Are a concrete-pumping company's charges to contractors subject to New York sales tax when its own crew operates the pump trucks?

Plain-English summary

A company owns concrete-pump trucks and is hired by contractors to pump concrete up to the higher floors of high-rise buildings under construction. It doesn't sell or alter the concrete — it just moves it into place. Its own trained, certified employees operate the trucks; only they may run the equipment; and the company pays all the repairs, maintenance, fuel, tolls, and insurance. It charges the contractor a fee for the truck and operator.

The Office of Counsel reached two conclusions. First, this is a service, not an equipment rental. When equipment comes with an operator and the owner keeps "dominion and control" — it doesn't hand over the equipment, it hires and fires the operators, directs the work, and pays the operating costs — the transaction is treated as a service (20 NYCRR 541.2(p)). Second, that service is not taxable when it's part of a capital improvement. Pumping concrete to form a building's floors, walls, and structure produces a capital improvement (it permanently adds to the real property), and whether a service is a capital improvement "depends on the end result." The end result here is a completed building, so the pumping charge is not taxable. The company should collect a Form ST-124 (Certificate of Capital Improvement) from the contractor or owner within 90 days. If instead the pumping is done on a job that is not a capital improvement, the company is installing tangible personal property and must charge sales tax.

What this means for you

Equipment-with-operator businesses (pumping, crane, excavation, etc.)

Supplying equipment with your own operator while keeping control of how the work is done is a service, not a taxable rental. The five-factor dominion-and-control test in 20 NYCRR 541.2(p) is what separates the two: who possesses the equipment, who hires/fires and directs the operators, and who pays the operating expenses.

When the service is — and isn't — taxable

If your service is part of a capital improvement (new construction, permanent structural work), it's not taxable; get a signed Form ST-124 within 90 days to document it. If the same kind of work is done on something that isn't a capital improvement (e.g., a repair), it can be taxable installation of tangible personal property and you must collect tax.

Accountants and tax professionals

This pairs the equipment-with-operator rule (service vs. rental) with the capital-improvement "end result" test (20 NYCRR 527.7). Both must line up for the charge to be nontaxable, and the ST-124 is the documentation.

Common questions

Q: Is concrete pumping taxable in New York?
A: When the pumping company supplies the operator and controls the work, it's a service. That service is not taxable when it's part of a capital improvement (like new building construction), but is taxable if the underlying job is not a capital improvement.

Q: Why isn't this an equipment rental?
A: Because the owner keeps dominion and control — only its employees operate the trucks, it directs the work, and it pays all operating costs. Under 20 NYCRR 541.2(p) that makes it a service, not a rental.

Q: What paperwork do I need?
A: Get a properly completed Form ST-124 (Certificate of Capital Improvement) from the contractor or property owner within 90 days of finishing the work.

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, especially whether a given job is a capital improvement.

Citations and references

Statutes and regulations:
- Tax Law § 1105(a) (sales of tangible personal property)
- Tax Law § 1105(c), (c)(3), (c)(5) (taxable services; installing TPP; real-property work vs. capital improvement)
- Tax Law § 1101(b)(5) (definition of "sale," includes rental/lease)
- Tax Law § 1101(b)(9) (definition of capital improvement)
- 20 NYCRR 541.2(p) (equipment-with-operator dominion-and-control test)
- 20 NYCRR 527.5(a)(2) (installing); 20 NYCRR 527.7(4) (capital improvement "end result")

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao.htm
• Opinion: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales/24-53s.htm
• Printer-friendly PDF: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a24-53s.pdf

Original ruling text

TSB-A-24(53)S
Sales Tax
November 12, 2024

The Department of Taxation and Finance (“the Department”) received a Petition for Advisory Opinion from [ REDACTED ] (“Petitioner”). Petitioner asks whether its charges to contractors for concrete pumping are subject to sales tax. We conclude that Petitioner is providing a service that is not subject to tax when performed as part of a capital improvement.

