Are sales of specialized engineering/environmental illustrations by a freelance illustrator subject to New York sales tax, including when the client is ultimately the New York State Department of Transportation?

Subject

Barker, is whether sales of Petitioner's specialized illustrations are subject to sales tax and, if so, if Petitioner is hired by an engineer whose client is the New York State Department of Transportation, are such sales subject to sales tax.

What this means for you

A highly specialized illustrator, whose clients are mostly engineering and architecture firms (occasionally real estate developers and ad agencies), takes complex technical drawings, test data, and site photos for a project and paints or draws "future conditions" onto them -- for example, showing what a landfill will look like once capped, or how undeveloped land will look after a proposed power substation and line are built, to support environmental impact studies or zoning approvals.

New York's sales tax regulations expressly list "artistic items, such as sketches, paintings, photographs, moving picture films and recordings" as tangible personal property, and tangible personal property sales are taxable under Section 1105(a) unless an exception applies. So the illustrator's charges for these drawings/paintings are taxable retail sales -- UNLESS the client provides a properly completed exemption certificate. The opinion flags one specific, no-paperwork-needed exception: if New York State or one of its own agencies, instrumentalities, or subdivisions is the direct purchaser and payer of record (not merely the ultimate end-user, as when a private engineering firm is hired by the state and then subcontracts the illustration work), no exemption certificate is even necessary -- the sale is exempt on its own.

Q&A

Q: I'm a freelance illustrator selling technical drawings and doctored photos to engineering firms -- is that taxable?
A: Yes, per this opinion -- drawings, sketches, and photographs are tangible personal property under 20 NYCRR § 526.8, so the charge is a taxable retail sale unless the client gives you a valid exemption certificate.

Q: An engineering firm hires me, and THEIR client turns out to be a state agency like the DOT -- does that make my sale to the engineering firm exempt?
A: Not automatically, per this opinion -- the exemption without a certificate applies only when the state or its agency is the DIRECT purchaser and payer of record for your work, not merely the end-user several contractual layers away. If a private firm is your actual client and payer, you'd still need a proper exemption certificate from them to avoid charging tax (and typically a private engineering firm wouldn't qualify for one on this kind of purchase).

Q: What if the New York State Department of Transportation itself hires and pays me directly for the illustrations?
A: Per this opinion, no exemption certificate is necessary in that situation -- direct sales to New York State or its agencies, instrumentalities, or subdivisions as purchaser and payer of record are exempt without further paperwork.

Citations

• Tax Law § 1105(a) -- imposes sales tax on retail sales of tangible personal property.
• 20 NYCRR § 526.8 -- defines tangible personal property to include artistic items such as sketches, paintings, and photographs.
• Matter of Awad Architectural Models, Inc., Adv. Op. St. Tax Comm'n, February 14, 1986, TSB-A-86(9)S -- prior opinion applying the same tangible-personal-property analysis to artistic/model work, cited and followed here.

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_26s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-94 (26)S
Sales
June 23, 1994

Taxpayer Services Division
Technical Services Bureau

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S940310A

On March 10, 1994, a Petition for Advisory Opinion was received from Leslie H. Barker,
RFD Box 351, Potterbrook Rd. Chestertown, N.Y. 12817.
The issue raised by Petitioner, Leslie H. Barker, is whether sales of Petitioner's specialized
illustrations are subject to sales tax and, if so, if Petitioner is hired by an engineer whose client is the
New York State Department of Transportation, are such sales subject to sales tax.
Petitioner is a highly specialized illustrator whose primary clients are engineering firms and
architectural firms. Occasionally, Petitioner will perform services for real estate developers and
advertising agencies.
Petitioner is given extremely complex drawings, tests, and site information for a project.
This information is studied and used to generate "future conditions." For example, an engineering
firm may need photographs or drawings to be used in an environmental impact study. A photograph
of an existing landfill site along with the engineering data to cap the site is given to Petitioner.
Petitioner then puts all the technical information together and formulates what the landfill will look
like after it is capped. This is then painted into an existing photo to be used by Petitioner's client.
Another example would be to take an existing photograph of a parcel of undeveloped land
purchased by a power company for a new substation and line. Petitioner digests the technical
information and paints new conditions for zoning approval.
Section 1105(a) of the Tax Law imposes a tax upon "[t]he receipts from every retail sale of
tangible personal property, except as otherwise provided in this article."
Section 526.8 of the Sales and Use Tax Regulations defines tangible personal property as
follows:
(a) Definition. The term tangible personal property means corporeal personal
property of any nature having a material existence and perceptibility to the human
senses. Tangible personal property includes, without limitation:
...
(3)
artistic items, such as sketches, paintings, photographs, moving
picture films and recordings;

-2­
TSB-A-94 (26)S
Sales
June 23, 1994
...
Petitioner's sale of drawings, sketches and photographs is the sale of tangible personal
property. (See: Awad Architectural Models, Inc., Adv Op St Tx Comm., February 14, 1986, TSBA-86(9)S). Accordingly the charge for such items is subject to sales tax unless Petitioner receives
a properly completed exemption certificate from the client. If New York State or any of its agencies,
instrumentalities or subdivisions are the direct purchaser and payer of record, no exemption
certificate is necessary.

DATED: June 23, 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.