(6),(16);
see also TB-ST-740. Sales Tax Regulation 20 NYCRR § 526.7(e) provides that “a sale is taxable
at the place where the tangible personal property or service is delivered or the point at which
possession is transferred by the vendor to the purchaser or his designee.” Consequently,
Petitioner’s purchase of three vessels delivered in New York is subject to New York State sales
tax.
Effective June 1, 2015, sales tax applies to only the first $230,000 of the purchase price
of each vessel. See Tax Law § 1115(jj)(1). Because the delivery of the vessels occurred after
June 1, 2015 and each vessel costs in excess of $230,000, the exemption limiting the application
of sales tax to only the first $230,000 of the purchase price of each vessel applies. 1
Sales tax becomes due at the time of transfer of title to or possession (or both) of the
property. 20 NYCRR § 525.2(a)(1)(iii)(2). If the seller of the vessels does not, or is not required
to collect the sales tax from Petitioner, and Petitioner is registered or is required to be registered
for sales tax purposes, Petitioner must report the purchase of the vessels and remit the tax due
1

For further discussion of recent changes in the sales and use tax for vessels, please see TSB-M-15(2)S, Changes to
the Application of Sales and Use Tax to Vessels.

-2-

TSB-A-16(12)S
Sales Tax
April 25, 2016

with its sales tax return for the period that includes the date the vessels were delivered. If
Petitioner is not registered or required to be registered for sales tax purposes, it must file Form
ST-130, Business Purchaser’s Report of Sales and Use Tax, within 20 days of the date of
delivery of the vessels.

DATED: April 25, 2016

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