Is installing a satellite dish antenna a tax-exempt capital improvement, or a taxable sale and installation?

Plain-English summary

Multi-View Communication, Inc. installs satellite dish TV antennas. Each dish is welded or otherwise attached to a pole set in a concrete base sunk in the ground and wired to the customer's electrical supply and TV receivers. It asked whether the installation is a capital improvement (which would make its charge to the customer tax-free).

The Department split the job: the dish is taxable; the concrete foundation is a capital improvement.

• The three-part capital-improvement test. Section 1101(b)(9) requires an installation to (i) substantially add value or prolong the property's life, (ii) become part of the realty or be so permanently affixed that removal would cause material damage, and (iii) be intended as permanent — all three.
• The concrete foundation qualifies. A concrete foundation with its permanently installed pole is a capital improvement (Publication 862; Matter of Slattery Associates; 20 NYCRR 528.12(c)(3)).
• The dish does not. The satellite dish is equipment that keeps its identity as tangible personal property after installation, whether welded or otherwise affixed; because its removal wouldn't cause material injury, it fails the second test and isn't a capital improvement. So the dish and its installation service are taxable (§§ 1105(a), 1105(c)(3)). The installer buys the dish for resale with a Contractor Exempt Purchase Certificate (Form ST-120.1).
• The foundation work. Where the installer performs the capital improvement (the concrete foundation), it pays tax on its materials but need not collect tax from the customer on that charge if it gets a Certificate of Capital Improvement (Form ST-124).
• Two more points. The Department couldn't answer whether paying sales tax on the dish would affect the customer's real property tax (advisory opinions cover only taxes the Commission administers; and a real-property-tax classification doesn't itself control sales-tax status; Roberson). And any invoice mixing taxable property with a capital improvement must state the amounts separately or the whole charge is taxed (20 NYCRR 533.2).

What this means for you

"Bolted down" isn't the test — "can it come off cleanly" is. New York's capital-improvement test turns on whether removal would materially damage the property or the item. A satellite dish unbolts or unwelds and comes off intact, so it stays taxable equipment. The concrete footing it sits on can't be removed without destroying it, so that part is a capital improvement. One job, two answers.

Split your invoice by component. Because the dish (taxable) and the foundation (capital improvement) are treated differently, you have to state the taxable and exempt amounts separately. Lump them together and New York taxes the entire charge.

Use the right certificate for each piece. Buy the dish you'll resell with a Contractor Exempt Purchase Certificate (ST-120.1). For the foundation you install as a capital improvement, pay tax on your materials and take a Certificate of Capital Improvement (ST-124) from the customer so you don't collect tax on that labor.

Common questions

Q: I permanently mounted the dish — isn't that a capital improvement?
A: No. The dish keeps its identity as tangible personal property, and removal wouldn't cause material damage, so it fails the capital-improvement test. The dish and its installation are taxable, even though the concrete foundation is a capital improvement.

Q: How do I handle the concrete foundation?
A: That's a capital improvement. You pay tax on your foundation materials but don't collect tax from the customer on that charge if you obtain a Certificate of Capital Improvement (Form ST-124).

Q: Will paying sales tax on the dish change my customer's property taxes?
A: The Department couldn't answer that — advisory opinions cover only taxes it administers, and a real-property-tax classification doesn't by itself determine sales-tax status.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(9) — three-part definition of "capital improvement" (value/life, permanent affixation so removal causes material damage, intended permanence)
• Tax Law § 1105(a); § 1105(c)(3) — taxes the sale of the dish and its installation service
• 20 NYCRR 528.12(c)(3) — concrete foundations as capital improvements; 20 NYCRR 533.2 — taxable and exempt amounts must be stated separately

Authorities cited:

• Publication 862; Matter of Slattery Associates — concrete foundations/poles are capital improvements
• Matter of Robert Roberson v. State Tax Commission, 65 A.D.2d 898 — a real-property-tax classification doesn't determine sales-tax status
• Forms ST-120.1 (Contractor Exempt Purchase Certificate) and ST-124 (Certificate of Capital Improvement)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1986.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a86_12s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-86 (12)S
Sales Tax
March 26, 1986

