Must a public benefit corporation (or its private parking-management agent) collect and remit sales tax on parking fees it charges the public at an airport it owns, even though the authority itself is generally tax-exempt?

Subject

Issue raised by Petitioner, Niagara Frontier Transportation Authority, is whether Petitioner or its Agent, Ampco System Parking, (hereinafter "Ampco") is required to collect and remit to the Department of Taxation and Finance sales tax on receipts received from its customers to park in parking lots and at metered parking spaces located at the Greater Buffalo International Airport.

What this means for you

The Niagara Frontier Transportation Authority ("NFTA"), a public benefit corporation created by state law to run transportation infrastructure in the Buffalo area (buses, light rail, terminals, harbors, and two airports), owns and operates parking lots and metered spaces at the Greater Buffalo International Airport. It hired Ampco System Parking as its agent to run day-to-day parking operations -- collecting fees at toll booths and parking meters, depositing the money, and (per their contract) handling sales tax collection and remittance, with a management fee paid to Ampco out of net receipts.

New York's general public-authority exemption shields NFTA from paying sales tax when it's the one buying goods or services. But that's a one-way street: the same statute (Tax Law § 1116(a)(1)) says a government entity still has to collect and remit sales tax when it acts as a VENDOR of services "of a kind ordinarily sold by private persons." Sales tax already applies generally to parking, garaging, or storing motor vehicles as a taxable service. A 1991 Appellate Division case, Town of North Hempstead v. Regan, had already established that municipal off-street parking counts as this kind of ordinarily-privately-sold service, even when it serves a public traffic-flow purpose -- so a government landlord doesn't get a pass just because parking happens to be publicly owned. Applying that logic here, NFTA's airport parking lots and meters are the same kind of service private parking-lot operators sell, so NFTA (through Ampco as its collecting agent) must charge, collect, and remit sales tax on those parking receipts, even though NFTA itself pays no sales tax on its own purchases.

Q&A

Q: We're a public authority that's exempt from paying sales tax on our own purchases -- does that exemption also cover fees we charge the public for services like parking?
A: No, per this opinion -- the purchaser-side exemption in Tax Law § 1116(a)(1) doesn't extend to your role as a vendor. If you sell a service "of a kind ordinarily sold by private persons" (like parking), you must still collect and remit sales tax on those receipts.

Q: We've hired a private company to manage and collect our parking fees for us -- does that shift the tax-collection obligation off of us?
A: Per this opinion's facts, the private management agent (Ampco) is the one actually required to collect and remit the tax on the authority's behalf, since it's the party collecting the receipts from customers at the point of sale -- but the underlying liability traces back to the authority's own status as the vendor of the service.

Q: Does it matter that our parking facilities serve a public transportation/traffic purpose rather than a purely commercial one?
A: No, per this opinion (citing Town of North Hempstead v. Regan) -- serving a public interest like traffic flow doesn't change the fact that off-street parking is a service ordinarily sold by private businesses, so the tax-collection obligation still applies.

Citations

• Tax Law § 1105(c)(6) -- imposes sales tax on receipts from providing parking, garaging, or storing for motor vehicles.
• Tax Law § 1116(a)(1) -- exempts the state and its agencies/public corporations from sales tax as purchaser, user, or consumer, but requires them to collect tax when acting as a vendor of services or property ordinarily sold by private persons.
• Public Authorities Law § 1299-c, § 1299-d, § 1299-o -- establish the Niagara Frontier Transportation Authority as a public benefit corporation performing an essential governmental function, exempting its own property and purchases from taxation.
• Town of North Hempstead v. Regan, 171 A.D.2d 165, 574 N.Y.S.2d 851 (1991) -- held municipalities must collect sales tax on off-street parking fees since parking is a service ordinarily sold by private persons, notwithstanding its public-traffic purpose.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1994.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a94_18s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-94 (18)S
Sales Tax
April 28, 1994

