N.Y. Comp. Codes R. & Regs. tit. 20 § 527.5

Current through Register Vol. 46, No. 50, December 11, 2024

Section 527.5 - Installing, repairing, servicing and maintaining tangible personal property

Tax Law, § 1105(c)(3)

(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.

(2) Installing means setting up tangible personal property or putting it in place for use.

Example 1:

An individual pays for the installation of a washer and dryer to existing wiring and plumbing in his home. The charge for installation is taxable.

Example 2:

An individual contracts with a company for a central station burglar alarm and guard service. The company charges him a fee at the commencement of the contract for installing wiring and alarm devices. The charge to the customer is taxable as an installation charge.

(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.

Example 3:

The charge for the repair and tuning of a piano is taxable.

Example 4:

The charge for the service of lubricating a motor vehicle is taxable.

Example 5:

The charge for washing an automobile is taxable, whether the washing is performed manually or by a coin-operated machine.

Example 6:

A company operates a diagnostic service in which it tests an appliance for a set fee, but does not repair the appliance. The charge for the diagnostic service is taxable.

Example 7:

A company operating a central station burglar alarm system charges its customers a fee for repairs to the system necessitated by damage beyond the control of the company. It does not charge its customers for repairs required by malfunctioning of the system. The charge by the company is taxable as a charge for repair.

(4) The installation of tangible personal property by a person furnishing services subject to tax under section 1105(b) of the Tax Law (utility services) is a service subject to the tax imposed under section 1105(c)(3) of the Tax Law when:

(i) the tangible personal property is installed at the premises of the purchaser of the utility service;

(ii) the tangible personal property installed is for use in connection with a utility service; and

(iii) the tangible personal property is purchased and owned by the person purchasing the utility service. For application of the tax on the installation of tangible personal property owned by a person furnishing a utility service, see section 527.2(d) of this Part.

Example 8:

A person purchases a unique type telephone and requests the telephone company to install it in his home for use in connection with the telephone service subscribed to. The installation service is taxable under section 1105(c)(3) of the Tax Law.

(5)

(i) The installation of floor covering is subject to tax unless it is the installation of the initial finished floor covering in new construction, in a new addition to existing construction or in a total reconstruction of existing construction.

(ii) The term floor covering includes carpet, carpet tile, carpet padding, linoleum and vinyl roll floor covering, linoleum tile, vinyl tile and other similar floor coverings.

Example 9:

A floor covering contractor removes wall-to-wall carpet and installs new wall-to-wall carpet padding and carpeting as its replacement. The total charge for the installation and sale of the padding and carpet is subject to sales tax because this is merely the replacement of the existing floor covering.

Cross-reference:

For a detailed discussion of the taxability of the installation of floor covering, see section 541.14 of this Title.

(b)Exemptions.

(1) The services of installing, maintaining, servicing or repairing tangible personal property are not taxable if the services were performed for resale. See section 526.6(c)(8) of this Title.

(2) Maintaining, servicing or repairing tangible personal property is not taxable if the property maintained, serviced or repaired is held for sale in the regular course of business.

Example 1:

A repair shop charges a boat dealer for reconditioning boat motors which the dealer will resell. The reconditioning of the motors is not taxable because the motors are for resale.

(3) Tax is not imposed on the services of laundering, dry-cleaning, tailoring, weaving, pressing, shoe repairing, and shoe shining. For example, alterations to clothing, although considered to be maintaining, servicing, or repairing property, are excluded from tax because they are tailoring. This would include tailoring performed either by an independent tailor or seamstress, or by a tailer or seamstress employed by the vendor of the clothing so long as the vendor's charge for the tailoring is reasonable and separately stated from the charge for the clothing itself, and regardless of whether the clothing qualifies for the exemption from tax under section 1115(a)(30) of the Tax Law. However, when a person provides raw materials to a tailor or seamstress and the tailor or seamstress produces an article of clothing for the person, the tailor's or seamstress' work constitutes the production of clothing (which is not tailoring); and the charge for such service would be subject to State and local sales and use tax (see 527.4[b] of this Part).

