Is a fee charged for a home grocery-shopping service -- where the shopper uses their own money to buy the customer's groceries, then delivers them and gets reimbursed plus a service fee -- subject to New York sales tax?

Subject

Issue raised by Petitioner, Paul Lorenzo, is whether a fee charge by his client for a home grocery shopping service is subject to sales and use taxes.

What this means for you

A personal grocery-shopping business takes a customer's shopping list, goes to the store, and buys the groceries using its own money -- then delivers the groceries to the customer's home. The customer pays a set service fee plus reimbursement for the money the shopper laid out for the groceries themselves.

New York's sales tax under Section 1105(c) only reaches a specific, enumerated list of services -- and personal shopping/delivery of groceries for a customer isn't on that list. Since the service doesn't fall within any of the taxed categories, the Department found the entire charge -- both the service fee and the grocery reimbursement -- is not subject to New York sales or use tax.

Q&A

Q: We run a personal-shopping, errand-running, or delivery business -- is our service fee taxable?
A: Per this opinion's reasoning, a personal shopping/delivery service isn't one of the enumerated taxable services under Tax Law § 1105(c), so the fee itself escapes sales tax -- provided the service doesn't otherwise overlap with a taxed category (like taxable trash removal or a taxable information service).

Q: Does it matter that our client is reimbursed for money spent on the customer's behalf, on top of the service fee?
A: No -- this opinion treated both the service fee and the grocery-cost reimbursement as untaxed, since the underlying service itself falls outside the enumerated list.

Q: Would this analysis change if the groceries were purchased with the customer's own money instead of the shopper's?
A: This opinion doesn't address that variation -- it was decided on the specific fact that the shopper used their own funds and was reimbursed. A different payment structure should be confirmed against its own facts rather than assumed to follow this ruling.

Citations

• Tax Law § 1105(c) -- imposes sales tax only on specifically enumerated services; personal grocery-shopping and delivery services aren't among them.

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_46s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-94 (46)S
Sales Tax
September 28, 1994

Taxpayer Services Division
Technical Services Bureau

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S940627A

On June 27, 1994, a Petition for Advisory Opinion was received from Paul Lorenzo, 32
Tompkins St., Cortland, New York 13045.
The issue raised by Petitioner, Paul Lorenzo, is whether a fee charge by his client for a home
grocery shopping service is subject to sales and use taxes.
Petitioner's client goes to the customer's home, takes the customer's list and goes to the store
to purchase the groceries for its customers. Petitioner's client uses its own money to purchase the
customer's groceries and then delivers the groceries to the customer's home. Petitioner's client
charges the customer a set fee for the purchase and delivery of the groceries and is also reimbursed
for the money expended to purchase the groceries.
Section 1105(c) of the Tax Law imposes tax upon the receipts from every sale, except for
resale, of certain enumerated services. The providing by Petitioner's client of a home grocery
shopping service as described above is not one of the services enumerated under Section 1105(c) of
the Tax Law and, therefore, such service is not subject to sales and use taxes.
Accordingly, since a home grocery shopping service as described above is not an enumerated
service subject to sales tax under Section 1105(c) of the Tax Law, the charge by Petitioner's client
for shopping for and delivering its customer's groceries is not subject to sales and use taxes.

DATED: September 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.