Are a moving company's charges for packing/unpacking and its sales of packing materials part of a transportation business under Article 9, sections 183 and 184?

Plain-English summary

Gold Service Movers, Inc. is a moving and storage company. It charges customers separately for packing and unpacking their goods (sometimes without doing the move at all) and also sells packing materials (boxes, crating, tape) that customers may or may not buy. It asked whether revenues from packing/unpacking and from selling packing materials are receipts from a transportation business under sections 183 and 184 of Article 9.

The Department explained the classification framework:

• A corporation liable under sections 183/184 is not subject to Article 9-A (Tax Law section 209.4). Classification is determined by the nature of the business viewed in its entirety, from the customer's perspective (Stat Equipment, Capitol Cablevision), and a corporation is generally principally engaged in the activity producing more than 50% of its receipts (Bucciero).
• Packing/unpacking with the move: Where the customer hires the company to pack, transport, and unpack the goods, the packing and unpacking are done in conjunction with the actual transportation and are transportation-business receipts -- even if separately stated.
• Packing/unpacking without the move: Where the company packs (or unpacks) but does not transport the goods, those receipts are not from a transportation business.
• Packing materials: A sale of packing material is a sale of tangible personal property, never a transportation receipt, even if the company later moves the goods packed in it.

Whether more than 50% of Gold Service's receipts are from a transportation business -- and thus whether it is an Article 9 or Article 9-A taxpayer -- is a question of fact an advisory opinion cannot resolve.

What this means for you

Classification turns on the whole business, not one service

A moving company is an Article 9 transportation taxpayer only if more than 50% of its receipts come from transportation, judged by what the customer buys and pays for, viewed in its entirety.

Packing is transportation only when tied to the move

Packing and unpacking count as transportation receipts when done in conjunction with the company's own transportation of the goods. The same work done as a stand-alone service, with no move, does not.

Selling packing materials is always a TPP sale

Receipts from selling boxes, crates, and other packing materials are sales of tangible personal property, not transportation receipts -- regardless of whether the company later moves the goods.

Watch the 1996 law change for truckers

Chapter 309 of the Laws of 1996 cut the section 184 trucking rate from 0.75% to 0.6% effective 1997 and, starting in 1998, moved trucking companies to Article 9-A unless they elect to stay under Article 9.

Common questions

Q: Is a moving company taxed under Article 9 or Article 9-A?
A: Under Article 9 (sections 183/184) only if more than 50% of its receipts are from a transportation business; otherwise under Article 9-A. It is a factual determination.

Q: Are packing and unpacking charges transportation receipts?
A: Only if done in conjunction with the company's actual transportation of the goods. Packing or unpacking with no move is not a transportation receipt.

Q: What about selling packing materials?
A: That is a sale of tangible personal property, never a transportation receipt, even if the company later moves the packed goods.

Citations and references

Statutes, regulations, and authorities:
- Tax Law sections 183 and 184 (Article 9 transportation franchise taxes); section 209.4 (corporation liable under 183/184 is not subject to 9-A); section 209.1 (Article 9-A)
- Transportation Law section 2.33 (transportation of property includes related handling services); Part 814 (household-goods carriers' tariffs)
- Matter of Stat Equipment Corp., TSB-D-96(3)C; Matter of Capitol Cablevision; Matter of RVA Trucking (nature-of-business classification)
- Re Joseph Bucciero Contracting, TSB-A-81(5)C (more-than-50-percent-of-receipts test); Chapter 309 of the Laws of 1996 (trucking rate cut; 1998 move to Article 9-A)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/corporation_ao_1996.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/corporation/a96_23c.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-96 (23) C
Corporation Tax
October 1, 1996

