New York Advisory Opinion TSB-A-96(23)S: When an out-of-state industrial auctioneer sells equipment at a New York auction site "as is, where is" to a buyer who arranges common-carrier shipment to an out-of-state destination, is the sale taxable in New York, and what records must the auctioneer keep to prove it isn't?

Plain-English summary

Norman Levy Associates, Inc. is a Michigan-based industrial auctioneer and appraiser that conducts public auction and private liquidation sales, nationally and internationally, including sales held at the premises of sellers located in New York State. Petitioner never takes title to the equipment it sells -- it acts as the seller's agent, accepting payment from the buyer and remitting the proceeds (net of commission and expenses) to the seller. The transactions at issue involve equipment auctioned at a New York sale site to buyers who intend to use it at a site outside New York; sales are made "as is, where is." Under the auction's terms, delivery happens only after the entire auction concludes, and the buyer arranges and pays for transport to the out-of-state destination by common carrier -- Petitioner releases the equipment to the buyer's carrier, and the buyer never physically takes possession of the equipment until the carrier delivers it out of state.

The Department ruled that these sales are not subject to New York State and local sales tax. New York's sales tax is a "transactions tax" and a "destination tax": tax liability turns on the point where possession is actually transferred from the vendor to the purchaser (or the purchaser's designee) — not on where the contract is negotiated or where the property physically starts out. Under 20 NYCRR § 526.7(e) (and the Department's own prior guidance, TSB-M-82(3.1)S), when a purchaser arranges delivery to an out-of-state point via common carrier and the equipment is released to that carrier rather than the buyer directly, possession is deemed transferred outside New York, so the sale escapes New York tax. But the Department drew a sharp line: if Petitioner instead makes a sale where the buyer (or the buyer's agent, employee, or other designee) actually takes physical possession of the equipment while it's still in New York, the sale IS taxable in New York even if the buyer subsequently ships it out of state — and Petitioner, as an auctioneer acting as the seller's agent, would itself be a "vendor" under Tax Law § 1101(b)(8) required to register with the Department, collect the tax, and file returns. Because Tax Law § 1132(c) presumes all sales taxable unless the vendor proves otherwise, Petitioner must maintain specific delivery records for its claimed out-of-state sales: the delivery address (locality and state); for common-carrier deliveries, the carrier's name and address plus a copy of the bill of lading and payment documentation; the full name and address of whoever received the property; if delivered to a designee or employee of the buyer, that person's name, address, and relationship to the buyer; and any other documentation supporting the out-of-state-delivery claim — on top of the general sales records already required under § 533.2 of the regulations and Tax Law § 1135.

What this means for you

Auctioneers and consignment sellers

If you sell property at a New York location but arrange for a common carrier to deliver it to an out-of-state buyer — without the buyer or the buyer's designee ever physically handling the goods in New York — the sale is generally not subject to New York sales tax, under the destination-tax rule. But you must be able to document that chain of custody.

Sellers using common carriers for out-of-state delivery

Keep the specific paper trail the Department describes: delivery address, carrier name/address, bill of lading, payment records, and the identity of whoever actually received the goods. Sales tax law presumes every sale is taxable until you affirmatively prove otherwise with adequate records — an invoice alone that's silent on delivery method won't be enough if it's ever challenged on audit.

Anyone arranging pickup by the buyer's own employee or agent in New York

If the buyer's own representative physically takes the goods in New York — even planning to ship them elsewhere afterward — the sale is taxable in New York. The "out-of-state sale" exception only protects deliveries genuinely completed outside the state, not sales where possession changes hands within New York first.

Common questions

Q: What's the legal difference between "where is" auction terms and where the sale is actually taxed?
A: They're unrelated. "As is, where is" describes the CONDITION of the property being sold (no warranties), not the tax situs. Tax situs depends entirely on where possession is physically transferred to the buyer, regardless of the property's physical location when sold.

Q: Does it matter whether the sales invoice explicitly states the goods were released to a common carrier?
A: The ruling notes some invoices reflect this and others are silent (though other records document the facts) — either way, Petitioner still needs to maintain sufficient supporting documentation beyond the invoice itself to substantiate the out-of-state delivery if it's ever audited.

Q: If a designee (not the buyer personally) picks up the equipment in New York, does that count as "taking possession" for tax purposes?
A: Yes — the ruling specifically states that delivery to an agent, representative, employee, or other designee of the purchaser within New York is a taxable transaction, since possession is deemed to actually transfer in New York at that point.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(4) (definition of retail sale)
• Tax Law § 1101(b)(5) (definition of sale/purchase)
• Tax Law § 1101(b)(8) (definition of vendor)
• Tax Law § 1132(c) (presumption that sales are taxable absent contrary evidence)
• 20 NYCRR 525.2(a) (sales tax as transaction/destination/consumer tax)
• 20 NYCRR 526.7(e) (transfer of possession controls taxable situs)
• 20 NYCRR 526.10 (definition of vendor; auctioneers included as an example)
• 20 NYCRR 533.2 (records to be kept)

