Are the services of installing (setting up) and dismantling (breaking down) trade-show exhibits taxable in New York, and does it matter that the setup is temporary?

Plain-English summary

I & D Inc. assembles and disassembles trade-show and convention exhibits for businesses across the country, including in New York. The exhibits are built by others and shipped in crates; on the show floor I & D uncrates the exhibit, bolts it together and puts it in place, and when the show ends it takes the exhibit apart and re-crates it for the next stop. It does not alter or modify the parts — it just supplies the labor. It asked whether its installation and dismantling services are taxable.

The Department held that installation is taxable and dismantling is not (if separately stated).

• Installation is a taxable service. Tax Law § 1105(c)(3) taxes "installing tangible personal property . . . not held for sale," and 20 NYCRR 527.5(a)(2) defines "installing" as "setting up tangible personal property or putting it in place for use." Erecting exhibits and setting them in place fits squarely within that.
• Temporary is still taxable. I & D argued that "install" implies some permanence, so temporary setups shouldn't be taxed. The Department disagreed for two reasons: (1) § 1105(c)(3) contains a separate exemption for installations that become a capital improvement (a permanent addition) — which would be unnecessary if only permanent installations were taxed; and (2) Central Office Alarm Co. v. State Tax Commission, 58 AD2d 162 (3d Dept. 1977), held installation taxable even where the equipment was contractually to be removed at the end of the contract.
• Dismantling is not a taxed service. Taking the exhibit apart is not among the services taxed under § 1105(c). So I & D need not collect tax on dismantling if the dismantling charge is separately stated. If the exempt charge is not separately stated, tax applies to the entire billed amount.

What this means for you

Setting things up for use is a taxable service in New York — permanence isn't the test. If you erect displays, booths, equipment, or fixtures and put them in place for use, that labor is taxable under § 1105(c)(3), even if everything comes back down a few days later. The only installations that escape are those that become a genuine capital improvement to real property.

Separately state your exempt charges or lose the exemption. Tear-down (dismantling) isn't taxable — but only if you break it out on the invoice. Lump installation and dismantling into one line and New York taxes the whole thing. This is a recurring rule across New York sales tax: a nontaxable charge bundled with a taxable one becomes taxable in full.

Small consumables you use up are your cost. Tape, nuts, and bolts consumed doing the job are property I & D buys and pays tax on; billing their cost through to the customer doesn't change the analysis of the service itself.

Common questions

Q: Our exhibit setup is only up for three days. Is the labor still taxable?
A: Yes. Installing tangible personal property is taxable regardless of how temporary it is. Permanence matters only for the separate capital-improvement exception, which doesn't apply to a trade-show booth.

Q: Is take-down (dismantling) taxable too?
A: No — dismantling isn't a service taxed under § 1105(c). But you must separately state the dismantling charge; otherwise tax applies to your entire bill.

Q: Does it matter that we don't own or modify the exhibit?
A: No. The taxable service is the labor of setting it up and putting it in place for use, whoever built or owns it.

Citations and references

Statute:

• Tax Law § 1105(c)(3) — taxes installing tangible personal property not held for sale; contains a separate exception for installations that become a capital improvement

Regulation:

• 20 NYCRR 527.5(a)(2) — "installing" means setting up tangible personal property or putting it in place for use

Case cited:

• Central Office Alarm Co. v. State Tax Commission, 58 AD2d 162 (3d Dept. 1977) — installation taxable under § 1105(c)(3) even though the equipment was to be removed at the end of the contract

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1985.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a85_16s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-85(16)S
Sales Tax
May 29, 1985

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S840424A

On April 24, 1984, a Petition for Advisory Opinion was received from I & D Inc., 3647
Market Street, Clarkston, Georgia 30021.
The issue raised is whether the installation and dismantling services which Petitioner provides to
exhibitors in the course of erecting and breaking down exhibits presented at trade shows and
conventions are taxable services under New York State and local tax laws.
Petitioner's business consists of assembling and disassembling exhibits for persons and
businesses that wish to advertise products and services at trade shows and conventions throughout
the United States, including New York. The exhibits are generally constructed by exhibit shops or
by the exhibitors themselves and may be used at several shows in different parts of the country. The
exhibits which Petitioner assembles and disassembles are shipped to the point of use by interstate
carriers in crates and disassembled parts. Once the shipment arrives at the show floor, Petitioner
uncrates the exhibit, bolts it together and puts it in place. When the convention is over, Petitioner
takes the exhibit apart and packs the parts into crates for shipment to the next destination. Petitioner
does not alter or modify the parts of the exhibit, but simply provides labor for the assembly and
subsequent disassembly of the exhibit. In the course of providing this service, Petitioner consumes
miscellaneous items such as tape, nuts and bolts, the cost of which is billed to customers along with
sales tax paid by Petitioner on these items.
Section 1105(c)(3) of the Tax Law imposed a tax on "Installing tangible personal property
. . . not held for sale in the regular course of business, whether or not the services are performed
directly or by means of coin operated equipment or by any other means, and whether or not any
tangible personal property is transferred in conjunction therewith. . ." The sales tax regulations
indicate that "installing means setting up tangible personal property or putting it in place for use."
(20 NYCRR 527.5(a)(2)). In light of the plain meaning of the above regulation, the service provided
by Petitioner is the taxable service of installing tangible personal property insofar as Petitioner
provides labor to erect exhibits and set them in place at trade shows and conventions.
Petitioner, however, contends that the term "install" as used in section 1105(c)(3) of the Tax
Law contemplates the addition of property with some degree of permanency. Petitioner argues that
the tax should be imposed only if the installation is intended to be permanent.
However, two considerations militate against such a conclusion. First, section 1105(c)(3)
provides an exemption for property which when installed becomes a capital improvement.
Accordingly, the statute grants exemption only if the property is installed with a great degree of
permanence.
RODERICK G. W. CHU, COMMISSIONER
TP-8 (3/83)

GABRIEL B. DiCERBO, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

-2­
TSB-A-85(16)S
Sales Tax
May 29, 1985

Secondly, it has been held that section 1105(c)(3) is applicable to the service of installing
tangible personal property under circumstance where, by contract, the equipment installed was to be
removed at the termination of the contract. In the Matter of Central Office Alarm Co. v. State Tax
Commission, 58 AD2d 162, (3rd Dept. 1977). In this case, the installation service was held taxable
under section 1105(c)(3) of the Tax Law even though the property was installed with no intention
of permanence.
Additionally, it should be noted that the service of dismantling displays is not subject to sales
tax since it is not one of the services taxed under section 1105(c) of the Tax Law. Thus, Petitioner
is not required to collect sales tax on its charges for dismantling services if such charges are
separately stated on Petitioner's bills to its customers. However, if Petitioner fails to separately state
the charges for exempt services, Petitioner is required to collect sales tax on the entire amount of its
charges.

DATED: May 14, 1985

s/FRANK J. PUCCIA
Director
Technical Services Bureau

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth herein.