NY TSB-A-16(16)S Sales Tax 2016-04-28

Are auto repairs done out of state taxable in New York if the repaired car is delivered to the customer in New York?

Short answer: Yes. Repair and maintenance of tangible personal property is a destination tax: what controls is where the repaired property is delivered to the customer. Here the dealer's body shop is in New Jersey, but customers always drop off and pick up their cars at the New York City showroom, so the repairs are taxable in New York at the combined State, New York City and MCTD rate. For the dealer's own repair equipment (like lifts): equipment delivered to its New York location is a New York sale and is taxable even if later moved to New Jersey; equipment delivered directly to the New Jersey shop is not subject to New York sales tax - but if that equipment is later brought into New York and used here, it owes New York use tax.

Disclaimer: This is an official New York State Department of Taxation and Finance Advisory Opinion (TSB-A), issued by the Office of Counsel at a taxpayer's request. It is limited to the facts set forth in it and binds the Department only with respect to the petitioner to whom it was issued, and only if that petitioner fully and accurately described all relevant facts; another taxpayer cannot rely on it. It reflects the law, regulations, and Department policy in effect when issued and may since have changed. Taxpayer-identifying details are redacted. New York State and local sales taxes are administered centrally by the Department. This summary is informational only and is not legal or tax advice. Consult a licensed New York tax professional about your specific situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked at the bottom of this page, or PDF in the sidebar) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

A New York City auto dealer (registered for New York sales tax) repairs customers' damaged cars at its New Jersey body shop. No customer ever visits the New Jersey shop — they drop off and pick up the car at the New York City showroom. The dealer asked (1) whether the repairs are taxable in New York and (2) how sales tax applies to the repair equipment (e.g., lifts) it buys.

The Office of Counsel concluded:

Repairs are taxable in New York. Installing, maintaining, servicing or repairing tangible personal property is a taxable service (Tax Law section 1105(c)(3)), and it is a destination tax — the point of delivery to the customer controls the tax and the rate (20 NYCRR 525.2(a)(3)). Because every repaired car is delivered to the customer at the New York City showroom, the repairs are taxable at the combined State + New York City + MCTD rate — even though the work was done in New Jersey.
Repair equipment is taxed by where it is delivered:
Equipment delivered to the dealer's New York location is a New York sale and is taxable — and stays taxable even if the dealer later trucks it to New Jersey.
Equipment delivered directly to the New Jersey shop is not subject to New York sales tax (even though the order was placed from New York).
But equipment bought and delivered outside New York that is later brought into New York for use owes New York use tax (Tax Law section 1110(a)).

What this means for you

Where the customer gets the property back is what matters

For repair and other taxable services, New York taxes based on where you hand the property back to the customer, not where the work is physically performed. Doing the labor across the state line does not avoid New York tax if the customer takes delivery in New York.

Buying equipment? Watch the delivery point

Your own equipment purchases follow the same delivery logic: delivered into New York = New York sale (taxable); delivered out of state = no New York sales tax — but using it in New York later triggers use tax. Moving New-York-delivered equipment out of state afterward does not undo the New York sale.

Common questions

Q: The work is done in New Jersey — why is there New York tax?
A: Because the repaired car is delivered to the customer in New York. Repairs are a destination tax keyed to the delivery point, not the work location.

Q: I had a lift delivered to my New York shop but moved it to New Jersey — is it still taxable?
A: Yes. The sale occurred in New York on delivery; a later move out of state does not negate it.

Q: I bought equipment delivered to New Jersey but use it sometimes in New York — do I owe anything?
A: New York use tax applies to equipment brought into New York for use here, even if it was delivered out of state.

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)(3) (installing, maintaining, servicing, repairing tangible personal property)
Tax Law section 1105(a) (sales tax on retail sales of tangible personal property)
Tax Law section 1110(a) (compensating use tax)
20 NYCRR 525.2(a)(3) (destination tax; point of delivery controls)

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_16s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-16(16)S
Sales Tax
April 28, 2016

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

PETITION NO S150601A

The Department of Taxation and Finance received a Petition for Advisory Opinion from
REDACTEDREDACTEDREDACTEDREDACTEDREDACTEDREDACTED.. Petitioner asks
whether charges for automobile repairs are subject to New York State and local sales taxes if the
repair facility is located out of state, but the repaired automobile is delivered to the customer in
New York. Petitioner also asks whether repair equipment is subject to New York State and local
sales taxes under two scenarios.
We conclude that charges for maintenance and repairs are taxable in New York if the
serviced property is delivered to the customer in New York. Repair equipment is subject to State
and local sales tax if it is delivered in New York State.
Facts
Petitioner, which is registered for sales tax purposes in New York, operates an
automobile sales showroom in New York City. Petitioner has an auto body shop in New Jersey
that handles repairs of its customers’ damaged automobiles. No customer ever visits the body
shop, and there is no ability for a customer to pick up repaired automobiles at that facility. A
customer whose automobile requires auto body repair work must deliver the automobile to the
New York City showroom and pick it up at the showroom when the work is completed.
Petitioner purchases certain equipment to repair automobiles (e.g., lifts). Petitioner
places all equipment orders from its New York City location. In some instances, the equipment
is delivered to Petitioner’s New York location and transported by Petitioner in its own trucks to
its New Jersey facility for installation. In other instances, the equipment is delivered directly to
Petitioner’s New Jersey facility.
Analysis
Petitioner’s charges for auto body repairs are subject to New York State and local sales
tax. Installing, maintaining, servicing or repairing tangible personal property is subject to State
and local sales taxes. See Tax Law § 1105(c)(3). Generally, the sales tax is a destination tax:
“[t]he point of delivery or point at which possession is transferred by the vendor to the purchaser,
or the purchaser's designee, controls both the tax incidence and the tax rate.” 20 NYCRR §
525.2(a)(3). Charges for repairs or other taxable services are subject to New York state and local
sales taxes if the repaired or serviced property is delivered to the customer in New York. “The
rate of the combined State and local sales tax is the rate in effect in the taxing jurisdiction where the
property serviced is delivered to the customer (or the customer’s designee).” Publication 838, A
Guide to Sales Tax for Automobile Dealers.

-2-

TSB-A-16(16)S
Sales Tax
April 28, 2016

Because all automobiles on which Petitioner has performed auto body repairs are
delivered to its customers at Petitioner’s New York City location, those repairs are taxable in
New York at the combined State, New York City and MCTD sales tax rates in effect at the
location of Petitioner’s showroom.
In addition, Petitioner’s purchases of equipment for use in repairing automobiles are
subject to sales tax if that equipment is delivered in New York. A “sale” occurs when there is a
transfer of title or possession, or both, for consideration. See Tax Law § 1105(b)(5). Thus, a
sale has occurred in New York when Petitioner purchases repair equipment and the equipment is
delivered to Petitioner’s New York City location. The fact that Petitioner may later move that
equipment outside the State does not negate the occurrence of a sale in New York. Equipment
delivered directly to Petitioner’s New Jersey facility would not be subject to sales tax in New
York, even if the order is placed from Petitioner’s New York City location. However, any
equipment purchased by Petitioner and delivered outside the State that is subsequently brought
into New York for use within the state would be subject to State and local use taxes. See Tax
Law § 1110 (a).

DATED: April 28, 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.