As a company that rents scaffolding, hoisting equipment, and pedestrian walkways and sells safety netting to building owners and general contractors, does a scaffolding company owe sales tax on its own equipment purchases, what does it need to collect from customers (including exempt organizations, government entities, and IDA-affiliated contractors), what records must it keep, what can it do if a customer refuses to pay or provide an exemption certificate, and does work at the World Trade Center site get special tax treatment?

Plain-English summary

Regional Scaffolding & Hoisting Co. rents scaffolding, hoisting equipment, and temporary pedestrian walkways (sidewalk bridge protection), and sells safety netting, to building owners and general contractors working on both capital-improvement and repair/maintenance projects. It doesn't itself alter, improve, repair, or maintain real property — it's purely an equipment vendor. Each job typically has three billed components: the rental/sale itself, erection/installation, and dismantling/removal. The company (which also worked at Ground Zero after 9/11 providing netting and walkways) posed five questions:

Its own purchases: Equipment bought exclusively to rent out, and safety netting bought exclusively to resell, are tax-free purchases for resale — the company is a vendor of tangible personal property and related services, not a "contractor" for sales tax purposes (since it doesn't itself alter/improve/repair real property).

Its charges to customers: Nearly all of the company's rentals and sales are taxable retail transactions, and the installation/removal charges bundled into the rental price are not deductible from the taxable amount even if separately stated — they're a necessary component of the rental. The taxable status doesn't depend on whether the customer's project is a capital improvement or repair job, because the equipment itself is never installed as an "integral component part" of the customer's real property (it's temporary, removable equipment). Exemption depends entirely on the customer's own status:

• A non-exempt private building owner or contractor: fully taxable, no exemption available.
• A qualifying exempt organization (charitable, veterans', etc.) as the direct building owner and payer: exempt with Form ST-119.1.
• A government entity as building owner: exempt with a governmental purchase order naming the entity as purchaser.
• A general contractor doing work FOR an exempt organization (but not its bona fide agent): still fully taxable — the equipment doesn't become part of the organization's real property, so no exemption document can relieve this.
• A contractor acting as a bona fide agent of an exempt organization (agency within scope, organization legally liable, title passes to the organization): exempt.
• A contractor acting as agent of an Industrial Development Agency (IDA): exempt, but only with a specific authorization letter on IDA letterhead meeting detailed content requirements.

Recordkeeping: Generally three years from the due date of the relevant sales tax return (longer in some circumstances), including a system linking exemption certificates to specific transactions.

Nonpaying customers: The company remains personally liable for tax it fails to collect, but keeps the same legal right to pursue a customer for unpaid tax as it would for any other unpaid part of the price — with the Commissioner of Taxation and Finance required to be joined as a party in any such collection lawsuit.

World Trade Center work: No special sales tax provisions apply — ordinary rules govern the company's WTC-site sales and rentals.

What this means for you

Equipment rental companies serving construction sites

You can buy inventory tax-free for resale if it's genuinely dedicated to rental/resale, but almost everything you charge customers will be taxable — installation and removal charges bundled into a rental price don't escape tax just by being separately stated, since they're treated as part of the rental itself.

Contractors working for tax-exempt organizations or government entities

Don't assume your exempt client's status automatically flows through to your own equipment rentals — unless you're a genuine, properly documented agent of the exempt entity (with title passing to them and legal liability resting with them), your rental remains fully taxable even on their project.

Businesses dealing with IDA-affiliated projects

The IDA agency exemption has specific, formal documentation requirements (a letter on IDA letterhead, signed by a responsible officer, naming the project/contractor) — a generic assertion of IDA involvement isn't enough.

Common questions

Q: Can an equipment rental company buy its rental fleet tax-free?
A: Yes, if the equipment is purchased exclusively for rental to customers — this qualifies as a purchase for resale.

Q: Are installation and removal charges for rented equipment taxable?
A: Yes — even if separately stated on the invoice, they're treated as a necessary part of the taxable rental charge, not a deductible service.

Q: If my customer is a tax-exempt charity, is my equipment rental to them automatically exempt?
A: Only if the exempt organization itself is the direct purchaser and payer of record (with proper documentation) — a contractor merely working FOR the exempt organization doesn't make the rental exempt, since rented equipment doesn't become part of the organization's real property.

