New York—Taxability of Vehicle Maintenance Management Programs

SALT Report 1755 – The New York Commissioner of Taxation issued an advisory opinion regarding the taxability of a vehicle leasing company’s monthly fee for service savings, preventive maintenance, roadside assistance, and warranty recovery.

The Taxpayer owns and operates a fleet vehicle leasing business and offers maintenance management services to its customers who own or operate their own vehicle fleets. As a part of the management services the Taxpayer provides assistance with almost every aspect of vehicle fleet maintenance and acts as “liaison” between the service providers and its customers’ drivers.

The Taxpayer offers the maintenance management program for a monthly contracted fee.  Under the terms of the contract the Taxpayer will, on a monthly basis, aggregate the bills of each service provider for each customer.  The customer will receive a monthly bill from the Taxpayer for any services performed on the customer’s vehicle.  In some cases, the Taxpayer will add a separately-stated charge to the bill for property or services purchased from local service contractors to account for any administrative costs.

Section 1105(c)(3) of the Tax Law imposes tax on the receipts from the services of installing, maintaining, servicing, and repairing tangible personal property.  However, in this instance, the Taxpayer does not actually own or operate any repair or maintenance facilities. Therefore, the Commissioner determined that the Taxpayer’s charges for the maintenance management program are not subject to tax.  Similarly, separately stated administrative charges related to the Taxpayer’s additional costs are not subject to tax.

For Further Information:

New York Commissioner of Taxation and Finance – TSB-A-12(19)S