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S940303A

On March 3, 1994, a Petition for Advisory Opinion was received from Niagara Frontier
Transportation Authority, 181 Ellicott Street, Buffalo, New York 14203.
The issue raised by Petitioner, Niagara Frontier Transportation Authority, is whether
Petitioner or its Agent, Ampco System Parking, (hereinafter "Ampco") is required to collect and
remit to the Department of Taxation and Finance sales tax on receipts received from its customers
to park in parking lots and at metered parking spaces located at the Greater Buffalo International
Airport.
Petitioner is a body corporate and politic, constituting a public benefit corporation. Petitioner
is organized and existing pursuant to Chapter 717 of the Laws of 1967 of the State of New York, as
amended. Pursuant to Section 1299-d.1 of the New York Public Authorities Law (hereinafter the
"Public Authorities Law") Petitioner's purposes are the continuance, further development and
improvement of transportation and other related services within the Niagara Frontier transportation
district (which consists of the counties of Erie and Niagara in the State of New York) including, but
not limited to, transportation by railroad, omnibus, marine and air, and to develop and implement
a unified mass transportation policy for the district. As set forth in Section 1299-d.2 of the Public
Authorities Law, the enabling legislation that created the authority states that such purposes "are in
all respects for the benefit of the people of the state of New York and the authority shall be regarded
as performing an essential governmental function in carrying out its purposes and in exercising the
powers granted by [Title ii-A of the New York Public Authorities Law]."
Pursuant to the authority granted to Petitioner under Article II-A of the Public Authorities
Law, Petitioner owns and operates a metropolitan bus transportation system in Erie and Niagara
counties, light rail rapid transit system in the City of Buffalo, a bus terminal in the City of Buffalo
and a bus terminal in the city of Niagara Falls, the small Boat Harbor and the Port of Buffalo, the
Greater Buffalo International Airport and the Niagara Falls International Airport.
Petitioner owns three parking lots at the Greater Buffalo International Airport (the "Airport")

• two short-term lots where customers are charged for parking by the half hour (up to a maximum
  amount per day) and one long-term lot where customers are charged for parking by the hour (up to
  a maximum amount per day and a maximum amount per week). Petitioner also owns a number of
  metered parking spaces near the entrances to the Airport's two terminals.
  Petitioner entered into an Agreement with Ampco dated February 1, 1994 (the "Agreement").
  Pursuant to Section 2.1 of the Agreement, Petitioner retained Ampco to act as Petitioner's limited
  agent with authority to purchase goods and services in accordance with Petitioner's procurement

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guidelines, to collect parking lot and meter receipts during the term of the Agreement and to perform
other services with respect to the parking facilities at the Airport. Moreover, pursuant to Section
32.1 of the Agreement the term of the Agreement is for two years, commencing February 1, 1994
and ending on January 31, 1996, unless sooner terminated. Petitioner has the right to extend the term
of the Agreement for two years.
Pursuant to Section 3.1 of the Agreement, Ampco is required to operate the parking facilities
as a first-class motor vehicle parking facility for the public, affording parking privileges to all person
operating motor vehicles who have need for the parking services provided at the Airport and who
have agreed to pay for such services. Further, Section 3.5.d of the Agreement provides that Ampco
employees will collect the parking receipts at toll booths located at the exits to the parking lots.
Ampco is required to provide on-premises labor to perform cashier functions at toll exit gates at, the
parking facilities. Moreover, Section 3.7 of the Agreement provides that Ampco is responsible for
collecting revenues from the meters at the metered parking spaces.
Pursuant to Section 4.2 of the Agreement, the parking rates charged for the parking facilities
at the Airport must be approved by Petitioner. Pursuant to Section 4.3 of the Agreement, Ampco
is required to collect and hold in trust for and on behalf of Petitioner the total parking receipts
collected from parking customers and to deposit them daily in a bank designated, in writing, by the
Petitioner, including any cashier overages received by Ampco in operation and management of the
parking operation.
Pursuant to Section 5.1 of the Agreement, Ampco receives a management fee for operating
the parking facilities equal to certain percentages of the net parking receipts, calculated on a monthly
basis. In addition, pursuant to Section 5.2 of the Agreement, Ampco is entitled to be reimbursed for
certain operating expenses. Moreover, pursuant to Section 5.3 of the Agreement, Ampco is required
to pay to Petitioner the net parking receipts (which does not include sales tax, if applicable) and sales
taxes, less its fee, by federal wire transfer within ten calendar days of the end of each month.
Section 27.1 of the Agreement provides that Ampco is responsible for collecting sales tax
on parking revenue and remitting it to Petitioner. However, if it is determined that neither Petitioner
nor Ampco is required to collect sales tax on parking receipts, this provision would be deleted from
the Agreement.
Section 1105 of the Tax Law imposes sales tax upon:
(a)
The receipts from every retail sale of tangible personal property, except as
otherwise provided in this article.
*

*

*

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Sales Tax
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(c)

