Is rent for radio communication tower and building space, where the tenant owns and installs its own antenna, subject to New York sales tax?

Plain-English summary

T&K Communication Systems, Inc. operates thirteen radio communication towers and leases space on them, along with a small amount of building floor space, to businesses that want to mount their own radio antennas for in-house communications. Under T&K's standard lease, the tenant owns its own antenna and related equipment, supplies all mounting hardware, has free and unrestricted access to install, maintain, and remove its equipment, and its equipment stays personal property (removable by the tenant) even though it's physically attached to the tower or building. T&K doesn't charge a separate transmission usage fee -- the rent is for the physical location itself. It asked whether these rental charges are subject to sales tax.

The Department focused on what's actually being rented: a specific spot on a tower and a defined amount of floor space, not the use of any equipment T&K owns. Because the tenant supplies, owns, installs, and can remove its own antenna equipment, and the whole point of the lease is the physical location (height, position, access), the charge is for the lease of real property, not a rental or license to use tangible personal property. Since New York's sales tax reaches transfers of tangible personal property (including leases and licenses to use it), and this transaction doesn't involve any of T&K's own tangible personal property being provided to the tenant, the rent isn't subject to state or local sales and use tax.

What this means for you

Tower owners, rooftop/site leasing companies, and similar infrastructure landlords

If your lease genuinely conveys a location -- a defined spot on a structure, with the tenant supplying and owning its own equipment and having real access rights -- structure it as a real property lease, and it should escape sales tax the same way ordinary real estate rent does. Watch the details that mattered here: tenant ownership of the equipment, tenant-supplied mounting hardware, free access, and removability of the tenant's equipment at lease end.

Businesses leasing tower or rooftop space for their own communications equipment

Expect your rent payment for space (as opposed to a service that includes the landlord's own transmission or relay equipment) to come without sales tax, since you're really just renting a location, not tangible personal property or a taxable service.

Accountants and tax professionals

This is a useful "real property lease vs. equipment rental" line-drawing opinion for the telecom-infrastructure-leasing industry -- compare it to a services-based tower arrangement where the tower operator's own transmission equipment or usage fee is bundled in, which would likely be analyzed differently.

Common questions

Q: Would the answer change if the tower owner also charged a transmission usage fee or provided the antenna itself?
A: This ruling explicitly notes T&K doesn't charge a transmission usage fee and the tenant owns its own antenna; a lease bundling the owner's own equipment or transmission services would need separate analysis.

Q: Does it matter that the tenant's equipment becomes physically attached to the tower?
A: No -- the lease specifies the tenant's equipment remains personal property removable by the tenant regardless of physical attachment, which supports treating the arrangement as a real property lease rather than an equipment sale or transfer.

Q: Is floor space within the building treated the same way as tower space?
A: Yes -- the same lease covers both the tower space and a defined amount of floor space for the tenant's equipment, and both are treated as real property rental under this ruling's facts.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(5) (definition of "sale, selling or purchase")
• Tax Law § 1105(a) (imposition of sales tax)

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_87s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-98(87)S
Sales Tax
December 30, 1998

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S970926C

On September 26, 1997, the Department of Taxation and Finance received a Petition for
Advisory Opinion from T&K Communication Systems, Inc., 56 Gail Drive, Owego, NY 13827­
1032.
The issue raised by Petitioner is whether receipts from the rental of radio communication
tower space, for antennae owned by a lessee, are subject to sales and compensating use taxes.
Petitioner submits the following facts as the basis for this Advisory Opinion.
Petitioner currently operates thirteen radio communication towers which have antennae
attached. Some of the antennae are owned by Petitioner and other antennae will be owned by
Petitioner's lessees. The rentals at issue in this Advisory Opinion are to persons who use the towers
for in-house communications in their businesses ("end users").
Petitioner's customers lease tower space and building space to house communication
equipment and placement of transmission lines. Antennae are installed on the towers for sending or
reception of radio frequency signals. Petitioner does not charge a transmission usage fee.
Petitioner's standard site lease agreement for use of tower space provides, in part:
Terms and Conditions

1. Description of Floor and Tower Space Leased. Lessor hereby agrees to
   Lease in part to lessee the use and enjoyment of the real property, further described
   and limited by the following. The entirety of the real property shall be referred to
   herein as "the premises."
   Floor space within a building owned or operated by Lessor at that location of
   approximately 24"W x 24"D x 72"H each in dimensions, one total. (emphasis added)
   *

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*

Tower space on a tower owned or operated by Lessor at that location whereby
Lessee's antennas shall be mounted at a heights [sic] above ground level as follows:
(emphasis added)

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TSB-A-98(87)S
Sales Tax
December 30, 1998

*

*

*

Lessee shall provide all mounting brackets, mounts, or any additional
structural modifications Lessee's [sic] deems necessary to mount Lessee's antennas
on the tower.
*

*

*

3. Maintenance of Equipment by Lessee. Lessee shall, at its own expense,
   maintain its equipment on or attached to the Premises in a safe condition and in good
   repair, and in a manner suitable to Lessor so as not to conflict with the use of the
   Premises by Lessor, or by any other company using the Premises.
   All repair and maintenance of Lessee's equipment shall be performed by
   qualified technicians, authorized to enter the Premises as Lessee's agents or
   employees.
   Any and all machinery, equipment and trade fixtures except the electrical
   service, installed by Lessee, shall remain personalty notwithstanding the fact that it
   may be affixed or attached to the realty, or the Premises, and shall, during the term
   of this Lease or any extension or renewal thereof, and upon termination thereof,
   belong to and be removable by Lessee. Lessee agrees that the Premises and
   associated realty shall not be damaged by Lessee's occupancy, make any repairs
   necessitated by Lessee's occupancy or removal of equipment less ordinary wear and
   tear.
4. Access. Lessor agrees to give Lessee free and unrestricted ingress and
   egress to the Premises during the continuation of this Lease and any renewals thereof
   for the purpose of installing, maintaining, operating and removing Lessee's
   equipment.
   Applicable Law
   Section 1101(b) of the Tax Law provides, in part:
   When used in this article for the purposes of the taxes imposed by
   subdivisions (a), (b), (c) and (d) of section eleven hundred five and by section eleven
   hundred ten, the following terms shall mean:
   *

*

*

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TSB-A-98(87)S
Sales Tax
December 30, 1998

(5) Sale, selling or purchase. Any transfer of title or possession or both,
exchange or barter, rental, lease or license to use or consume ..., 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 of the Tax Law provides, in part:
Imposition of sales tax. — . . . there is hereby imposed and there shall be paid
a tax . . . upon:
(a) The receipts from every retail sale of tangible personal property, except
as otherwise provided in this article.
Opinion
In this case, Petitioner’s customer leases tower space, and a specific amount of floor space
within a building owned by Petitioner, at a particular location. The lessee has free and unrestricted
access to the premises during the term of the lease and any renewals thereof, and the lessee provides
all mounting brackets, mounts, or any additional structural modifications lessee deems necessary to
mount its antennae at the location. For Petitioner’s customers which install their own antennae on
Petitioner’s towers, the physical location of the towers is the primary reason to lease space on them.
Charges by Petitioner to a lessee for the rental of radio communication tower space at a specific
location, for antennae and equipment owned by a lessee, are not charges for rental or a license to use
tangible personal property, and are not subject to State and local sales and use taxes.

DATED: December 30, 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.