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. C960508B

On May 8, 1996, a Petition for Advisory Opinion was received from Gold Service Movers,
Inc., 95 Virginia Road, White Plains, New York 10603.
The issue raised by Petitioner, Gold Service Movers, Inc., is whether revenues from charges
for packing and unpacking goods and the sales of packing materials are derived from a transportation
business under sections 183 and 184 of Article 9 of the Tax Law.
Petitioner submits the following facts as the basis for this Advisory Opinion.
The taxpayer is engaged in business as a moving and storage company and derives its income
from several sources, e.g. transportation, storage, commissions, etc.
Petitioner states that traditionally, a moving company would be engaged to move boxes or
cartons that have been packed by the customer in anticipation of the move. Upon delivery to the new
home or office, the customer would then unpack the boxes. Therefore, Petitioner contends that
packing and unpacking is to be distinguished from mere loading and unloading. In fact, a customer
may retain Petitioner to pack or unpack goods without utilizing Petitioner's transportation services.
Packing and unpacking goods is an additional service provided by Petitioner for which the customer
is charged separately. The service entails the careful packing and sealing of household or office
belongings of the customer, so that the goods may be moved safely, and then unpacked in an
organized manner utilizing a sequentially numbered pattern. This service provides an administrative
and time-saving benefit to the customer.
Petitioner further states that packing materials consist of boxes (including boxes for specific
types of goods), cartons, foam, tape, etc. This includes specialized crating for vulnerable items such
as mirrors or pianos. Packing materials may be purchased at the option of the customer. The
customer may, and frequently does, use packing materials purchased from other sources. Also, one
may purchase packing materials from Petitioner and not hire Petitioner for the move. In several
cases where special crating was purchased, Petitioner did not provide the transportation service.
Section 209.1 of Article 9-A of the Tax Law imposes an annual franchise tax on domestic
or foreign corporations for the privilege of exercising a corporate franchise, doing business,
employing capital, owning or leasing property in a corporate or organized capacity, or maintaining
an office in New York State. Section 209.4 of the Tax Law, provides that a corporation liable for tax
under sections 183 and 184 of Article 9 of the Tax Law is not subject to tax under Article 9-A of the
Tax Law.

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TSB-A-96 (23) C
Corporation Tax
October 1, 1996
Sections 183 and 184 of the Tax Law impose annual franchise taxes on a domestic or foreign
corporation formed for or principally engaged in the conduct of a transportation business. The tax
is imposed for the privilege of exercising its corporate franchise, doing business, employing capital,
owning or leasing property in a corporate or organized capacity or maintaining an office in New
York State.
To determine the classification and proper taxability of a corporation under either Article 9
or Article 9-A, an examination of the nature of the corporation's activities is necessary, regardless
of the purpose for which the corporation was organized. In Matter of Stat Equipment Corp and
Matter of Bi-County Ambulance and Ambulette Transport Corp, Dec Tax App Trib, January 25,
1996, TSB-D-96(3)C, the Tax Tribunal stated the test for proper classification of business activities
as follows:
We stated the test in Matter of Capitol Cablevision Sys. (Tax Appeals Tribunal, June
9, 1988):
"[i]t is well established that classification for corporation tax purposes is to be
determined by the nature of the taxpayer's business and not by the words in its
certificate of incorporation, nor by focusing on one aspect of its business operations.
The business must be viewed in its entirety and from the perspective of its customers
- what they buy and pay for. (Ouotron Sys v Gallman, 39 NY2d 428; Matter of
Holmes Elec. Protective Co. v McGoldrick, 262 AD 514, affd 288 NY 635; Matter
of McAllister Bros. v Bates, 272 AD 511)" (Matter of Capitol Cablevision
Sys.,supra).
Ordinarily, a corporation is deemed to be principally engaged in the activity from which more
than 50 percent of its receipts are derived. See, e.g., Re Joseph Bucciero Contracting Inc., Adv Op
St Tax Commn, July 23, 1981, TSB-A-81(5)C.
In Matter of RVA Trucking Inc. v New York St Tax Commn, 135 AD2d 938, affirming State
Tax Commission Decision, June 12, 1986, TSB-H-86(24)C, the Court stated that the State Tax
Commission "quite reasonably defined 'transportation' as comprehending 'any real carrying about or
from one place to another' and 'trucking' as generally involving 'the process or business of carting
goods on trucks' (Matter of Joseph A. Pitts Trucking, St Tax Commn Dec, July 18, 1984, TSB-H­
84(34)C; see, Matter of Newton Creek Towing Co. v Law, 205 App Div 209, 211, affd 237 NY
578)."
Section 2.33 of the Transportation Law provides that the "transportation of property" includes
any service in connection with the receiving, delivery, elevation, transfer in transit, ventilation,
refrigeration, icing, storage and handling of the property transported. A person engaged in intrastate
transportation as a common carrier of property by motor vehicle transporting household goods on
any highway in New York State is regulated under Article 9 of the Transportation Law and Part 814
of the Transportation Regulations.

