Does transferring a vehicle's DMV registration to a commonly owned company, without transferring title, trigger New York sales tax?

Plain-English summary

Randy T. Rodecker, Inc. owned three pick-up trucks registered in its own name with the DMV. It later transferred the DMV registration on those trucks to Fence King of Rocky Point, Inc., a company owned by the same person, but never transferred legal title -- title stayed with Rodecker. Rodecker asked whether sales tax was due on this registration transfer.

The Department explained that New York's sales tax doesn't turn on title alone -- a taxable "sale" is any transfer of title or possession for consideration. Transferring a vehicle's registration effectively transfers the right to use that vehicle on public highways, which the Department treats as a transfer of "possession" under the sales tax regulations, separate from a transfer of title. So the registration transfer here was a transfer of possession, and it would be a taxable retail sale if Fence King gave Rodecker any consideration for it, including money, an assumed liability, a fee, or any other charge Fence King was required to pay. Because the facts submitted didn't establish whether consideration changed hands, the Department couldn't say definitively whether tax was due; it only confirmed that if there was consideration, sales tax would apply, and if there wasn't, it wouldn't.

What this means for you

Businesses moving vehicles or equipment between related or commonly owned entities

Keeping legal title in one entity's name doesn't automatically avoid sales tax if you transfer a vehicle's registration, custody, or right to use it to another entity -- that's still a transfer of "possession," and New York taxes sales based on title or possession changing hands for consideration.

Owners restructuring how vehicles are used across affiliated companies

The presence or absence of consideration is the deciding factor once a transfer of possession has occurred. A true gift or accommodation with no consideration wouldn't be a taxable sale; any payment, fee, or assumed liability in exchange for the transfer would make it one.

Accountants and tax professionals

This ruling is a clean, generalizable statement that New York's "sale" definition under Tax Law § 1101(b)(5) and 20 NYCRR § 526.7 reaches transfers of possession, including a DMV registration transfer conferring the right to use a vehicle, independently of title, and is useful for any related-party asset-transfer fact pattern, not just vehicles.

Common questions

Q: Does transferring only a vehicle's registration, not title, avoid sales tax?
A: Not necessarily. A registration transfer can itself be a taxable "transfer of possession" if the recipient pays any consideration for it -- title staying with the original owner doesn't prevent the transfer from being taxed.

Q: Does it matter that the two companies are owned by the same person?
A: No. Common ownership doesn't exempt the transaction from sales tax; what matters is whether a transfer of title or possession occurred for consideration.

Q: What counts as "consideration" here?
A: Monetary payment, exchange, barter, rendering of a service, or an agreement to do any of those, including assuming a liability, paying a fee, rental, or royalty.

Q: Can another business rely on this ruling for a similar related-party transfer?
A: No. It's an Advisory Opinion binding the Department only as to Randy T. Rodecker, Inc. and the specific facts described, which didn't establish whether consideration was actually paid.

Citations and references

• Tax Law § 1101(b)(4) (retail sale)
• Tax Law § 1101(b)(5) (sale, selling or purchase; transfer of title or possession)
• Tax Law § 1105(a) (tax on retail sales of tangible personal property)
• 20 NYCRR § 526.7(a), (b), (e) (definition of sale; consideration; transfer of possession)
• 15 NYCRR § 20.1 (DMV registration regulations)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1998.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a98_54s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-98(54)S
Sales Tax
August 6, 1998