The receipts from every sale, except or resale, of the following services:
*

*

*

(6)
Providing parking, garaging or storing for motor vehicles by persons
operating a garage (other than a garage which is part of premises occupied solely as
a private one or to family dwelling), parking lot or other place of business engaged
in providing parking, garaging or storing for motor vehicles.
Section 1116 of the Tax Law provides, in pertinent part, as follows:
Sec. 1116. Exempt organizations--(a) Except as otherwise provided in this
section, any sale or amusement charge by or to any of the following or any use or
occupancy by any of the following shall not be subject to the sales and compensating
use taxes imposed under this article:
(1)
The state of New York, or an of its agencies, instrumentalities, public
corporations (including a public corporation created pursuant to agreement or
compact with another state or Canada) or political subdivisions where it is the
purchaser, user or consumer, or where it is a vendor of services or property of a kind
not ordinarily sold by private persons; (emphasis added)
Section 1299-c of the Public Authorities Law provides, in part, as follows:
1.
There is hereby created the "Niagara Frontier transportation
authority." The authority shall be a body corporate and politic constituting a public
benefit corporation...
*

*

*

5.
The authority shall be a "state agency" for the purposes of sections
seventy-three and seventy-four of the public officers law.
Section 1299-o of the Public Authorities Law provides, in pertinent part, as follows:
It is hereby found, determined and declared that the creation of the authority
and the carrying out of it purposes is in all respects for the benefit of the people of
the state of New York and for the improvement of their health, welfare and prosperity
and is a public purpose, and that the authority will be performing an essential
governmental function in the exercise of the powers conferred upon it by this title.
Without limiting the generality of the following provisions of this section, property
owned by the authority, property leased by the authority and used for transportation
purposes, and property used for transportation purposes by or for the benefit of the

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Sales Tax
April 28, 1994
authority exclusively pursuant to the provisions of a joint service arrangement or of
a joint facilities agreement or trackage rights agreement shall all be exempt from
taxation and special ad valorem levies. The authority shall be required to pay no
fees, taxes or assessments, whether state or local, except special benefit assessments
if said property is located in a special benefit district, including but not limited to
fees, taxes or assessments on real estate, franchise taxes, sales taxes or other excise
taxes, upon any of its property, or upon the use thereof, or upon its activities in the
operation and maintenance of its facilities or on any fares, tolls, rentals, rates, charges
or other fees, revenues or other income received by the authority and the bonds of the
authority and the income therefrom shall at all times be exempt from taxation, except
for gift and estate taxes and taxes on transfers...(emphasis added)
In Town of North Hempstead v. Regan, 1991, 171 A.D.2d 165, 574 N.Y.S. 2d 851 the Court
held that governmental entities providing off-street parking for constituents were not exempt from
collecting sales tax imposed on revenues received from off-street parking fees since municipalities
were "vendors" of services "of a kind ordinarily sold by private persons," notwithstanding that their
off-street metered parking fields served public interest in aiding free flow of traffic.
Pursuant to Section 1299-c of the Public Authorities Law, Petitioner is a body corporate and
politic constituting a public benefit corporation. Pursuant to Section 1116(a)(1) of the Tax Law and
Section 1299-o of the Public Authorities Law, as a public benefit corporation Petitioner, or its agent
Ampco, are exempt from the payment of sales tax as a purchaser, user or consumer of tangible
personal property or services. However, pursuant to Section 1116(a)(1) of the Tax Law where
Petitioner is the vendor of services or property of a kind ordinarily sold by private persons Petitioner
is required to collect sales tax on the receipts received from the sale of such service or property.
In the instant case Ampco as agent for Petitioner will operate three parking lots at the Airport
and a number of metered parking spaces near the entrances to the Airport's two terminals. Pursuant
to Section 1105 of the Tax Law, the receipts derived from the providing of parking, garaging or
storing of motor vehicles by persons operating a garage, parking lot or other business engaged in
providing parking, garaging or storing for motor vehicles are subject to sales and use taxes.
Accordingly, pursuant to Section 1116(a)(1) of the Tax Law and Town of North Hempstead v.
Regan, supra, since Ampco as agent for Petitioner is a vendor of services or property of a kind
ordinarily sold by private persons, Ampco as agent or Petitioner must collect and remit sales tax on
the receipts received from the parking lot fees and metered parking spaces located at the Airport.
The exemption from sales tax contained in Section 1299-o of the Public Authorities Law while

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Sales Tax
April 28, 1994
exempting the Petitioner from paying sales tax on its purchases of goods and services, does not
exempt it or its agent from collecting and remitting sales tax on receipts received from those
purchasing parking services at its facilities.

DATED: April 28, 1994

/s/
PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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