Is a specialized suspended-ceiling-tile cleaning service taxable in New York, or does it qualify for the sales tax exclusion for 'laundering'?

Plain-English summary

Sistine Systems performed under two dozen jobs cleaning suspended ceiling tiles between mid-1996 and late 1998, each done on a single-day, job-to-job basis with no ongoing contract. The process used specialized, expensive equipment and a proprietary cleaning solution designed specifically for ceiling tiles. Sistine argued its work wasn't "ordinary janitorial services" under a Department notice about the 1990 expansion of interior-cleaning taxation, and separately argued its process was really "laundering" -- a category the statute specifically excludes from the tax on maintaining/servicing/repairing tangible personal property.

The Department rejected the laundering argument by leaning on its own prior case (Delta Sonic Car Wash), which had already ruled that car washing isn't "laundering" either. The statute lists laundering alongside "dry-cleaning, tailoring, weaving, pressing, shoe repairing and shoe shining" -- and under ordinary rules of statutory interpretation, words are read together with their neighbors. All of those companion terms describe services performed on clothing, cloth, or leather goods; New York's own prior determinations confirm "laundering" has always meant cleaning clothes or cloth specifically. Cleaning ceiling tiles, however specialized the equipment or solution, simply isn't in that category, so the laundering exclusion doesn't apply.

That left Sistine's service taxable either as maintaining/servicing tangible personal property (if the suspended ceiling counts as personal property) or as maintaining/servicing real property (if it counts as part of the building) -- either way, taxable. The Department also clarified the scope of the 1990 interior-cleaning notice Sistine had cited: that amendment specifically added tax to regular contractual interior cleaning services lasting 30 days or more. Sistine's job-to-job, single-day engagements were never within that narrower category to begin with -- but that doesn't help Sistine, because such short-term cleaning services were already taxable both before and after the 1990 amendment under the general maintaining/servicing provisions. The notice simply wasn't relevant to Sistine's situation one way or the other.

What this means for you

Specialty cleaning and facilities-maintenance service providers

"Laundering" is a narrow, clothing/cloth-specific exclusion in New York -- using specialized equipment, proprietary chemicals, or an unusual process doesn't bring a different kind of cleaning service (ceilings, upholstery, exterior surfaces, etc.) within that exclusion. Expect to be taxed under the general maintaining/servicing/repairing provisions instead.

Businesses doing occasional, single-day cleaning jobs (not 30-day+ contracts)

Don't assume short, one-off cleaning jobs are automatically outside the sales tax just because they miss the 30-day regular-contract threshold that a specific 1990 notice addressed -- general maintaining/servicing/repairing taxation applied to short jobs both before and after that amendment.

Accountants and tax professionals

This ruling is a useful, direct application of the Delta Sonic Car Wash precedent outside the car-wash context -- a good template whenever a client argues an unusual cleaning process should be classified as "laundering" by analogy rather than by the statute's actual clothing/cloth-specific scope.

Common questions

Q: Does "laundering" cover any cleaning service that uses a specialized chemical process?
A: No -- New York limits "laundering" to cleaning clothes, cloth, or leather goods, following its own prior determinations and the Tax Appeals Tribunal's Delta Sonic Car Wash decision.

Q: Are short, one-off cleaning jobs exempt from sales tax because they're not "regular contractual" services?
A: No -- the 30-day regular-contract threshold only describes when the 1990 amendment specifically added tax to that category; shorter jobs were independently taxable under the general maintaining/servicing/repairing rules both before and after that amendment.

Q: Does it matter whether the ceiling is classified as tangible personal property or real property?
A: Not for the bottom line here -- the service is taxable either way, just under a different statutory provision (§ 1105(c)(3) for personal property, § 1105(c)(5) for real property).

Citations and references

Statutes and regulations:

• Tax Law § 1105(c)(3) (tax on maintaining, servicing, or repairing tangible personal property; laundering exclusion)
• Tax Law § 1105(c)(3)(ii) (laundering, dry-cleaning, tailoring, etc. excluded from tax)
• Tax Law § 1105(c)(5) (maintaining, servicing, or repairing real property)
• 20 NYCRR § 527.5(a)(3) (maintaining/servicing/repairing defined for tangible personal property)
• 20 NYCRR § 527.7(a)(1), (b)(1) (maintaining/servicing/repairing defined for real property)

Prior rulings and cases referenced:

• Matter of Delta Sonic Car Wash, Inc., TSB-D-91(89)S (November 14, 1991)
• Matter of Kailburn, State Tax Commn. (June 9, 1987)
• Matter of Douglas H. Casement Enters., State Tax Commn. (November 27, 1981)
• Matter of Scarano, State Tax Commn. (December 3, 1975)
• Department of Taxation and Finance Notice N-90-17, New York State Sales and Use Tax on Interior Cleaning and Maintenance Services

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1999.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a99_39s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-99(39)S
Sales Tax
September 17, 1999