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TSB-A-96 (23) C
Corporation Tax
October 1, 1996
Under section 814 of the Transportation Regulations, all common carriers of household
goods by motor vehicle shall establish rates for the transportation of the household goods. The
transportation charges shall be computed in accordance with the carrier's tariff on file with the
Commissioner of Transportation. In addition, the charges to be made for each accessorial, additional
or terminal service rendered in connection with the transportation of household goods by motor
vehicle shall be established by a separate tariff. The tariffs establishing these charges shall separately
state each service to be rendered and the charge therefor. A carrier shall establish one charge for a
complete packing service including providing a container, packing and unpacking and a separate
charge for such service without unpacking. These charges are not to be included in, but are in
addition to the charges based on the rate for transporting the household goods.
In this case, when determining the classification and proper taxability of Petitioner, its
business activities "must be viewed in its entirety and from the perspective of its customers - what
they buy and pay for" as stated in Stat Equipment Corp, supra. If more than 50 percent of Petitioner's
receipts are derived from a transportation business, Petitioner is properly taxable under sections 183
and 184 of Article 9 of the Tax Law. Otherwise, Petitioner is taxable under Article 9-A of the Tax
Law.
In applying the principles of RVA Trucking, supra, Stat Equipment Corp, supra, and the tariff
treatment for common carriers of household goods by motor vehicle under the Transportation Law,
it is determined that where packing and unpacking is done in connection with the actual
transportation of the goods, the entire receipt for this activity is from a transportation business. That
is, where a customer hires a moving company to pack the customer's goods, transport the goods to
another location and then unpack the goods, the packing and unpacking is done in connection with
the actual transportation of the goods and both services, together, is what the customer is paying for.
Even though the charges may be separately stated, the packing and unpacking is done in conjunction
with the actual transportation, and both services constitute a transportation business.
However, where a customer hires a moving company to pack and unpack the customer's
goods (or to just pack the customer's goods) and the moving company does not transport the goods,
the packing and unpacking activity is not done in connection with the actual transportation of the
goods and the moving company's receipts for this activity is not from a transportation business.
Where a moving company sells packing material to a customer, the receipt for this activity
is from the sale of tangible personal property and is not a receipt for a transportation business even
if the moving company subsequently transports the goods that are packed in this material.
Accordingly, for purposes of determining whether more than 50 percent of Petitioner's
receipts are from a transportation business, the charges for the transportation of goods are receipts
from a transportation business. However, the separately stated charges for packing and unpacking
a customer's goods are receipts from a transportation business only if it is done in conjunction with
the actual transportation of the goods.
Otherwise, the receipts from the charges

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TSB-A-96 (23) C
Corporation Tax
October 1, 1996
for packing and unpacking a customer's goods is not ancillary to the transportation of goods and,
therefore, are not receipts from a transportation business as contemplated under sections 183 and 184
of the Tax Law. Likewise, the receipts from the sales of packing material are not receipts from a
transportation business as contemplated under sections 183 and 184 of the Tax Law.
The actual classification of Petitioner as either an Article 9 of the Tax Law taxpayer or an
Article 9-A of the Tax Law taxpayer is a question of fact not susceptible of determination in an
advisory opinion. An advisory opinion merely sets forth the applicability of pertinent statutory and
regulatory provisions to "a specified set of facts". Tax Law §171.Twenty-fourth; 20 NYCRR
2376.1(a).
It should be noted that Chapter 309 of the Laws of 1996 provides that under section 184 of
the Tax Law, the tax rate for trucking companies is decreased from .75 percent to .6 percent on gross
earnings effective for 1997 and thereafter. In addition, starting in 1998, trucking companies will be
subject to tax under Article 9-A of the Tax Law rather than under Article 9 unless the company opts
to remain under Article 9 of the Tax Law.

DATED: October 1, 1996

NOTE:

/s/
John W. Bartlett
Deputy Director
Technical Services Bureau

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