Can a mobile-home dealer get a refund of the difference between the tax it paid the manufacturer and the tax that would apply in its customer's county?

Plain-English summary

Hawkins Manufactured Housing, Inc., a mobile-home dealer in Broome County (a 7% combined-rate county), asked whether it can get a refund of the difference between the tax it pays the manufacturer and the (lower) tax that would apply if the dealer were located in its customer's county.

The Department held: no refund based on the customer's rate — but a refund is available if the home is installed as a capital improvement.

• The dealer's purchase from the manufacturer is a retail sale. Section § 1115(a)(23) (for sales on or after December 31, 1981) exempts receipts from sales of mobile and factory-manufactured homes except where sold by the manufacturer (or purchased outside the state by the user). It also provides that a dealer's purchase from a manufacturer is not a "sale for resale" under § 1101(b)(4). So the dealer's purchase is a taxable retail sale.
• The dealer pays tax at its own location. Because the homes are delivered to Hawkins's dealership in Broome County, Hawkins pays a 7% sales tax there.
• No refund just because the customer's county is cheaper. There is no provision of law entitling a dealer to a refund merely because it later sells the home to a customer in a New York county with a lower tax rate.
• A capital-improvement installation changes the result. If the home is not only sold and delivered but also installed so as to constitute a capital improvement to real property, the dealer is entitled to a refund of the entire tax paid to its home county, but then owes use tax in the county of installation — the net effect being a refund of the rate differential (§ 1119(a)(1); State Tax Commission Model Resolution, Nov. 1982, § 12(a)(1)).
• Out-of-state installation → full refund. Where such installation takes place outside New York, the dealer is entitled to a refund of all state and local taxes paid.

What this means for you

Where you're located sets your tax, not where your customer lives. As a dealer you pay tax where the home is delivered to you. Selling it on to someone in a lower-rate county doesn't, by itself, entitle you to claw back the difference.

Installation as a capital improvement is the lever that unlocks a refund. If the home is set up in a permanent way that makes it a capital improvement to real property, the tax shifts to a use tax where it's installed — so you recover your home-county tax and pay the installation county's rate instead (a full refund if installed out of state).

Keep the records to prove installation and location. A rate-differential or full refund under § 1119(a)(1) turns on where and how the home was installed, so document the installation and its location to support any refund claim.

Common questions

Q: My customer is in a lower-tax county than my dealership. Can I refund the difference? A: Not on that basis alone. You paid tax where the home was delivered to you, and no law refunds tax simply because the buyer's county rate is lower.

Q: When can I get a refund, then?
A: When the home is installed as a capital improvement to real property. You're refunded the tax paid to your home county and instead owe use tax where it's installed — a net refund of the rate difference (§ 1119(a)(1)); if installed out of state, you're refunded all state and local tax.

Q: Isn't my purchase from the manufacturer a purchase for resale? A: No. Section 1115(a)(23) makes a dealer's purchase from a manufacturer a taxable retail sale and specifically not a "sale for resale" under § 1101(b)(4), so you pay tax on it.

Citations and references

Statutes:

• Tax Law § 1115(a)(23) — exemption for mobile/factory-manufactured homes, except sales by the manufacturer; a dealer's purchase from a manufacturer is a retail sale, not a sale for resale
• Tax Law § 1101(b)(4) — definition of "sale for resale"
• Tax Law § 1119(a)(1) — refund/credit where property is installed as a capital improvement (rate differential; full refund for out-of-state installation)

Other authority:

• State Tax Commission Model Resolution (Nov. 1982), § 12(a)(1) — local counterpart to the § 1119(a)(1) refund

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1983.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a83_5s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-83(5)S
Sales Tax
February 15, 1983

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S821224A

On December 24, 1982 a Petition for Advisory Opinion was received from Hawkins Manufactured Housing, Inc., R D # 1 Box 200, Harpursville, New York 13787. The issue raised is whether Petitioner, a mobile home dealer, is eligible for a refund of the difference between the sales tax paid to a manufacturer of mobile homes and the sales tax which would have been paid if the Petitioner had been located in the county of its customer. Petitioner operates a mobile home dealership located in Broome County, which has a combined 7% New York State and local sales tax rate. Section 1115(a)(23) of the Tax Law, applicable to sales made on or after December 31, 1981, provides for an exemption from sales and use tax with respect to receipts from sales of mobile homes and factory manufactured homes, except where sold by the manufacturer or where otherwise purchased outside the State by the user. It is also there provided that a purchase by a dealer from a manufacturer "shall not be deemed a sale for resale within the meaning of" section 1101(b)(4) of the Tax Law. Such sales to dealers thus constitute retail sales. Accordingly, where Petitioner purchases mobile homes which are delivered to its dealership in Broome County it must pay a sales tax of 7%. There is no provision of law which would entitle a mobile home dealer to a refund of tax simply by reason of its having sold a mobile home to a customer located in a county (in New York) with a lower tax rate than that imposed in the county of the dealer's location. However, if such mobile home is not only sold and delivered but also installed in such a manner as to constitute a capital improvement to real property, the dealer would be entitled to an appropriate refund based on the difference between the applicable local tax rates. That is, the dealer would be entitled to a refund of the entire tax paid to the dealer's home county, but would be subject to a use tax in the county of installation. The net result would be entitlement to a refund based on the tax rate differential. In addition, where such installation takes place outside the State, the dealer would be entitled to a refund of all State and local taxes paid. See Tax Law, §1119(a)(1); State Tax Commission Model Resolution, November 1982, section 12(a)(1).

DATED: January 31, 1983

s/FRANK J. PUCCIA
Director
Technical Services Bureau

ROBERT W. BOUCHARD, ACTING COMMISSIONER
GABRIEL B. DiCERBO , DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR
TP-8 (8/82)