New York Advisory Opinion TSB-A-96(2)S: Is the fee a business pays Pitney Bowes to have its rented "Postage by Phone" meter reset by telephone subject to New York sales tax?

Plain-English summary

Grace Borgenicht Gallery, Inc. rents a "Postage by Phone" meter from Pitney Bowes Corporation. The Postage by Phone system eliminates the need to have the meter physically reset by the Post Office: instead, Petitioner sends money in advance to cover the postage it needs, and then resets the meter itself by calling in and entering codes supplied by the Postage by Phone system. Pitney Bowes charges Petitioner a separate "reset charge" specifically for the service of resetting the meter. Petitioner submitted an invoice showing the meter rental and reset charges, an account statement for the Postage by Phone account, and a copy of the meter reset instructions as part of its request.

The Department ruled the reset charge is subject to New York State and local sales and use tax. Tax Law § 1105(c)(3) taxes the service of installing tangible personal property, or maintaining, servicing, or repairing tangible personal property not held for sale in the regular course of business -- regardless of whether the service is performed directly, by coin-operated equipment, or by any other means, and regardless of whether any tangible personal property is transferred along with it. The regulations (20 NYCRR § 527.5(a)(3)) define "maintaining, servicing and repairing" broadly, covering all activities that keep property in a condition of fitness, efficiency, readiness, or safety, or that RESTORE it to such a condition. The Department found the postage meter reset charge fits squarely within that definition -- resetting the meter by telephone restores it to a condition of readiness to dispense postage -- so the charge is taxable under § 1105(c)(3), notwithstanding that the service happens remotely over the phone rather than through a technician's physical visit.

What this means for you

Businesses renting postage meters or similar equipment with phone-based service resets

Expect any separate "reset," "reactivation," or similar service charge tied to restoring rented equipment to working order to be taxable as a maintenance/servicing/repair service, even when performed remotely by phone rather than in person.

Equipment rental companies charging service/reset fees

A charge for restoring a customer's rented equipment to a functional or ready condition generally falls within the broad "maintaining, servicing or repairing" tax category -- collect and remit sales tax on these charges the same way you would for a traditional in-person service call.

Common questions

Q: Does it matter that no technician physically visits and no parts are replaced?
A: No -- Tax Law § 1105(c)(3) expressly applies "whether or not the services are performed directly ... or by any other means, and whether or not any tangible personal property is transferred in conjunction therewith," so a purely remote, code-based reset with no physical visit or parts still counts as a taxable maintaining/servicing/repairing service.

Q: Would postage itself (the funds loaded into the meter) also be taxable?
A: The ruling addresses only the reset charge specifically -- it doesn't discuss the taxability of postage funds loaded via the Postage by Phone system, which is a separate transaction from the service charge for resetting the meter.

Q: Is the meter RENTAL charge itself taxable in the same way?
A: The ruling doesn't separately analyze the meter rental charge -- it focuses specifically on the reset charge as a maintenance/servicing/repair service; a rental of tangible personal property would typically be analyzed as a retail sale/lease under a different provision.

Citations and references

Statutes and regulations:

• Tax Law § 1105(c)(3) (installing/maintaining/servicing/repairing tangible personal property tax)
• 20 NYCRR 527.5(a) (imposition; maintaining/servicing/repairing defined)

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_2s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-96 (2)S
Sales Tax
January 18, 1996

Taxpayer Services Division
Technical Services Bureau

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S950724A

On July 24, 1995, a Petition for Advisory Opinion was received from Grace Borgenicht
Gallery, Inc., 724 5th Avenue, New York, New York 10019.
The issue raised by Petitioner, Grace Borgenicht Gallery, Inc., is whether the charge paid to
Pitney Bowes Corporation ("Pitney Bowes") for the service of having a postage meter reset (the
"reset charge") is subject to State and local sales and use taxes.
Petitioner rents a "Postage by Phone" meter from Pitney Bowes. The Postage by Phone
System eliminates the need for having the meter reset by the Post Office. Money is sent in advance
to cover the cost of the postage needed. The postage meter is then reset by telephone by entering
codes supplied by the Postage by Phone System. Pitney Bowes charges Petitioner a reset charge for
the service of resetting the meter.
Petitioner submitted a copy of an invoice from Pitney Bowes for the meter rental, indicating
reset charges, a copy of an account statement of a Postage by Phone account used to pay for postage,
and a copy of the meter reset instructions, as part of its Petition for Advisory Opinion.
Section 1105 of the Tax Law provides, in part, as follows:
Sec. 1105. Imposition of sales tax.--... there is hereby imposed and there shall
be paid a tax ... upon:
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*

(c) The receipts from every sale, except for resale, of the following services:
*

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*

(3) Installing tangible personal property, excluding a mobile home, or
maintaining, servicing or repairing tangible personal property, including a mobile
home, not held for sale in the regular course of business, whether or not the services
are performed directly or by means of coin-operated equipment or by any other
means, and whether or not any tangible personal property is transferred in
conjunction therewith... (emphasis added)
Section 527.5(a) of the Sales and Use Tax Regulations provides, in part, as follows:

-2­
TSB-A-96 (2)S
Sales Tax
January 18, 1996
(a) Imposition. (1) The tax is imposed on receipts from every sale of the services of
installing, maintaining, servicing or repairing tangible personal property, by any
means including coin-operated machines, whether or not any tangible personal
property is transferred in conjunction with the services.
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*

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(3) Maintaining, servicing and repairing are terms used to cover all activities that
relate to keeping tangible personal property in a condition of fitness, efficiency,
readiness or safety or restoring it to such condition. (emphasis added)
The charge paid by Petitioner to Pitney Bowes to reset the meter by telephone is
representative of a charge paid to restore the meter to a condition of readiness. Accordingly, pursuant
to Section 1105(c)(3) of the Tax Law and Section 527.5 of the Sales and Use Tax Regulations, the
reset charge is subject to State and local sales and use taxes.

DATED: January 18, 1996

/s/
DORIS S. BAUMAN
Director
Technical Services Bureau

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