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO.S980206A

On February 6, 1998, the Department of Taxation and Finance received a
Petition for Advisory Opinion from Randy T. Rodecker, Inc., 471 Route 25A, Rocky
Point, NY 11778.
The issue raised by Petitioner, Randy T. Rodecker, Inc., is whether sales
tax is due on the transfer of motor vehicle registration on three pick-up trucks
owned by Petitioner, where transfer of title has not occurred.
Petitioner submits the following facts as the basis for this Advisory
Opinion.
Petitioner owns three pick-up trucks. The pick-up trucks were registered
with the Department of Motor Vehicles in the name of Petitioner.
Subsequently,
Petitioner transferred the registration of the vehicles to Fence King of Rocky
Point, Inc. (hereinafter “Fence King”).
Petitioner and Fence King are wholly
owned by the same person. Title to the three pick-up trucks is in the name of
Petitioner and was never transferred.
Applicable Laws and Regulations
Section 1101(b) of the Tax Law provides, in part:
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(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. . .
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(5)
Sale, selling or purchase.
Any transfer of title or
possession or both, exchange or barter, rental, lease or license to
use or consume (including, with respect to computer software, merely
the right to reproduce), conditional or otherwise, in any manner or
by any means whatsoever for a consideration, or any agreement
therefor, including the rendering of any service, taxable under this
article, for a consideration or any agreement therefor.
Section 1105(a) of the Tax Law provides for the imposition of sales tax on
the receipts from every retail sale of tangible personal property, except as
otherwise provided.

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TSB-A-98(54)S
Sales Tax
August 6, 1998

Section 526.7 of the Sales and Use Tax Regulations provides, in part:
(a) Definition.
(1) The words sale, selling or purchase mean any
transaction in which there is a transfer of title or possession, or
both, of tangible personal property for a consideration.
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(b) Consideration. The term consideration includes monetary
consideration, exchange, barter, the rendering of any service, or
any agreement therefor. Monetary consideration includes assumption
of liabilities, fees, rentals, royalties or any other charge that a
purchaser, lessee or licensee is required to pay.
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(e) 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.
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(4) Transfer of possession with respect to a rental, lease or
license to use, means that one of the following attributes of
property ownership has been transferred:
(i) custody or possession of the tangible personal property,
actual or constructive;
(ii) the right to custody or possession of the tangible
personal property;
(iii) the right to use, or control or direct the use of,
tangible personal property.
Opinion
In this case, Petitioner transferred motor vehicle registration on three
pick-up trucks to Fence King. Title to the three pick-up trucks remained in the
name of Petitioner.
Section 1105(a) of the Tax Law imposes sales tax on the receipts from the
retail sale of tangible personal property. Under Section 1101(b)(4) of the Tax
Law a retail sale is a sale of tangible personal property to any person for any
purpose. Section 1101(b)(5) of the Tax Law and Section 526.7(a)(1) of the Sales
and Use Tax Regulations define a “sale” to mean a transfer of title or possession

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TSB-A-98(54)S
Sales Tax
August 6, 1998

of tangible personal property for a consideration.
Section 526.7(e)(4) of the
Sales and Use Tax Regulations provides that possession of tangible personal
property is transferred when the right to custody or possession of, or the right
to use, tangible personal property is transferred.
Petitioner’s transfer of registration of the three pick-up trucks to Fence
King indicates a transfer of the right to use these vehicles on the public
highways. See Section 20.1 of the Department of Motor Vehicles Regulations (15
NYCRR 20.1). Accordingly, Petitioner’s transfer of registration of the pick-up
trucks is a transfer of possession under Section 526.7(e)(4) of the Sales and Use
Tax Regulations, and would be a sale for purposes of Section 1101(b)(5) of the
Tax Law if Petitioner received consideration from Fence King. Under Section
526.7(b) of the Sales and Use Tax Regulations, consideration includes monetary
consideration, which includes the assumption of liabilities, fees, rentals or any
other charge that a purchaser, lessee or licensee is required to pay.
If the transfer of registration of the three pick-up trucks from Petitioner
to Fence King was made for consideration, that transfer would be a sale for sales
tax purposes. Therefore, the transfer of registration would be subject to sales
tax under Section 1105(a) of the Tax Law if the transfer was a retail sale under
Section 1101(b)(4) of the Tax Law, and was not otherwise exempt from tax under
Article 28 of the Tax Law.

DATED: August 6, 1998

NOTE:

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

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