Are a sightseeing cycleboat operator's tour ticket receipts taxable, and does it owe sales tax on the boats, fuel, and maintenance?

Plain-English summary

An operator of sightseeing cycleboat tours (pedal-powered boats with a gas-motor assist, a driver, and a tour host that visit local sites, breweries, and restaurants) asked two things: are its tour ticket receipts taxable, and does it owe tax on the boats, fuel, supplies, and repairs?

The Office of Counsel split the answer:

• Tour receipts — not taxable. Sales tax applies to tangible personal property and certain enumerated services. Tour services are not on that list, so receipts from sightseeing tour tickets aren't subject to State or local sales tax (TSB-A-15(30)S).
• Boats, fuel, and repairs — taxable. All receipts for tangible personal property are presumed taxable until proven otherwise (§ 1132(c)(1)). The operator pointed to the commercial-vessel exemption (§ 1115(a)(8)) for vessels primarily engaged in interstate or foreign commerce and their fuel/supplies/maintenance/repairs. But that requires transporting persons or property between states or countries, and these cycleboats only travel to local sites. So they aren't qualifying commercial vessels, and the operator must pay sales/use tax on the boats and on the fuel, supplies, maintenance, and repairs to run them.

What this means for you

Tour, sightseeing, and experience operators

Your tour receipts are generally not taxable (tours aren't an enumerated service) — but that doesn't exempt your business equipment. Expect to pay sales/use tax on vehicles, vessels, fuel, and maintenance unless a specific exemption fits.

Boat and vessel operators

The § 1115(a)(8) commercial-vessel exemption is narrow: the vessel must be primarily in interstate/foreign commerce (moving people or goods between states/countries). Purely local operation doesn't qualify, even for a commercial passenger boat.

Accountants and tax professionals

Tour services = non-enumerated/non-taxable (TSB-A-15(30)S). For inputs, rebut the § 1132(c)(1) presumption only with a real exemption; § 1115(a)(8) needs interstate/foreign commerce per 20 NYCRR 528.9(a)(5).

Common questions

Q: Do I charge sales tax on my tour tickets?
A: No. Sightseeing tour services aren't enumerated taxable services, so the ticket receipts aren't taxable.

Q: Can I buy my boats and fuel tax-free as a commercial vessel?
A: No. The commercial-vessel exemption requires interstate or foreign commerce; local-only cycleboats don't qualify, so the boats, fuel, and repairs are taxable.

Q: What if my boats traveled between states?
A: A vessel primarily engaged in interstate/foreign commerce could qualify for the § 1115(a)(8) exemption — these don't.

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), (c) (tax on tangible personal property and enumerated services)
• Tax Law § 1115(a)(8) (exemption for commercial vessels primarily in interstate or foreign commerce and their fuel/supplies/repairs)
• Tax Law § 1132(c)(1) (presumption of taxability); 20 NYCRR 532.4, 528.9(a)(5)
• TSB-A-15(30)S (tour services not taxable)

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/a20-56s.pdf

Original ruling text

New York State Department of Taxation and Finance
Office of Counsel

TSB-A-20(56)S
Sales Tax
November 10, 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”). Petitioner asks (1) whether the receipts for its sightseeing
cycleboat tours are subject to State or local sales taxes; and (2) whether its purchases of
cycleboats, and the fuel, supplies, maintenance and repairs services required to operate the
cycleboats are subject to State or local sales taxes. We conclude that Petitioner’s receipts from
its sightseeing cycleboat tours are not subject to New York State or local sales taxes. However,
the purchases of the cycleboats, the fuel and supplies required to operate the cycleboats and the
services of maintaining and repairing the cycleboats, are subject to State and local sales taxes.
Facts
Petitioner provides cycleboat (“boat”) sightseeing tours. Passengers may purchase
individual tickets or book the entire boat for a group tour at a specific date, time and location.
Petitioner provides the driver and tour host. Each boat has ten seats for pedaling passengers and
a bench that seats an additional five passengers, and is equipped with a gas motor that provides
additional power as needed.
Only individuals who purchased tickets in advance of the initial departure are allowed on
the boat. Each tour lasts approximately one hour and forty-five minutes. The tour host
welcomes passengers on board and reviews safety instructions, processes paperwork and
waivers, explains the route, points out locations of interest, answers questions, and acts as a
liaison between passengers and the driver. The boat travels to local sites, breweries and
restaurants in the downtown area of the city in which the Petitioner is based. Passengers are
allowed to disembark at each location where the boat docks. Passengers are not allowed to
change the duration of the tour and the itinerary is relatively fixed once the tour has started. No
food or drink is sold or served on the boat, although passengers are allowed to bring food and
drink with them on the boat. Petitioner’s boats are each equipped with a countertop to
accommodate passengers’ belongings. Petitioner does not have a liquor license and does not
contract with a caterer to provide food or drink on the tour.
Analysis
Petitioner provides what it characterizes as sightseeing tours of local sites, breweries and
restaurants with a tour host who points out locations of interest and answers questions. Petitioner
asks whether it should charge state and/or local sales tax on its receipts for its sightseeing
cycleboat tours. Tax Law § 1105 imposes sales tax on receipts from the sale of tangible personal

-2-

TSB-A-20(56)S
Sales Tax
November 10, 2020

property and from certain enumerated services. Tax Law §§ 1105(a)(c). Tour services are not
among the services taxable under Tax Law § 1105(c). Therefore, Petitioner’s receipts from the
sale of tickets for its sightseeing tours are not subject to New York State or local sales tax. See
TSB-A-15(30)S.
Petitioner also asks whether it must pay state and/or local sales tax on its purchases of the
cycleboats and on the purchases of fuel, supplies, maintenance and repairs required to operate the
cycleboats. Tax Law § 1105(a) imposes sales tax upon the receipts from “every retail sale of
tangible personal property….” Tax Law § 1132(c)(1) sets forth a presumption that all receipts
for tangible personal property are subject to tax “until the contrary is established,” and places the
burden of proving the contrary upon the vendor or its customer. See 20 NYCRR 532.4[a][1];
[b][[1]. Tax Law § 1115(a)(8) provides an exemption from sales and use tax for receipts of
“[c]ommercial vessels primarily engaged in interstate or foreign commerce and property used by
or purchased for the use of such vessels for fuel, provisions, supplies, maintenance and repairs
(other than articles purchased for the original equipping of a new ship).” To qualify, a
commercial vessel must be primarily engaged in interstate or foreign commerce. In this context,
interstate or foreign commerce means the transportation of persons or property between states or
countries. 20 NYCCR 528.9(a)(5). Petitioner states that the cycleboats travel to local sites. As
Petitioner’s cycleboats do not transport persons or property between states and/or countries,
Petitioner’s cycleboats are not considered commercial vessels eligible for the tax exemption.
Therefore, Petitioner must pay the New York State and local sales tax on the purchases of the
cycleboats. Similarly, Petitioner must pay the New York State and local sales tax due on the
purchases of fuel, provisions, supplies, maintenance and repairs required to operate the
cycleboats.
DATED: November 10, 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.