Must a broker who lists and shows used mobile homes but never takes title or possession collect sales tax when buyer and seller close the deal directly?

Plain-English summary

Mobilehome Marketing, Inc. brings together owners of used mobile homes and prospective buyers. When an owner wants to sell, the broker appraises the home, lists it, and shows it to prospects. If a buyer decides to purchase, the buyer pays the seller directly — the broker never handles the money (except a down payment held in escrow pending financing) and earns a commission under its listing agreement. The broker never takes title to or possession of the homes and never transfers them to buyers. It asked whether it must collect sales tax on these sales.

The Department held the broker has no duty to collect.

• Only "vendors" must collect sales tax. Sections 1131 and 1132 put the collection duty on vendors, and § 1101(b)(8) defines a vendor as, essentially, a person making sales of taxable property or services.
• A "sale" is a transfer of title or possession. Under § 1101(b)(5), a sale is a transfer of title or possession (or both) for consideration.
• This broker transfers neither. Because Mobilehome Marketing never takes or passes title or possession, and the sale closes directly between seller and buyer, the broker isn't itself making retail sales of tangible personal property.
• Result: the broker isn't a vendor for these transactions and has no obligation to collect New York State or local sales tax on the mobile-home sales it arranges.

What this means for you

Arranging a sale is not the same as making one. If you match buyers and sellers, appraise, list and show property, but never take title or possession and let the parties close directly, you generally aren't a "vendor" and don't collect the sales tax on that sale. Your commission is your income from a brokerage service, not sale proceeds.

Handling the money can change the analysis — be careful. Here the broker's escrow of a down payment didn't make it a vendor because it still never took title or possession. But the more you step into the shoes of the seller (taking title, taking possession, closing in your own name), the more likely you're the one making the retail sale.

Whether the buyer owes tax is a separate question. This opinion is about who must collect. Even where a broker isn't a vendor, the underlying transaction between the private seller and buyer may still have its own tax treatment; don't read this as the sale being tax-free to everyone.

Common questions

Q: I earn a commission on each mobile-home sale — doesn't that make me the seller?
A: No. Earning a commission for brokering a deal doesn't make you a vendor. What matters is that you never take or transfer title or possession, and the buyer and seller close directly.

Q: I hold the buyer's down payment in escrow. Does that make me collect the tax?
A: In this opinion it didn't. Holding a down payment in escrow, without ever taking title or possession, wasn't enough to make the broker a vendor.

Q: When would I have to collect tax?
A: If you take title to or possession of the property and make the sale yourself — closing in your own name rather than merely arranging a direct sale between owner and buyer — you'd be a vendor with a collection duty.

Citations and references

Statutes and authority:

• Tax Law § 1105(a) — tax on retail sales of tangible personal property
• Tax Law § 1101(b)(5) — a "sale" is a transfer of title or possession (or both) for consideration
• Tax Law §§ 1131 and 1132 — vendors must collect sales tax from customers
• Tax Law § 1101(b)(8) — defines "vendor" as a person making sales of taxable property or services

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1981.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a81_11s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-81(11)S
Sales Tax
August 17, 1981

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S800902A

On September 2, 1980 a Petition for Advisory Opinion was received from Mobilehome
Marketing, Inc., Outer Washington Street, Watertown, New York 13601.
The issue raised is whether Petitioner is obligated to collect sales tax where Petitioner
arranges for the sale of tangible personal property (used mobile homes) between the buyer and the
seller.
In the course of Petitioner's business it is contacted by owners of used mobile homes who
wish to sell the same. Petitioner will then appraise the value of the mobile homes, list them as
available for sale and show them to prospective buyers.
When a prospective customer decides to purchase one of the mobile homes payment is made
directly to the seller. Petitioner does not handle the payment at any time, except with respect to a
down payment which is placed in an escrow account pending completion of financing. Petitioner
receives a commission, pursuant to the terms of the listing agreement entered into by Petitioner and
the seller. Petitioner never takes title to the mobile homes, nor does Petitioner ever receive
possession of such property. Petitioner transfers neither title to nor possession of the mobile homes
to the purchasers. The sellers with whom Petitioner has dealt have never sold more than one mobile
home each since the inception of Petitioner's business.
Section 1105(a) of the Tax Law imposes a tax on the "receipts from every retail sale of
tangible personal property, except as otherwise provided in this article."
Section 1101(b)(5) of the Tax Law defines the terms "sale, selling or purchase" as "Any
transfer of title or possession or both . . . for a consideration, or any agreement therefor . . . . "
Sections 1131 and 1132 of the Tax Law require "vendors" of tangible personal property to
collect sales tax from customers.
Section 1101(b)(8) of the Tax Law defines the term "vendor," in relevant part, as:
"(A) A person making sales of tangible personal property or services, the receipts of which
are taxed by this article;
(B) A person maintaining a place of business in the state and making sales, whether at such
place of business or elsewhere, to persons within the state of tangible personal property or
services, the use of which is taxed by this article."

JAMES H. TULLY., COMMISSIONER
TP-8 (4/80)

LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

-2­
TSB-A-81(11)S
Sales Tax
August 17, 1981

Inasmuch as Petitioner does not transfer title to nor possession of the mobile homes in
question to purchasers, and in light of the fact that the sales are consummated directly between
sellers and purchasers, Petitioner cannot be said to be itself making retail sales of tangible personal
property. Petitioner is therefore not a "vendor" with respect to the sales here under discussion.
Accordingly, inasmuch as Petitioner is not a "vendor", within the meaning of the provisions
of the Tax Law referred to above, Petitioner has no obligation to collect New York State or local
sales tax on the transactions involving the sale of mobile homes, as described above.

DATED: July 31, 1981

s/LOUIS ETLINGER
Deputy Director
Technical Services Bureau