NY TSB-A-20(34)S Sales Tax 2020-07-14

Does New York sales tax apply to a teleprompter company's operated teleprompting service versus renting the equipment alone?

Short answer: It depends on who controls the equipment. When the company supplies a teleprompter system plus its own technician who keeps control, it is selling a non-taxable service, so no sales tax applies. But when it rents the equipment alone with no operator, that is a taxable rental of tangible personal property, and tax applies where the equipment is delivered in New York. The company also cannot buy its equipment tax-free for resale, because it is not purchased exclusively to rent out.

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 full-service teleprompter company provides two different things: (1) service packages — a complete teleprompter system plus an experienced technician who operates it and stays in control of the equipment — and (2) for customers experienced enough to run the gear themselves, a rental of the equipment alone with no technician. It asked whether sales tax applies.

The Office of Counsel drew a clean line based on who controls the equipment. In the service package, the technician keeps control and the customer never takes possession, so there is no taxable sale or rental of tangible personal property — the company is selling a teleprompting service, which is not one of the services New York lists as taxable. No sales tax applies. But when the company rents the equipment with no operator, possession passes to the customer, so it is a taxable rental of tangible personal property, and the company must collect tax where the equipment is delivered in New York.

The opinion adds that the company cannot buy its teleprompter equipment tax-free under the resale exclusion. That exclusion requires property bought exclusively for resale; here the equipment is bought mainly to perform the teleprompting service, not solely to rent out, so the purchases are taxable.

What this means for you

Audio-visual and event-production companies

Bundling an operator who keeps control of your gear generally makes the charge a non-taxable service rather than a taxable equipment rental. The moment you hand the equipment over for the customer to run themselves, the same gear becomes a taxable rental.

Anyone renting equipment with vs. without an operator

The control test in 20 NYCRR 526.7(e)(6) is decisive: operator-in-control = service; customer-in-control = taxable rental. Spell out in each contract which one it is.

Accountants and tax professionals

Watch the resale-exclusion trap: equipment used to perform a service is not bought "exclusively for resale," so you owe tax on the purchase even though the gear is occasionally rented out (P-H Fine Arts).

Common questions

Q: Why isn't the operated teleprompting taxable?
A: Because the technician keeps control of the equipment, the customer never takes possession, so there is no taxable rental — and teleprompting itself isn't an enumerated taxable service.

Q: When do I have to collect tax?
A: On the bare equipment rentals (no operator), based on where the equipment is delivered in New York.

Q: Can I buy my equipment tax-free because I sometimes rent it out?
A: No. It isn't purchased exclusively for resale, so the resale exclusion doesn't apply and your purchase is taxable.

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) (sales tax on retail sales of tangible personal property)
Tax Law § 1101(b)(5) (definition of 'sale' includes a rental, lease, or license to use)
Tax Law § 1105(c) (enumerated taxable services)
20 NYCRR 526.7(e)(1), (e)(4), (e)(6) (transfer of possession; operator-controlled equipment)
P-H Fine Arts Ltd. v. NYS Tax Appeals Tribunal, 227 AD2d 683 (3d Dep't 1996), lv den 89 NY2d 804 (resale exclusion requires purchase exclusively for resale)

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/a20-34s.pdf

Original ruling text

New York State Department of Taxation and Finance
Office of Counsel

TSB-A-20(34)S
Sales Tax
July 14, 2020

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION
The Department of Taxation and Finance received a Petition for Advisory Opinion from
[ REDACTED ] (Petitioner) regarding the imposition of sales tax on its receipts for
teleprompting services and equipment rentals. We conclude that sales tax is not imposed on
receipts for teleprompting services because Petitioner does not relinquish direction or control of
its equipment. However, we conclude that sales tax is imposed on receipts for equipment rentals
where the equipment is delivered within New York State.
Facts
Petitioner is a full-service teleprompter company that provides teleprompting services for
corporate and entertainment events including public speeches, live entertainment events, and
video/film productions. A teleprompting service package includes a complete teleprompter
system, which varies based on the event, and an experienced professional technician to operate
the system. The provided technician is in control of the equipment at all times and is not under
the direction of the customer.
In certain circumstances, Petitioner’s customers are sufficiently experienced to operate
the teleprompting equipment independently. In those circumstances, Petitioner will rent a
complete teleprompter system without the experienced professional technician.
Analysis
Tax Law § 1105(a) imposes tax on the receipts from every retail sale of tangible personal
property. Pursuant to Tax Law § 1101(b)(5), a sale is “[a]ny transfer of title or possession or
both, exchange or barter, rental, lease or license to use or consume, conditional or otherwise, in
any manner or by any means whatsoever for a consideration, or any agreement therefor ….”
Under sales tax regulation § 526.7(e)(4), the transfer of possession with respect to a rental, lease
or license to use tangible personal property means that one of the following attributes of property
ownership has been transferred:
(i) custody or possession of the tangible personal property, actual or constructive;
(ii) the right to custody or possession of the tangible personal property;
(iii) the right to use, or control or direct the use of, tangible personal property.
When a lease of equipment includes the services of an operator, possession is deemed to be
transferred where the lessee has the right to direct and control the use of the equipment. See 20
NYCRR 526.7(e)(6).

-2-

TSB-A-20(34)S
Sales Tax
July 14, 2020

Here, Petitioner’s teleprompter service packages include a professional technician that
maintains control of the equipment and is not under the direction of the customer. Accordingly,
there is no transfer of title or possession. The receipts for the teleprompter service packages are
not subject to sales tax as sales of tangible personal property. Rather, Petitioner is selling a
teleprompting service, which is not an enumerated service subject to sales tax. See Tax Law §
1105(c).
However, Petitioner also rents equipment without providing any professional technician.
In such a circumstance, possession of the equipment is transferred to the customer. Sales tax is
imposed on these receipts as sales of tangible personal property and Petitioner must collect sales
tax on these receipts where equipment is delivered within New York State. 20 NYCRR
526.7(e)(1).
Additionally, Petitioner may not claim the resale exclusion from sales tax on its
equipment purchases. To qualify for the resale exclusion, equipment must be purchased
exclusively for the purpose of resale. See P-H Fine Arts Ltd. v. New York State Tax Appeals
Tribunal, 227 AD2d 683 (3d Dep’t 1996), lv den 89 NY2d 804. As relevant here, Petitioner
purchases equipment to render a teleprompting service and not solely for the purpose of renting
equipment to customers. Accordingly, the equipment is not purchased exclusively for the
purpose of resale and the resale exclusion does not apply.
DATED: July 14, 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.