N.Y. Comp. Codes R. & Regs. tit. 20 § 528.26

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

Section 528.26 - Tractors, trailers and semitrailers

Tax Law, §§ 1115(a)(26), (g), 1139(g)

(a)Exemption.

(1) The sale or lease of qualifying vehicles as defined in subdivision (b) of this section and property installed on such vehicles for the equipping, maintenance or repair thereof are exempt from the sales and use tax.

(2) Services of installing, maintaining, servicing or repairing tangible personal property (ordinarily taxed pursuant to section 1105[c][3] of the Tax Law) performed on qualifying vehicles for their equipping, maintenance or repair and on property installed on such vehicles for their equipping, maintenance or repair are also exempt from the sales and use tax.

(3) The exemption does not apply with respect to the purchase or use of:

(i) trucks;

(ii) motor fuel and/or diesel motor fuel;

(iii) shop equipment;

(iv) tools (other than tools sold as part of original equipment of a vehicle);

(v) tractors tractor, trailers and semitrailers when used in combination which have gross vehicle weights of 26,000 pounds or less;

(vi) mobile homes and/or factory-manufactured homes; and

(vii) taxable services other than those subject to tax pursuant to section 1105 (c)(3) of the Tax Law.

The exemption certificate for tractors, trailers, or semitrailers may not be used for purchases of tangible personal property or services described in subparagraphs (i)-(iv) and (vi)-(vii) of this paragraph.

(b)Definitions.

The following terms shall apply for purposes of this section.

(1) A tractor is a motor vehicle designed and used as the power unit in combination with a semitrailer or trailer, or two such trailers in tandem. Any such motor vehicle shall not carry cargo except that a tractor and semitrailer engaged in the transportation of automobiles may transport motor vehicles on part of the power unit.

(2) A semitrailer is any trailer which is so designed that when operated the forward end of its body or chassis rests upon the body or chassis of the towing vehicle.

(3) A trailer is any vehicle not propelled by its own power, drawn on the public highways by a motor vehicle (as defined in section 125 of the Vehicle and Traffic Law) except for:

(i) motorcycle sidecars;

(ii) vehicles being towed by a nonrigid support; and

(iii) vehicles designed and primarily used for other purposes and only occasionally drawn by such a motor vehicle.

(4)Gross vehicle weight is the unloaded weight of the vehicle plus the unloaded weight of the heaviest motor vehicle, trailer, semitrailer, dolly or other device to be used in combination with such vehicle plus the weight of the maximum load, exclusive of the weight of the driver, and his/her helper, which may be carried or drawn by such vehicle.

(5)Unloaded vehicle weight is the actual weight of the vehicle, which includes all equipment:

(i) necessary for the performance of the function of the vehicle as a vehicle;

(ii) necessary for the safety of the vehicle;

(iii) permanently attached to the vehicle;

(iv) used exclusively for the protection of the load carried by the vehicle; or

(v) used exclusively for the loading or unloading of the vehicle.

(6)Qualifying vehicle is a tractor, trailer or semitrailer, provided such qualifying vehicle is used in combination with any vehicles where the gross vehicle weight of such combination exceeds 26,000 pounds. Trailers and semitrailers which otherwise meet the requirement for exemption when combined with a tractor are considered a qualifying vehicle though combined with a truck.

(c)Purchases.

(1) Generally, the purchase or lease of a qualifying vehicle or property installed on such vehicle for its equipping, maintenance or repair may be made without the payment of sales tax provided the purchaser gives to the vendor a properly completed exemption certificate for tractors, trailers and semitrailers within 90 days of the delivery of the property.

Example 1:

An individual engaged in the transportation of property purchases a new tractor from a dealer. The purchase agreement calls for the tractor to be fully equipped for long-haul situations. Such optional equipment includes the addition of a sleeper unit, an AM-FM stereo radio, splash guards, roof-mounted wind deflector and a built-in toolbox with hand tools included. The purchaser intends to use the tractor in combination with a trailer which when loaded will exceed 26,000 pounds gross vehicle weight. The purchase of the tractor and all optional equipment is exempt from sales tax provided the purchaser gives the vendor a properly completed exemption certificate for tractors, trailers or semitrailers, within 90 days of the delivery of the property.

(2)

(i) The purchase of the services of installing, maintaining, servicing or repairing tangible personal property (ordinarily taxed pursuant to section 1105[c][3] of the Tax Law) performed on (a) qualifying vehicles for the equipping, maintenance or repair thereof, or ( b) property installed on qualifying vehicles for the equipping, maintenance or repair thereof, may be made without the payment of sales tax. Property installed by the vendor of the service and transferred as part of such service is also exempt from tax regardless of whether the charges therefor are separately stated on the bill given to the customer. The purchaser must provide the vendor with a properly completed exemption certificate for tractors, trailers and semitrailers within 90 days of the date the services were performed to avail itself of the exemption.

