NY TSB-A-17(23)S Sales Tax 2017-12-28

Is providing non-transplantable human tissue to medical facilities and labs for research and training subject to New York sales tax?

Short answer: No. The petitioner runs a non-transplantable human tissue bank: it receives donated bodies, processes, preserves, prepares, and ships tissue specimens to hospitals, universities, and device makers for research and training. Under New York law there is no property right in a dead body 'in the commercial sense,' so transferring a tissue specimen isn't a sale of tangible personal property. Instead, the petitioner is performing a service — removal, transportation, processing, preservation, and storage of human tissue — and that service isn't one of the enumerated services subject to sales tax. So the consideration it receives isn't taxable.

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 company operates a non-transplantable human tissue bank. It receives donated human bodies (with legal consent, no payment to families), then processes, tests, preserves, stores, prepares, and ships tissue specimens — or whole cadavers — to hospitals, universities, medical-training organizations, and device manufacturers for research and training. It asked how the consideration it receives is taxed.

The Office of Counsel concluded it's not taxable:

Sales and use tax applies to retail sales of tangible personal property and to enumerated services (Tax Law § 1105(a)–(c)).
Under New York law, "there is no right of property in a dead body . . . in the commercial sense" (Finley v. Atlantic Transport Co.). So transferring a tissue specimen is not a sale of tangible personal property.
What the company actually does is perform a service — the removal, transportation, processing, preservation, and storage of human tissue. Because that service is not among the enumerated taxable services, the consideration it receives is not subject to sales tax.

What this means for you

Tissue banks, anatomical-donation programs, and biorepositories

Furnishing human tissue/cadaveric specimens for research and training is treated as a non-taxable service, not a sale of goods — because a dead body isn't "property in the commercial sense." The processing/preservation/shipping that goes with it is part of that non-taxable service.

The reasoning is narrow

The result rests specifically on the no-commercial-property-in-a-body doctrine and on the activity being a service not on New York's taxable list. Don't extend it to ordinary tangible goods.

Buyers (research institutions, device makers)

Charges for receiving non-transplantable human tissue specimens for research/training aren't taxable purchases.

Common questions

Q: The tissue bank ships a physical specimen — why isn't that a taxable sale of property?
A: Because New York recognizes no property right in a dead body in the commercial sense, so the transfer isn't a sale of tangible personal property; it's a non-taxable service.

Q: Does the processing, preservation, and shipping change the answer?
A: No. Those steps are part of the non-taxable service of removing, transporting, processing, preserving, and storing the tissue.

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 § 1105(a), (b), (c) (imposition of sales and use tax on property and enumerated services)
Finley v. Atlantic Transport Co., 220 NY 249 (1917) (no property right in a dead body in the commercial sense)

Source

Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2017.htm
Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a17_23s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-17(23)S
Sales Tax
December 28, 2017

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

PETITION NO. S160729A

The Department of Taxation and Finance received a Petition for Advisory Opinion from
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Petitioner asks about the proper sales tax treatment of the consideration it receives for providing
non-transplantable human tissue to medical facilities and laboratories for use in medical
research and training. We conclude that such sales are not subject to State and local sales and
use tax.
Facts
Petitioner operates a non-transplantable human tissue bank that provides services
associated with the processing, storage, preparation and transportation of tissue specimen to
clients for medical research and training purposes. Petitioner’s customers include medical
facilities, hospitals, universities, academic medical centers, medical training organizations and
medical device manufacturers, among others. Petitioner receives donated human bodies shortly
after the time of death in order to provide such customers with either complete, intact cadavers,
or portions of human tissue according to its customers' specific needs associated with their
training and research requirements. Petitioner makes no payments to a donor's estate or the
donor’s family for the donated remains. These donations are subject to legal consent and
authorization from the donors and/or their next of kin. By donating to Petitioner, donors and
their families are able to meet their own or loved ones' wishes to help support and further the
advancement of scientific and medical research.
Petitioner’s transfer of a specimen to its customers involves the following steps.
First, Petitioner must acquire the tissue specimen. This involves increasing public
awareness of the services provided by Petitioner through the whole body donation process,
developing contacts and relationships at hospitals, hospices and funeral homes, and preparing the
necessary legal documents in order to conform to state laws related to whole body donation.
Second, Petitioner must preserve the tissue specimen. After the donation has occurred,
Petitioner must arrange for the transportation of the body to one of its intake facilities. At that
point shortly after the time of death, a number of tests must be conducted on the body to ensure
that the tissue is safe and suitable for use by Petitioner’s clients. From the time of death until the
tissue is requested and supplied, proper storage, handling and preparation of the body is required.
Services related to this storage and preparation process include embalming, latex injection, cold
storage or flash freezing, suturing and formalin fixing. This process is critical in order to
maintain the viability of any tissue for use by Petitioner’s clients in their medical studies and test

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TSB-A-17(23)S
Sales Tax
December 28, 2017

procedures. As a final part of this step, Petitioner’s highly trained laboratory technicians prepare
requested tissue to meet customer specifications.
Third, Petitioner must prepare the requested tissue specimen for delivery and transport it.
This process includes the documentation of the tissue request from the medical agency, possible
thawing of specific tissue related to that request, separation of a particular body part, testing of
the tissue for suitability and then the shipment and/or delivery of that specific tissue to the
customer. Shipment is done via vacuum sealed containers, dry ice and other similar provisions
to ensure the preservation and security of the tissue in transit.
Analysis
The Tax Law imposes sales and use tax on retail sales of tangible personal property and
the sale, except for resale, of certain enumerated services. See Tax Law § 1105(a), (b), and (c).
Under New York law, “there is no right of property in a dead body . . . in the commercial sense.”
Finley v. Atl. Transp. Co., 220 NY 249, 255 (1917). Accordingly, in transferring a tissue
specimen to a medical facility or laboratory for medical research and training purposes,
Petitioner is not making a sale of tangible personal property. Rather, it is performing a service,
which involves removal, transportation, processing, preservation and storage of a human organ.
Because this service is not one of the services made subject to sales tax, the consideration
Petitioner receives for this service is not subject to sales tax.

DATED: December 28, 2017

/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.