Facts

Petitioner owns concrete pumping trucks and is hired by contractors to pump concrete for the construction of high-rise buildings. The trucks do not change the nature or composition of the concrete; no chemicals or water are added. The trucks merely move the concrete from the ground level to a higher floor of a building. The concrete is used by the contractor to create floors, walls, and other parts of the buildings.

When it is hired to pump concrete as described, Petitioner determines how to pump the concrete and its employees operate the equipment to do so. Only Petitioner’s employees are allowed to operate the trucks and associated equipment and Petitioner directs the work of its employees. All of Petitioner’s employees are trained and certified on how to operate the trucks and are required to take classes to learn the safety precautions needed for operating the trucks. Petitioner arranges and pays for all repairs, maintenance, tolls, insurance, and fuel for the pump trucks. Any violations incurred by the trucks or Petitioner’s employees are paid for or disputed by Petitioner.

Petitioner does not provide or sell concrete. Contractors order concrete independently from companies unrelated to Petitioner. A company delivering concrete to a contractor’s job site puts the concrete into a receiving container attached to one of Petitioner’s pump trucks. Petitioner’s employee then pumps the concrete into the building as required by the contractor.

Petitioner charges the contractor a fee for its concrete pumping service, which represents the charge for the truck and the operator.

Analysis

Tax Law § 1105(a) imposes sales tax on the receipts from every retail sale of tangible personal property, except as otherwise provided in Article 28 of the Tax Law. Tax Law § 1105(c) imposes sales tax on the receipts from every sale, except for resale, of certain services. The term “sale” means “the transfer of title or possession or both” for consideration, and includes a rental, lease and license to use. See Tax Law §1101(b)(5). A lease of a vehicle or equipment with the services of an operator is considered to be a service if dominion and control of the vehicle or equipment remains with the owner or lessor. Dominion and control are maintained where the owner or lessor:

(1) does not transfer possession, control and/or use of the equipment to the lessee during the term of the agreement or contract;

(2) maintains the right to hire and fire the drivers and operators;

(3) uses [their] own discretion in performing the work (even though the lessee may designate the area where material is to be picked up and delivered) and generally selects [their] own routes;

(4) retains responsibility for the operation of the equipment or vehicle; and

(5) directs the work, pays all operating expenses, including drivers' and/or operators' wages, insurance, tolls and fuels.

20 NYCRR 541.2(p).

Here, Petitioner maintains dominion and control over the trucks. It does not transfer possession of the trucks to its customer. Only Petitioner’s employees may operate the trucks. Petitioner retains the right to hire and fire the operators and direct the manner in which they perform their work. Petitioner is responsible for its equipment and pays all operating expenses. Accordingly, we conclude that Petitioner is providing a service and is not renting equipment to its customers.

In general, the services of installing, repairing, or maintaining tangible personal property are taxable. See Tax Law §1105(c)(3). “Installing means setting up tangible personal property or putting it in place for use.” 20 NYCRR 527.5(a)(2). Sales tax is also imposed on the services of “maintaining, servicing or repairing real property, . . . as distinguished from adding to or improving such real property . . . by a capital improvement.” Tax Law §1105(c)(5). A capital improvement is an addition or alteration to real property that:

(A) substantially adds to the value of the real property, or appreciably prolongs the useful life of the real property; and

(B) becomes part of the real property or is permanently affixed to the real property so that removal would cause material damage to the property or article itself; and

(C) is intended to become a permanent installation.

Tax Law § 1101(b)(9). Whether a service constitutes a capital improvement ‘‘depends on the end result of such service.’’ 20 NYCRR 527.7(4). Here, Petitioner is putting concrete in place to form floors, walls, and other parts of buildings. The installation of concrete in the construction of a building satisfies the capital improvement criteria. Moreover, the end result of the project is a completed building. Therefore, Petitioner’s concrete pumping service is not taxable. Petitioner should obtain from the contractor or property owner a properly completed ST-124 -- Certificate of Capital Improvement within 90 days after rendering its service. Conversely, if Petitioner pumps concrete on a project that does not qualify as a capital improvement, it would be performing the service of installing tangible personal property and must collect sales tax from its customer.

DATED: November 12, 2024

MARY ELLEN LADOUCEUR
Principal Attorney

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.