Example 2:

The owner of a qualifying vehicle has the vehicle serviced at a truck repair center. The services performed consist of changing the oil and oil filter, checking all fluid levels, and replacing light bulbs. Charges for such services and parts are exempt from the sales tax provided the purchaser gives to the vendor a properly completed exemption certificate for tractors, trailers or semitrailers within 90 days of the date the services were performed.

Example 3:

The owner of a dump truck has the same services provided to its vehicle as in example 2. Although the gross vehicle weight of the dump truck exceeds 26,000 pounds, the services are subject to tax because the exemption is limited to services performed on qualifying tractors, trailers, semitrailers or property installed on such vehicles and does not apply to services performed on other motor vehicles.

(ii) Services other than those subject to tax pursuant to section 1105 (c)(3) of the Tax Law performed on qualifying vehicles or on property installed on qualifying vehicles are not exempt from tax pursuant to section 1115 (g) of the Tax Law. Thus, the service of producing, fabricating, processing, printing or imprinting tangible personal property, performed on qualifying vehicles or property installed on qualifying vehicles, for a person who directly or indirectly furnishes such property (not purchased by him for resale) are subject to tax.

Example 4:

The purchase of vehicle painting services for the purpose of advertisement, product promotion, company identification or decorative value are subject to sales and use taxes.

(3)

(i) Generally, the purchase of parts and supplies (excluding motor fuel and diesel motor fuel) that are installed on or attached to qualifying vehicles for their equipping, maintenance or repair may be made without the payment of sales tax provided the purchaser gives to the vendor a properly completed exemption certificate for tractors, trailers or semitrailers within 90 days of the delivery of the property. Such purchases include but are not limited to the following:

(a) vehicle repair and replacement parts;

(b) vehicle fluids (e.g., oil, brake fluid, transmission fluid, coolant, etc.) excluding motor fuel and/or diesel motor fuel;

(c) cargo restraint systems;

(d) anti-theft devices;

(e) safety decals;

(f) wind deflectors;

(g) splash guards;

(h) tractor hose retrievers; and

(i) dollies which convert semitrailers to trailers.

(ii) The purchase of tools (other than those sold as part of the original equipment of a vehicle), shop equipment and supplies that do not become part of or attach to a qualifying vehicle are subject to tax at the time of purchase. Such purchases include but are not limited to the following:

(a) road flares and reflectors;

(b) hand tools;

(c) service jacks;

(d) tire changers;

(e) battery chargers;

(f) parts washers;

(g) truck/tractor washers;

(h) work stands; and

(i) wheel balancers.

The exemption certificate for tractors, trailers or semitrailers may not be used for purchases of tangible personal property described in this subparagraph.

(4) Bulk purchases by registered vendors.

(i) Purchases in bulk of parts and supplies described in subparagraph (3)(i) of this subdivision for qualifying and non-qualifying vehicles when made by a person which is registered as a vendor for purposes of the New York State sales and use tax may be made without the payment of sales tax to the extent that the use of such parts and supplies cannot be identified at the time of purchase. However, use tax must be paid when such parts and supplies are installed on a nonqualifying vehicle or when used in the equipping, maintenance or repair of a nonqualifying vehicle. Such tax should be paid with and reported on the vendor's return filed for the period in which such parts and supplies are so used. Such person must maintain records sufficient to identify the use of all such parts and supplies. (See subdivision [d] of this section and Part 533 of this Title.)

Example 5:

Company A, a registered vendor, owns, operates and services its own fleet of trucks, tractors, trailers and semitrailers. Company A makes bulk purchases of oil, oil filters, glo-plugs, brake fluid, brake pads, and tires all of which are intended for use on its qualifying vehicles. It may purchase all such parts and supplies exempt from sales tax by giving the vendor a properly completed exemption certificate for tractors, trailers or semitrailers. However, Company A is liable for the use tax on the cost of any parts and supplies purchased for use on its qualifying vehicles but used on those of its vehicles which do not qualify for the exemption. Company A is required to maintain adequate records to identify the vehicles on which such parts and supplies were used.

(ii) Where parts and supplies described in subparagraph (3)(i) of this subdivision are identifiable for use on nonqualifying vehicles, no exemption is authorized and the person making such purchases is required to pay the tax at the time of purchase.

