New York – Taxability of Towing and Transportation Charges

SALT Report 1714 – The New York Department of Taxation and Finance issued guidance regarding a Taxpayer’s charges for towing and transporting construction equipment.  The Taxpayer rents a variety of construction equipment, such as tools, excavators, and concrete mixers that he delivers, for a fee, to the customer’s jobsite.  On occasion, the Taxpayer will transport, for a fee, construction equipment owned by the customer from one jobsite to another.

The Department determined the taxability as follows:

New York Tax Laws §§1105(a) and 1101(b)(5) impose sales tax on rentals of construction equipment and vehicles.  Therefore, the Taxpayer’s charge to its customers to deliver rented equipment or vehicles is subject to sales tax, whether or not the delivery charge is separately stated on the bill or invoice provided to the customer.

Under NYCRR §526.5(g)(3) transporting tangible personal property is not a taxable service in and of itself, unless that service is provided in conjunction with a taxable service.  Therefore, the Taxpayer’s charges for transporting the equipment owned by its customer are not taxable.

However, if the Taxpayer tows or transports a customer’s equipment in conjunction with the Taxpayer’s or a third party’s maintenance or repair services to that equipment, then the towing or transport charges would be subject to tax.

When tax is due for any of the taxable situations listed above, it should be collected at the combined state and local tax rate in effect in the jurisdiction where the customer takes possession of the vehicle or equipment.

For Further Information:

New York Commissioner of Taxation and Finance – TSB-A-12(21)S