Are the site safety manager, fire safety manager, and emergency watchman services a company provides on construction sites subject to New York sales tax?

Plain-English summary

New York City requires contractors doing construction, alteration, or demolition to keep licensed safety personnel on site: site safety managers who continually inspect for hazards (netting, scaffolds, material storage, hoisting equipment, and the like), fire safety managers who patrol when a site's fire-protection system is out of service, and emergency action watchmen who run fire drills and maintain emergency logs. A company that supplies these workers to contractors asked whether its charges are taxable.

The Office of Counsel concluded the charges are subject to sales tax as protective and detective services under Tax Law § 1105(c)(8). That provision taxes "guard, patrol and watchman services of every nature," and these officials patrol and monitor sites to protect against fire, damage to property, and injury to people, notifying officials when they see an unsafe condition. The company argued the work is a non-taxable governmentally-mandated inspection, but the Department disagreed: the limited inspection exception only applies to inspections that are not tied to protective work, and these services are protective in nature.

What this means for you

Construction-staffing and safety firms

If you supply site safety managers, fire safety managers, or emergency action watchmen, your receipts are taxable protective services. Register as a sales tax vendor and collect tax, even though the workers are required by law and even though "inspection" is part of what they do.

Contractors and developers

Expect sales tax on what you pay for site safety, fire safety, and watchman coverage. Budget for it on New York City projects where these roles are mandatory.

Accountants and tax professionals

The key line is between a protective service (taxable under § 1105(c)(8)) and a pure governmentally-mandated inspection not connected to taxable work on property (which can fall outside tax). Patrolling and guarding to prevent harm is protective, so the inspection carve-out in § 1105(c)(3)/(5) does not rescue it. Compare TSB-A-96(67)S.

Common questions

Q: Does it matter that the law requires these safety personnel?
A: No. Being legally mandated does not make a protective service non-taxable. The Department rejected that argument here.

Q: Isn't this just inspection, which can be exempt?
A: The inspection exception is narrow and applies to inspections not provided together with taxable work on property. Because the service is protective (guarding/patrolling against fire and injury), it is taxable.

Q: What tax rate applies?
A: The combined New York State and local sales tax in effect where the protective service is performed.

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

Citations and references

Statutes and guidance:
- Tax Law § 1105(c)(8) (protective and detective services)
- Tax Law § 1105(c)(3), (5) and the governmentally-mandated inspection exception; Cf. TSB-A-96(67)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales-ao-2020.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a20-14s.pdf

Original ruling text

New York State Department of Taxation and Finance
Office of Counsel

TSB-A-20(14)S
Sales Tax
June 2, 2020

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S181005A

The Department of Taxation and Finance received a Petition for Advisory Opinion from
[ REDACTED ] (“Petitioner”). Petitioner asks whether the services it provides construction sites for its
site safety managers, fire safety manager, and emergency watchman services are subject to New York
State and local sales and use tax under Articles 28 and 29 of the Tax Law. We conclude that the
Petitioner’s services are subject to sales tax as protective services under Tax Law § 1105(c)(8).
Facts
Petitioner is a company that is engaged by contractors to provide site safety managers, fire
safety managers, and emergency action watchmen for work on construction sites. All site safety
managers, fire safety managers, and emergency action watchmen are required to immediately notify
the New York City Department of Buildings should they observe that certain enumerated
construction site emergency or unsafe conditions exist.
Contractors performing construction, alteration, and/or demolition within New York City are
obligated to use construction site supervisors to oversee the contractor’s site safety. All construction
projects must have a site safety manager present at all times when the site is operational.
A site safety manager continually inspects the construction site and performs inspections
relating to safety netting, housekeeping, material storage and removal, sidewalks, warning signs and
lights, scaffolds, structural ramps, runways, and platform inspections, as well as material handling
and hoisting equipment inspections. Site safety managers must be properly licensed.
In addition, when a site safety manager’s presence is required and the construction site’s fire
protection system is non-operational, a fire safety manager must also be present. The fire safety
manager must patrol the site areas in which the fire protection system is out of service at least once
every hour.
An emergency action watchman is required on a construction site when a building is being
constructed or demolished to make recommendations regarding a contractor’s compliance with the
City’s Fire Safety and Emergency Action Plans. They maintain fire safety and emergency action log
books, conduct building wide fire drills, conduct fire safety refresher training sessions with the
contractor’s staff, and conduct building wide emergency action plan drills. Emergency action
watchmen must obtain licensing from the New York City Fire Department.

-2-

TSB-A-20(14)S
Sales Tax
June 2, 2020

Analysis
Tax Law § 1105(c)(8) imposes sales tax on the receipts for:
Protective and detective services, including but not limited to, all services provided by
or through alarm or protective systems of every nature, including, but not limited to,
protection against burglary, theft, fire, water, damage or any malfunction of industrial
processes or any other malfunction of or damage to property or injury to persons,
detective agencies, armored car services and guard, patrol and watchman services of
every nature . . . .
Site safety managers, fire safety managers, and emergency action watchmen are engaged in
services to protect construction sites and construction workers against damage inflicted by fire or
unsafe site conditions. These site safety officials regularly patrol and inspect locations on
construction sites to ensure protection against fire, damage to property, or injury to persons. If, during
the course of their inspections, these site safety officials see an unsafe condition, they are required to
notify appropriate officials. These services are within the scope of protective and detective services
subject to sales tax under Tax Law § 1105(c)(8).
We have considered Petitioner’s argument that the services discussed above should not be
taxable because they are a governmentally mandated inspection service. However, Petitioner’s
services are protective in nature, within the meaning of Tax Law § 1105(b)(8). They are not solely
inspection services that are not provided in conjunction with taxable services to tangible personal
property or real property under Tax Law § 1105(c)(3) or (5), respectively. Cf. TSB-A-96(67)S. Thus,
the limited exception for governmentally mandated inspection services from the sales tax imposed
under Tax Law § 1105(c)(3) or (5) does not apply.
taxes.

Accordingly, Petitioner’s services are subject to the New York State and local sales and use

DATED: June 2, 2020
/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.