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S851024A

On October 24, 1985 a Petition for Advisory Opinion was received from Multi-View
Communication, Inc., P.O. Box 589, Ontario, N.Y. 14519.
The issue raised is whether satellite dish television antennas installed by Petitioner constitute
capital improvements within the meaning and intent of Article 28 of the Tax Law.
Such antennas are welded or attached by other means to a pole sunk in a concrete base which
is set into the ground. The satellite system is wired to the electric power supply of the customer's
building and to the television receivers.
Section 1101(b)(9) of the Tax Law defines the term "capital improvement" as an addition or
alteration to real property which meets all three of the following criteria:[It]
"(i)

Substantially adds to the value of the real property, or appreciably
prolongs the useful life of the real property; and

(ii)

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

(iii)

Is intended to become a permanent installation."

The construction of concrete foundations, including poles permanently installed therein, has
been determined a capital improvement to real property. (See Department of Taxation and Finance
Publication 862 [2/81], Classification of Improvements and Repairs to Real Property for Sales Tax
Purposes, pg. 7; Matter of Slattery Associates, Inc., Decision of the State Tax Commission, Aug. 16,
1977; STH 77-65; 20 NYCRR 528.12[c][3]).
The satellite dish, however, is considered equipment which retains its identity as tangible
personal property after installation, whether it is welded or otherwise affixed to the pole. Since its
removal, under either circumstance, would not cause material injury to the property or the item itself,
it cannot be held that the satellite dish becomes a permanent part of the real property. Accordingly,
as its installation fails to meet the second condition set forth in the provisions of the Tax Law quoted
above, it does not constitute the performance of a capital improvement. Petitioner's charges to its

RODERICK G. W. CHU, COMMISSIONER
GABRIEL B. DiCERBO, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR
TP-8 (3/83)

-2­
TSB-A-86 (12)S
Sales Tax
March 26, 1986

customers, both for the tangible personal property sold and for the service of its installation, are
subject to tax. (Tax Law, 1105[a], 1105[c][3]). In such instance, Petitioner need not pay tax on the
tangible personal property purchased by it for resale to its customer, upon presentation to its vendor
of a properly completed Contractor Exempt Purchase Certificate (Form ST-120.1).
Petitioner inquires whether sales tax paid on the satellite dish would negate an increase in
the customer's real property tax liability. Regulation section 901.1 provides that an advisory opinion
may be requested only with respect to taxes administered by the State Tax Commission. (20
NYCRR 901.1) Since the real property tax is not a tax administered by the State Tax Commission,
this question cannot be answered within the context of an advisory opinion. However, it should be
noted that the classification of an item for real property tax purposes will not by itself determine such
property's status for purposes of the sales tax law. (See: Matter of Robert Roberson v. State Tax
Commission, 65 AD2d 898).
Where Petitioner performs a capital improvement (e.g. installment of the concrete
foundation), it must pay sales tax on its purchase of materials, but is not required to collect tax on
its charge to its customer for such capital improvement if Petitioner receives from its customer a
properly completed Certificate of Capital Improvement (Form ST-124). (Tax Law 1101(b)(4),
1105(c)(3)(iii), 1132(c); 20 NYCRR 527.7(a)(3) and 532.4. See also Technical Services Bureau
Memorandum TSB-M-82(17)S).
Finally, it should be noted that whenever Petitioner renders to its customer an invoice which
includes charges both for the sale of tangible personal property and for the performance of a capital
improvement, the taxable and nontaxable amounts must be stated separately thereon. If such
amounts are not so separately stated, tax must be collected on the entire amount charged. (20
NYCRR 533.2(a)(1); (b)(2)).

DATED: March 26, 1986

s/FRANK J. PUCCIA
Director
Technical Services Bureau

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