Is the technical advice of a licensed professional engineer — evaluating and recommending upgrades to a building's air-conditioning system — subject to New York sales tax?

Plain-English summary

R.H. McDermott Corp., a licensed professional engineer, is hired — usually by other engineering firms — to evaluate existing air-conditioning systems and recommend redesigning and upgrading them for a new tenant. It sells no tangible property (no architectural models), and its recommendations go only to the engineer/client qualified to interpret the report. It asked whether this technical advice is taxable.

The Department held: no — a licensed professional engineer's technical advice is not subject to sales or use tax.

• The tax reaches property and enumerated services only. Tax Law § 1105(a) taxes retail sales of tangible personal property; § 1105(c) taxes certain enumerated services.
• Professional engineering advice is outside that scope. Furnishing technical advice by a licensed professional engineer is neither a sale of tangible personal property nor an enumerated service — even if a written report is furnished as an incident to the engineering service. It's a professional service outside the sales tax.
• Scope of the ruling. It's limited to reports and documents — evaluations, specifications, plans, designs — that, being based on the principles of mathematics and the physical sciences, may legally be rendered only by licensed professional engineers (Opinion of Counsel, 1966 NYTB-2, p. 58).
• But the engineer's own supplies are taxable. Under 20 NYCRR § 526.6(c)(7), property bought to perform a nontaxable service is not bought for resale — so the engineer's purchases of supplies and materials used or consumed in performing the consulting service are subject to state and local sales and use tax.

What this means for you

Genuine licensed-professional services aren't sales-taxable in New York, even when they come with a written report. An engineer's evaluations, specifications, plans, and designs — work that only a licensed professional engineer may legally produce — are professional services outside the sales tax. A report delivered as part of the service doesn't turn it into a taxable sale of paper.

The exemption tracks the license and the nature of the work. This treatment is limited to documents grounded in mathematics and the physical sciences that only a licensed PE may render. It isn't a blanket exemption for anything labeled "consulting."

You're the consumer of your own supplies. Because your service is nontaxable, the materials and supplies you buy to perform it aren't "for resale" — so you pay sales/use tax on them.

Common questions

Q: I'm a licensed professional engineer. Do I charge sales tax on my technical advice and reports?
A: No. Furnishing technical advice — including evaluations, specifications, plans, and designs that only a licensed PE may legally render — is a professional service outside New York's sales tax, even with a written report.

Q: Does giving the client a written report make it a taxable sale?
A: No. The report is incidental to the professional service; it doesn't convert the service into a taxable sale of tangible property.

Q: Do I owe tax on the supplies and materials I use to do the work?
A: Yes. Property used to perform a nontaxable service isn't bought for resale, so your purchases of supplies and materials are subject to state and local sales and use tax.

Citations and references

Statute, regulation, and authority:

• Tax Law § 1105(a) — imposes sales tax on retail sales of tangible personal property
• Tax Law § 1105(c) — taxes only enumerated services; a licensed professional engineer's technical advice is not among them
• 20 NYCRR § 526.6(c)(7) — tangible personal property purchased for use in performing a nontaxable service is not purchased for resale, so the engineer's supplies are taxable
• Opinion of Counsel, 1966 NYTB-2, p. 58 — limits the treatment to reports and documents (evaluations, specifications, plans, designs) that only licensed professional engineers may legally render

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1988.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a88_22s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-88(22)S
Sales Tax
March 2, 1988

STATE OF NEW YORK
COMMlSSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S870901A

On September 1, 1987, a Petition for Advisory Opinion was received from R.H. McDermott
Corp., 421 Seventh Avenue, New York, N.Y. 10001.
The issue raised is whether the rendering of technical advice by the Petitioner, a licensed
professional engineer, is a service subject to sales tax.
Petitioner is engaged, usually by other engineering firms, to evaluate existing air conditioning
systems and to make recommendations for redesigning and upgrading the installation to meet the
needs of a new tenant.
Petitioner states it does not sell tangible property, such as architectural models, and its
recommendations are given only to the engineer/client who retains its services as the only person
qualified to interpret the data in the report.
The Tax Law imposes sales tax on every retail sale, except for resale, of tangible personal
property (§1105[a]) and of certain enumerated services (§1105[c]).
The furnishing of technical advice by a licensed professional engineer is not deemed to be
the sale of tangible personal property or the sale of an enumerated service even if a written report
is furnished as an incident to the engineering service being performed. Such a professional service
is outside the scope of the sales tax.
Accordingly, the rendering of technical advice by a licensed professional engineer is not
subject to sales or use tax.
It must be emphasized that this ruling is limited to the tax status of reports and documents
(e.g., evaluations, specifications, plans and designs) which, being based upon the principles of
mathematics and the physical sciences, may legally be rendered only by licensed professional
engineers. Opinion of Counsel, 1966 NYTB-2, p. 58.
The Sales and Use Tax Regulations provide that tangible personal property purchased for use
in performing a service not subject to tax is not purchased for resale. (20 NYCRR 526.6[c][7]).
Accordingly, Petitioner's purchases of supplies or materials used or consumed in performing
professional consulting services are subject to State and local sales and use tax.
DATED: March 2, 1988

NOTE:

s/FRANK J. PUCCIA
Director
Technical Services Bureau
The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.

RODERICK G. W. CHU, COMMISSIONER
TP-8 (3/83)

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