Prior guidance referenced:

• TSB-M-82(3.1)S (Department memorandum on transfer of possession outside New York)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1996.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a96_23s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-96 (23)S
Sales Tax
April 22, 1996

Taxpayer Services Division
Technical Services Bureau

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S951201A

On December 1, 1995, a Petition for Advisory Opinion was received from Norman Levy
Associates, Inc., 21415 Civic Center Drive, Suite 306, Southfield, Michigan 48076-3920.
The issues raised by Petitioner, Norman Levy Associates, Inc., are:
(1) Whether the sales described in the statement of facts below are out-of-state sales that are
not subject to tax in New York State.
(2) If the sales described are deemed to be out-of-state sales, what is the nature of the
business records Petitioner must maintain to satisfy its burden on audit of proving that such sales are
out-of-state sales.
Petitioner is a Michigan based industrial auctioneer and appraiser. As part of its business
activities, Petitioner conducts public auction and private liquidation sales nationally and
internationally. Petitioner does not take title to the equipment to be sold, but accepts payment from
the buyer as seller's agent. Petitioner subsequently remits the proceeds net of commission and
expenses to the seller.
The particular transactions at issue take place at public auction sales or private liquidation
sales conducted on the premises of sellers located in New York State. In these transactions,
Petitioner, acting as seller's agent, sells industrial equipment at the sale site to a buyer for use at a
site outside New York State. The terms of these sales are "as is" and "where is"
Paragraph 5 of the Terms and Conditions of the Auction Sale states that "[e]very lot will be
sold 'AS IS' and 'WHERE IS' without covenant or warranty as to use or fitness whatsoever."
However, paragraph 3 provides in part:
The buyer shall pay the total bid price for all of the lots as purchased before
taking delivery of the property (assets). DELIVERY WILL BE MADE OF
PURCHASED PROPERTY ONLY AFTER COMPLETION OF THE ENTIRE
AUCTION, If for any reason whatsoever a property as bid cannot be delivered within
that period of time of delivery provided for at the sale for any reason whatsoever, the
buyer expressly waives liability on the part of the Auctioneer and further agrees that
any obligation with respect thereto shall be limited to the bid and paid for price for
said property (assets). The buyer shall be responsible at his risk and expense for the
timely removal of the purchased property (asset) .... (emphasis added).

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In all instances, the buyer arranges and pays for transport to the out-of-state site by common
carrier, and the equipment is released by Petitioner to the buyer's common carrier for transport to the
out-of-state site. The buyer never takes physical possession of the purchased equipment until
delivered by the common carrier to the out-of-state site. In some instances, the sales invoice reflects
the release of the goods to a common carrier for shipment to an out-of-state site. In other instances,
the invoice is silent in this regard, though other records document these facts
Section ll01(b) of the Tax Law states in part:
(4) Retail sale. (i) A sale of tangible personal property to any person for any
purpose, other than (A) for resale as such or as a physical component part of tangible
personal property, ...
(5) Sale, selling or purchase. Any transfer of title or possession or both,
exchange or barter, rental, lease or license to use or consume...
*
*
*
(8) Vendor. (i) The term "vendor" includes:
(A) A person making sales of tangible personal property or services, the
receipts from which are taxed by this article; ...
Section 525.2(a) of the Sales Tax Regulations provides in part:
(2) The sales tax is a "transactions tax," liability for the tax occurring at the
time of the transaction. Generally speaking, the taxed transaction is an act resulting
in the receipt of consideration for the transfer of title, or possession or both to
property or rendition of services from one person to another. The time or method of
payment is immaterial, since the tax becomes due at the time of transfer of property
or rendition of service.
(3) The sales tax is a "destination tax," that is, the point of delivery or point
at which possession is transferred by the vendor to the purchaser or designee controls
both the tax incident and the tax rate.
(4) The sales tax is a "consumer tax," that is, the tax is imposed on the retail
sale of tangible personal property and certain services and is collected from the
person who purchases at retail--the consumer. The consumer cannot shift the liability
for payment of the tax to another person nor otherwise relieve himself of such
liability, although the vendor is personally liable for the tax he was responsible for
collecting.
Section 526.7(e) of the Sales Tax Regulations provides in part:

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Transfer of possession. (1) Except as otherwise provided in paragraph (3) of
this subdivision, a sale is taxable at the place where the tangible personal property or
service is delivered, or the point at which possession is transferred by the vendor to
the purchaser or his designee.
*