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S990519A

On May 19, 1999, the Department of Taxation and Finance received a Petition for Advisory
Opinion from Sistine Systems, 177 Keller Ave., Kenmore, New York 14217.
The issue raised by Petitioner, Sistine Systems is whether sales tax applies to the services
described below.
Petitioner submits the following facts as the basis for this Advisory Opinion.
The services performed by Petitioner between July 1, 1996 through October 1, 1998 involved
the cleaning of suspended ceilings. The cleaning process involves the use of expensive, highly
specialized equipment to apply a proprietary cleaning solution specifically designed for the cleaning
of ceiling tiles. The total number of jobs done during that period was less than two dozen. All those
jobs were done on a job to job basis and never involved a regular contractual basis or consisted of
a time frame of more than a single day of work. Petitioner stated that the process used to clean the
ceilings does not constitute "ordinary janitorial services" as described in Department of Taxation and
Finance Notice entitled New York State Sales and Use Tax on Interior Cleaning and Maintenance
Services, N-90-17. Petitioner asserts that its services constitute laundering so that the receipts are
excluded from sales tax under Section 1105(c)(3)(ii) of the Tax Law.
Applicable Law and Regulations
Section 1105 of the Tax Law provides, in part:
Imposition of sales tax.-On and after June first, nineteen hundred seventy­
one, there is hereby imposed and there shall be paid a tax of four percent upon:
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(c) The receipts from every sale, except for resale, of the following services:
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(3) ...maintaining, servicing or repairing tangible personal property,...not held
for sale in the regular course of business,...except:
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-2­
TSB-A-99(39)S
Sales Tax
September 17, 1999

(ii) any receipts from laundering, dry-cleaning, tailoring, weaving, pressing,
shoe repairing and shoe shining;...
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(5) Maintaining, servicing or repairing real property, property or land, as such
terms are defined in the real property tax law, whether the services are performed in
or outside of a building, as distinguished from adding to or improving such real
property, property or land, by a capital improvement as such term capital
improvement is defined in paragraph nine of subdivision (b) of section eleven
hundred one of this article, but excluding services rendered by an individual who is
not in a regular trade or business offering his services to the public,...
Section 527.5(a)(3) of the Sales and Use Tax Regulations provides:
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.
Section 527.7 of the Sales and Use Tax Regulations provides, in part:
(a) Definitions. (1) Maintaining, servicing and repairing are terms which are
used to cover all activities that relate to keeping real property in a condition of
fitness, efficiency, readiness or safety or restoring it to such condition. Among the
services included are services on a building itself such as painting; services to
grounds, such as lawn services, tree removal and spraying; trash and garbage removal
and sewerage service and snow removal.
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(b) Imposition. (1) The tax is imposed on receipts from every sale of the
services of maintaining, servicing or repairing real property, whether inside or
outside of a building....
Opinion
Petitioner’s service of cleaning suspended ceilings constitutes maintaining or servicing
tangible personal property or real property, subject to State and local sales taxes under Section
1105(c) of the Tax Law. Petitioner’s service is not a laundering service for purposes of the exclusion
from tax contained in Section 1105(c)(3)(ii) of the Tax Law.

-3­
TSB-A-99(39)S
Sales Tax
September 17, 1999

In Matter of Delta Sonic Car Wash, Inc., Dec Tax App Trib, November 14, 1991,
TSB-D-91(89)S, the Tribunal, in holding that certain car wash services were not excluded from tax
as laundering, stated as follows:
The term "laundering" is one of several services the receipts from which are
excluded from sales tax pursuant to section 1105(c)(3)(ii). It has no definition in the
Tax Law nor is it a term which is specifically defined in the Commissioner’s
regulations. We agree with petitioner that ascribing a dictionary meaning to an
undefined term may, under certain circumstances, be useful in determining the sense
in which the word is used in a statute. However, we are also mindful that the words
of a statute are not construed singly; rather, each is construed in connection with the
other words of the context....
Here, the words associated with "laundering" in the context of section
1105(c)(3)(ii) are "dry-cleaning, tailoring, weaving, pressing, shoe repairing and shoe
shining." Clearly, these terms refer to services involving clothing, cloth or leather
goods. Indeed, the former State Tax Commission determined that the meaning of
"laundering" referred only to the process of cleaning clothes or cloth (see, Matter of
Kailburn, State Tax Commn., June 9, 1987; Matter of Douglas H. Casement Enters.,
State Tax Commn., November 27, 1981; Matter of Scarano, State Tax Commn.,
December 3, 1975)....
In accordance with Delta Sonic Car Wash Inc., supra, the process which Petitioner uses to
perform the service of cleaning suspended ceilings does not constitute laundering as contemplated
by the exclusion from the imposition of sales tax as provided in Section 1105(c)(3)(ii) of the Tax
Law. The receipts from the provision of Petitioner’s services are subject to sales tax under either
Section 1105(c)(3) of the Tax Law if the suspended ceiling constitutes tangible personal property
or under Section 1105(c)(5) if the suspended ceiling constitutes real property.
The purpose of N-90-17 was to announce the amendments to Article 28 of the Tax Law (the
New York State Sales and Use Taxes) effectuated by Chapter 190 of the Laws of 1990, effective
June 1, 1990, which resulted in the imposition of State and local sales taxes on all charges for
interior cleaning and maintenance services performed on a regular contractual basis for a term of 30
days or more. Services of the type performed by Petitioner, for a term of less than 30 days, were
subject to State and local sales taxes prior to and after the enactment of Chapter 190.

DATED: September 17, 1999

NOTE:

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

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