NY TSB-H-81(30)S Sales Tax 1981-03-02

Is a window quilt (an insulated window shade) taxable when sold, and is installing it a tax-free capital improvement?

Short answer: Taxable both ways — as goods, and as an installed job. Nassau Solar Development, Inc. asked whether selling an uninstalled 'window quilt' is subject to sales tax, and whether selling one installed is a tax-free capital improvement. A window quilt is an insulated window shade — similar to draperies and blinds — used as a heat-regulation device that can be part of a passive solar system. The Department held that selling an uninstalled window quilt is a retail sale of tangible personal property, taxable under Tax Law § 1105(a). Its installation is not a capital improvement to real property under the three-part test in 20 NYCRR 527.7 (it does not substantially add value or appreciably prolong the property's useful life, and is not permanently affixed such that removal would cause material damage). So when a window quilt is sold on an installed basis, the entire charge — goods plus installation — is subject to sales tax under § 1105(a); the § 1105(c)(3) capital-improvement exclusion does not apply.

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This page answers the general question as of 1981. Ezel answers yours, under current New York tax law, with citations.

Disclaimer: This is an official New York State Department of Taxation and Finance Advisory Opinion, issued by the Technical Services Bureau (identified with the earlier 'TSB-H' numbering prefix used alongside 'TSB-A' in 1981) at a taxpayer's request. It is limited to the facts set forth in it and binds the Department only with respect to the petitioner to whom it was issued, and only if that petitioner fully and accurately described all relevant facts; another taxpayer cannot rely on it. It reflects the law, regulations, and Department policy in effect when issued and may since have changed. New York State and local sales taxes are administered centrally by the Department. This summary is informational only and is not legal or tax advice. Consult a licensed New York tax professional about your specific situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

Nassau Solar Development, Inc. of West Hempstead, New York, asked two questions about a "window quilt" — an insulated window shade, similar to draperies and blinds, used as a heat-regulation device (it can be part of a passive solar system, controlling heat loss like insulated draperies):

Is selling an uninstalled window quilt subject to sales tax?
Is selling one on an installed basis a capital improvement to real property, so the receipts are exempt?

The Department ruled both the goods and the installed job are fully taxable.

Selling an uninstalled window quilt is a retail sale of tangible personal property, taxable under Tax Law § 1105(a).
Installing a window quilt is not a capital improvement. Under the three-part test in 20 NYCRR 527.7, a capital improvement must substantially add value or appreciably prolong the real property's useful life, and become permanently affixed so removal would cause material damage. A window quilt — like draperies and blinds — doesn't meet that test.
So an installed sale is fully taxable. When a window quilt is sold on an installed basis, the entire charge (goods plus installation) is subject to sales tax under § 1105(a); the § 1105(c)(3) exclusion for installations that are capital improvements does not apply.

What this means for you

Energy-saving purpose doesn't make a removable furnishing a capital improvement. A window quilt controls heat loss and can serve a passive solar system, but for sales tax it's treated like other window coverings — draperies and blinds — that are removable tangible personal property, not permanent parts of the building. Its useful function doesn't change the capital-improvement analysis.

Sell it installed and you tax the whole charge. Because installing a window quilt isn't a capital improvement, you can't split out or exempt the installation. The full installed price is subject to sales tax under § 1105(a).

Compare truly permanent improvements. Items that become a permanent, materially-affixed part of the building (and prolong its useful life) can qualify as tax-free capital improvements. Window coverings that simply mount to a window and can be removed without material damage do not.

Common questions

Q: Is a window quilt taxable to sell by itself?
A: Yes. An uninstalled window quilt is a retail sale of tangible personal property, taxable under § 1105(a).

Q: If I install it, is the labor a tax-free capital improvement?
A: No. Installing a window quilt isn't a capital improvement under 20 NYCRR 527.7, so the whole installed charge — goods and labor — is taxable.

Q: Does it matter that it's an energy-saving / passive-solar device?
A: No. The Department treated it like draperies and blinds — a removable window covering — regardless of its heat-regulation purpose. That doesn't make it a permanent capital improvement.

Citations and references

Statutes, regulations and authority:

Tax Law § 1105(a) — imposes sales tax on receipts from every retail sale of tangible personal property
Tax Law § 1105(c)(3) — taxes the service of installing tangible personal property, except where the installed property becomes a capital improvement to real property
20 NYCRR 527.7 — defines "capital improvement" (adds value or prolongs useful life; becomes part of or permanently affixed so removal causes material damage; intended to be permanent)

Source

Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1981.htm
Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/h81_30s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-H-81(30)S
Sales Tax
March 2,1981

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S801006A

On October 6, 1980 a Petition for Advisory Opinion was received from Nassau
Solar Development, Inc., 152 Hempstead Turnpike, West Hempstead, N.Y. 11552.
The issues raised are whether the sale of an uninstalled window quilt is
subject to the sales tax imposed under Article 28 of the Tax Law and whether the
sale of a window quilt on an installed basis constitutes a capital improvement
to real property so as to exempt the receipts from such sale from such sales tax.
A window quilt is an insulated window shade, similar in nature to draperies
and blinds. It is a "heat regulation device" which may be a component of a
passive solar system, serving the same purpose as insulated draperies to control
the amount of heat which escapes from a building.
Section 1105(a) of the Tax Law imposes a tax on "The receipts from every
retail sale of tangible personal property, except as otherwise provided in this
article."
Section 1105(c)(3) of the Tax Law imposes a tax on receipts from the
service of "Installing tangible personal property...except for installing
property which, when installed, will constitute [a]...capital improvement to real
property...."
Section 527.7 of the Sales and Use Tax Regulations defines the term capital
improvement to mean "... an addition or alteration to real property (i) which
substantially adds to the value of the real property, or appreciably prolongs the
useful life of the real property, and (ii) which becomes part of the real
property or is permanently affixed to the real property so that removal would
cause material damage to the property or article itself, and (iii) is intended
to become a permanent installation." 20 NYCRR 527.7.
The sale of an uninstalled window quilt constitutes a retail sale of
tangible personal property the receipts from which are subject to the sales tax
imposed under Section 1105(a) of the Tax Law. Its installation does not
constitute a capital improvement to real property within the meaning of section
527.7 of the Sales and Use Tax Regulations. Consequently, when a window quilt is
sold on an installed basis the entire charge is subject to sales tax pursuant to
the provisions of section 1105(a) of the Tax Law.

DATED: January 2, 1981

s/LOUIS ETLINGER
Deputy Director
Technical Services Bureau

JAMES H. TULLY, JR., COMMISSIONER
LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

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