*

*

Example 2: A person, not a resident of New York State, purchases tangible
personal property in New York State and has it delivered to his home out of state.
The receipt from the sale is not taxable in New York State as delivery was made
outside of New York State.
Section 526.10 of the Sales Tax Regulations provides in part:
526.10 Vendor. (Tax Law, Sec. l101(b)(8)), (a) Persons included. (1)(i) A
person making sales of tangible personal property the receipts from which are subject
to tax is a vendor.
Example 1: Auctioneers, door to door salesmen, independent brokers, and
operators of service stations, retail stores, restaurants, etc., are vendors.
Section 533.2 of the Sales Tax Regulations provides in part:
533.2 Records to be kept. (Tax Law, Secs. 1132(c), 1135, 1138(a), 1142(5))
(a) General. (1) For the proper administration of the sales and use tax law and to
prevent evasion of the sales tax, it is statutorily presumed that all receipts from sales
and purchases of property or services of any type ... are subject to the tax until the
contrary is established. The burden of proving that any receipt, ... is not taxable is on
the vendor or the customer. To satisfy his burden of proof, a vendor must maintain
records sufficient to verify all transactions.
(2) Upon audit by the department, or at such other times as the department
requests, the vendor or user must present all the records described in this Part, kept
in a manner suitable to determine the correct amount of tax due, together with such
documentation, summaries and schedules, including any New York State or federal
tax returns or schedules as the department may request. Such vendor or user must
provide the auditors of the department with suitable facilities for conducting their
audit or examination. In those instances where the vendor or user maintains or
processes records on an electronic data processing system, the department reserves
the right to have such records presented on machine-sensible form, and the vendor
or user must furnish access to such equipment or records as is necessary for the
department to carry out its standard audit procedures.

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(3) All records required to be kept by this Part shall be preserved for a period
of three years from the due date of the return to which they relate, or the date of
filing, if later, except as provided in paragraph (4) of this subdivision, and longer
than three years if their contents are material to any period open or extended pursuant
to statute, or in any action or proceeding pending before the Department of Taxation
and Finance or in a judicial proceeding or action.
*

*

*

(b) Sales records. (1) Every person required to collect tax, including every
person purchasing or selling tangible personal property for resale must keep records
of every sale, ... and all amounts paid, charged or due thereon, and of the tax payable
thereon. The records must contain a true copy of each:
(i) sales slip, invoice, receipt, contract, statement or other memorandum of sale; ...
(2) The sales record either must provide sufficient detail to independently
determine the taxable status of each sale and the amount of tax due and collected
thereon or may be substantiated by analysis of supporting records ....
(3) The seller must maintain records which substantiate points of delivery if
delivery was made at a place other than his place of business. Such documents should
include receipts from parcel delivery services, common carriers, unregulated truckers,
the United States Postal Service, foreign freight forwarders, and logs from company
vehicles. Such documents must be referenced to specific sales transactions.
(4) Exemption certificates must be dated and retained in order to prove
exempt sales. Once a properly completed certificate is obtained, it relieves the seller
of liability to collect the tax on transactions to which the certificate applies. Every
vendor accepting an exemption certificate must maintain a method of associating a
sale made for exempt purposes with the certificate on file. The burden of proving the
validity of any properly completed certificate rests with the customer or other person
who issues the certificate.
In this case, the purchaser makes arrangements for delivery of the property to a point outside
New York State by a common carrier. Petitioner releases the equipment to the common carrier for
transport to the out-of-state site. The purchaser never takes physical possession of the equipment
until delivered by the common carrier to the out-of-state site. Under these circumstances, possession
is deemed to be transferred outside of New York State. (See TSB-M-82(3.1)S). Under Section
526.7(e) of the Sales and Use Tax Regulations the sale would not be subject to New York State and
local sales taxes.

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Sales Tax
April 22, 1996

However, Petitioner, as an auctioneer and acting as a seller's agent, would be a vendor
required to register and file returns with the Department of Taxation and Finance and collect the
appropriate sales and local use taxes if Petitioner makes sales of tangible personal property where
actual physical possession of the property is transferred to the purchaser within New York State.
Where the purchaser accepts the property in the State, tax is due even if the property is subsequently
delivered out of state. Any delivery of the property purchased to an agent, representative, employee,
or other designee of the purchaser in New York State-is a taxable transaction, as transfer of
possession from the seller to the purchaser is actually effected in New York State. Under section
1132(c) of the Tax Law, all sales are deemed to be taxable unless satisfactory evidence to the
contrary is maintained. See section 533.2 of the Sales and Use Tax Regulations.
For sales where delivery is made outside New York State, Petitioner is required to maintain
records sufficient to verify the point of delivery and should (in addition to the records required to be
kept by section 533.2 of the Sales Tax Regulations and section 1135 of the Tax Law) keep a record
of the following information associated with the sales invoice:

1. The address, locality and state where delivery is made;
2. If the property is delivered to a common carrier, indicate the name and business address
   of the carrier and keep a copy of the bill of lading and payment documentation;
3. The complete name and address of the person to whom the property is delivered;
4. Where the property is delivered to a designee or employee of the purchaser by the seller
   or its agent, indicate the address where the property is delivered, the name of such designee or
   employee of the purchaser who accepts delivery, and such designee's or employee's relationship to
   the purchaser;
5. Any other documentation that Petitioner believes will support its basis for not collecting
   and remitting the sales taxes.

DATED: April 22, 1996

/s/
Doris S. Bauman
Director
Technical Services Bureau

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