New York: Taxability of Equipment Provided with Services Addressed

The New York Department of Taxation and Finance recently issued two advisory opinions addressing the taxability of equipment provided along with an operator.  Under New York law, sales and use tax is imposed on leases and rentals of equipment when the right to use or direct control of the use of the equipment transfers to the lessee. When an equipment lease includes the services of an operator, possession is deemed to be transferred only where the lessee has the right to direct and control the use of the equipment. In the first advisory opinion (TSB-A-20(34)S), the taxpayer at issue was a full-service teleprompter service provider. Each teleprompting service included the teleprompting equipment and an experienced technician to operate the system. Because the technician maintained control of the equipment and was not under the direction of the customer, there was no transfer of possession of the equipment to the customer. Thus, the receipts from the teleprompter services were not taxable as tangible personal property. Moreover, teleprompting services are not an enumerated service in New York.

In a similar, but separate advisory opinion (TSB-A-20(37)S), the Department addressed the taxability of a taxpayer’s video, sound, and lighting services. In providing its services, the taxpayer used its own audio/visual and lighting equipment. The taxpayer generally worked with customers to determine the video, sound and lighting needed for each event and then assembled and operated the equipment during the event. The Department concluded that the video, sound and lighting consultation services were not a taxable enumerated service. Furthermore, because the taxpayer did not transfer possession or control of its equipment to the customer, there was no taxable sale of tangible personal property. Please contact Judy Cheng at 212-872-3530 with questions on these opinions.