(4) Tax is not imposed on the charge for installation of tangible personal property which, when installed, will be an addition or capital improvement to real property. For a detailed discussion of repairs or capital improvements to real property, see section 527.7 of this Part. For a detailed discussion of the taxability of floor covering, see section 541.14 of this Title. See section 544.4 of this Title regarding installing, repairing, servicing and maintaining mobile homes and factory-manufactured homes.

(5) Commercial vessels.

(i) Tax is not imposed on receipts from services rendered to commercial vessels and property used by such vessels for fuel, supplies, maintenance and repairs when such vessels are primarily engaged in interstate or foreign commerce.

Example 2:

A steamship company engages a shipyard to clean and paint the hull of a commercial vessel engaged in foreign commerce. The services rendered by the shipyard are not subject to tax.

(ii) A commercial vessel is any type of water craft used or engaged in the transportation for hire of persons or property on water. Any vessel used or engaged for other purposes on more than an occasional basis is not a commercial vessel. A commercial vessel is primarily engaged in interstate or foreign commerce where 50 percent or more of the receipts from the vessel's activities are derived from interstate or foreign commerce. (See section 528.9[a] for further definitions applicable to commercial vessels.)

(iii) Tax is imposed on receipts from services rendered to articles purchased for the original equipping of a new ship.

(iv) Receipts from services rendered to marine cargo containers used by or for commercial vessels engaged in foreign or interstate commerce, are excluded from the imposition of sales tax.

(6) Installation, repair and maintenance services rendered in or about the residence of a private homeowner or lessee are not subject to tax when:

(i) the person performing the services is engaged directly by the homeowner or lessee; and

(ii) the person performing the services is not in a regular trade or business, offering his services to the public.

Example 3:

A homeowner engages a college student to clean and wax his automobile. The student is not in the business of servicing automobiles and does the work in the homeowner's garage. The cleaning and waxing of the automobile is not subject to tax.

Example 4:

A college student advertises in the classified that he will wash and wax automobiles for a fee. The washing and waxing of automobiles is taxable.

(7) Wages, salaries and other compensation paid by an employer to his employee for installation, repair or maintenance service rendered by the employee under an employer- employee relationship are not receipts subject to the tax.

(8) Farming.

There is an exemption from tax for services rendered to certain tangible personal property used in farm production. For a detailed discussion and description of this exemption, see section 528.7 of this Title.

(9) Mobile homes.

Tax is not imposed on the charge for the installation of a mobile home. For a detailed discussion and description of this exception, see Part 544 (Mobile Homes and Factory Manufactured Homes) of this Title.

(10) Tax is not imposed on receipts from services rendered to certain machinery, equipment or apparatus, or parts, tools or supplies used in connection therewith, as described in section 1105-B of the Tax Law. For a detailed discussion and description of this exemption, see section 528.13 of this Title.

(c)Maintenance and service contracts.

(1) The purchase of a maintenance or service contract is a taxable transaction.

(2) The vendor making sales of such contracts may purchase for resale any tangible personal property which is transferred to his customer in connection with the services rendered.

(3) Any charge made for services rendered in addition to the purchase price of the maintenance or service contract is taxable.

Example 1:

A vendor selling home appliances also offers a 12-month extended service contract with unlimited parts and labor. The charge for the service contract is taxable.

Example 2:

The same vendor also offers a service contract for the price of $50 under which the purchaser will receive one service call at no additional charge, including parts and labor, and each additional service call will cost the purchaser $5 for parts and labor. All the charges are receipts subject to tax.

(d)Warranty work.

(1) Repair or maintenance services rendered, without charge to a customer under a warranty agreement are not taxable.

(2) The vendor performing the warranty services may purchase for resale any tangible personal property which is transferred to his customer in connection with the services rendered.

(3) Charges for services rendered which are not covered by the warranty are taxable.

(4) Where a manufacturer reimburses a vendor or repairman performing warranty work, the reimbursement is not taxable, as it was for resale.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 527.5