Example 6:

Company B, a registered vendor, owns, operates and services its fleet of trucks, tractors and trailers. Company B makes purchases in bulk of tires for its fleet from two suppliers. All tires for its nonqualifying truck fleet are purchased from Supplier No. 1 while all tires for its qualifying vehicles are purchased from Supplier No. 2. In this instance, Company B is required to pay the tax at the time of its purchases from Supplier No. 1 but may issue an exemption certificate for tractors, trailers or semitrailers for its purchases from Supplier No. 2.

(iii) When a person, which is a registered vendor, pays tax at the time of purchase of parts and supplies later used in a manner which qualifies for exemption, it may apply for a refund or credit of such tax. (See subdivision [e] of this section for provisions relating to refunds and credits.)

(5) Bulk purchases by other than registered vendors.

(i) Purchases of parts and supplies described in subparagraph (3)(i) of this subdivision made in bulk by a person which is not required to and is, thus, not registered as a vendor for New York State sales and use tax purposes are exempt only to the extent that all such purchases are for use on qualifying vehicles. In order to make exempt purchases, a properly completed exemption certificate for tractors, trailers or semitrailers must be furnished to the vendor within 90 days of the sale. The purchaser is required to maintain adequate records to identify the vehicles on which such parts and supplies were used.

(ii) When parts and supplies described in subparagraph (3)(i) of this subdivision are purchased by a person which is not a registered vendor and such person cannot, at the time of purchase, identify those parts and supplies which will be used on a qualifying vehicle, such person must pay the tax at the time of purchase. Such person may apply for a refund of tax paid with respect to those purchases of property installed upon a qualifying vehicle for its equipping, maintenance or repair. (See subdivision [e] of this section for provisions relating to refunds and credits.)

(iii) When purchases of parts and supplies are identifiable for installation on or use in the equipping, maintenance or repair of nonqualifying vehicles, no exemption is authorized and the purchaser is required to pay the tax due at the time of purchase.

(d)Vendor and customer obligations.

(1) In general, the burden of proving a receipt is not taxable is upon the vendor and the customer. The vendor's sales records must either provide sufficient detail to independently determine the taxable status of each sale and the amount of tax due and collected thereon or be substantiated by analysis of supporting records. Any vendor who willfully fails to keep any required records shall be subject to criminal liability. In order to prove a sale was exempt from tax, exemption certificates must be received, dated and retained. For purposes of this exemption, the vendor must obtain from the purchaser or its authorized representative, a properly completed exemption certificate for tractors, trailers or semitrailers within 90 days of the date of sale. In addition, the name of the business entity and the authorized representative must be shown on all invoices for such purchases whether made by cash, check or charged to the customer's account when such purchases are made by the customer. When services are performed on vehicles, the customer invoice must contain information sufficient to identify the vehicle on which such services are performed (e.g., highway use tax permit number for tractors or vehicle registration/license plate number for trailers). Vendors accepting exemption certificates must maintain a method of associating sales made for exempt purposes with the certificates on file. A properly completed certificate timely received in good faith within 90 days of the sale, will relieve the vendor of its liability to collect tax on transactions to which the certificate applies. In such event, the burden of proving a transaction is not taxable shall be solely upon the customer. A certificate is not received in good faith if accepted in the sale of tangible personal property or a service which is designated on the front or reverse side of the certificate as not being exempt from tax. In such a case the vendor and customer are each liable for the sales and compensating use tax due.

(2) Customer obligations. Any person who willfully issues a false or fraudulent exemption certificate with intent to evade tax shall be subject to civil and criminal penalties. A properly completed certificate timely received in good faith, will relieve the vendor of its liability to collect tax on transactions to which the certificate applies. In such event, the burden of proving a transaction is not taxable shall be solely upon the customer. Sales and compensating use tax will be due with respect to any vehicle, parts or supplies which are purchased free of tax and later used in a manner which does not qualify for exemption. Unless a customer keeps records sufficient to prove that property purchased without payment of tax was used in an exempt manner, it shall be presumed that compensating use tax is due with respect to such property.

(3)

(i) For more complete rules with respect to collection of tax and vendor's obligations see Parts 532 and 533 of this Title.

(ii) For criminal penalties for failure to keep required records, see Tax Law, section 1817(j).

(iii) For civil and criminal penalties for false or fraudulent use of an exemption certificate, see Tax Law, sections 1145(a)(5) and 1817(m).

(e)Refund or credit.

Refunds and credits of sales tax imposed and paid on purchases subject to the exemption described in subdivision (a) of this section shall be administered in accordance with the provisions of Part 534 of this Title and section 1139 of the Tax Law.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 528.26