Q: Is there special sales tax treatment for work done at Ground Zero/the World Trade Center site?
A: No — the Department confirmed there are no special sales tax exemptions for WTC-site work; ordinary rules apply.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b) (purchase at retail, receipt, retail sale, sale/selling/purchase, tangible personal property definitions)
• Tax Law § 1105(a) (retail sales tax)
• Tax Law § 1115(a)(15), (16) (contractor purchases for exempt organizations' real property)
• Tax Law § 1116(a) (list of exempt organizations/entities)
• Tax Law § 1132(a), (c) (tax collection; exemption certificates)
• Tax Law § 1133(a) (vendor personal liability)
• 20 NYCRR § 526.5(e), § 526.6, § 526.7 (receipt; retail sale; sale/selling/purchase)
• 20 NYCRR § 527.5(a) (installing/maintaining/servicing tangible personal property)
• 20 NYCRR § 529.7(h) (sales to exempt organizations)
• 20 NYCRR § 532.1(d) (vendor's remedy for customer's failure to pay tax)
• 20 NYCRR § 533.2 (recordkeeping requirements)
• 20 NYCRR § 541.3(d)(2)(iv) (contractor purchases for exempt organizations, Examples 7-8)
• 20 NYCRR § 541.9 (contractor's purchase, rental, repair, use of equipment)
• Insurance Law § 6707 (nonprofit property/casualty insurers exemption)
• Private Housing Finance Law § 93(1) (limited dividend housing companies)
• TSB-M-87(7)S (Tax Status of IDA Projects)

Prior rulings referenced:

• Shroid Construction, Inc., TSB-A-02(30)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2003.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a03_31s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-03(31)S
Sales Tax
July 17, 2003

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S020726B

On July 26, 2002, the Department of Taxation and Finance received a Petition for Advisory
Opinion from Regional Scaffolding & Hoisting Co., Inc., 3900 Webster Avenue, Bronx, New York,
10470.
The issues raised by Petitioner, Regional Scaffolding & Hoisting Co., Inc., are:
1) Whether sales tax is due on purchases of equipment by Petitioner which is rented
to Petitioner’s customers, and on purchases of safety netting.
2) Whether sales tax is due on receipts from sales by Petitioner.
3) What record keeping requirements are imposed on Petitioner.
4) Whether Petitioner has recourse when its customer refuses to either provide an
exemption document or pay tax.
5) Whether any special sales tax provisions apply with respect to purchases or sales
made by Petitioner in connection with work done by Petitioner at the site of the
World Trade Center (WTC) terrorist attack.
Petitioner submits the following facts as the basis for this Advisory Opinion.
Petitioner is in the business of renting scaffolding, hoisting equipment and temporary
pedestrian walkways (sidewalk bridge protection), and selling safety netting to customers in a
variety of different situations. Petitioner itself does not alter, improve, repair or maintain real
property. Customers may be building owners or general contractors. The building owners may be
non-exempt private persons, exempt organizations or government entities. The general contractors
may be providing services for private persons, exempt organizations or exempt governmental
entities, or as an agent of an exempt governmental entity. The projects for which the scaffolding,
hoisting equipment, temporary walkways, or netting are provided may be capital improvement
projects or repair and maintenance projects.
Each contract performed by Petitioner has three components which may be separately stated
on the bill or customer invoice:
1) The rental of scaffolding, hoisting equipment and pedestrian walkways, and the sale of
safety netting;

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2) The erection or installation of the scaffolding, hoisting equipment, pedestrian walkways
or safety netting; and,
3) The dismantling and removal of the scaffolding, hoisting equipment, pedestrian walkways
or safety netting. The safety netting is ultimately transferred to the customer.
Petitioner worked at the WTC site at Ground Zero, providing safety netting and temporary
pedestrian walkways as described above.
Applicable Law and Regulations
Section 1101(b) of the Tax Law provides, in part:
When used in this article for the purposes of the taxes imposed by
subdivisions (a), (b), (c) and (d) of section eleven hundred five and by section eleven
hundred ten, the following terms shall mean:
(1) Purchase at retail. A purchase by any person for any purpose other than
those set forth in clauses (A) and (B) of subparagraph (i) of paragraph (4) of this
subdivision.
*

*

*

(3) Receipt. The amount of the sale price of any property and the charge for
any service taxable under this article . . . valued in money, whether received in
money or otherwise, including any amount for which credit is allowed by the vendor
to the purchaser, without any deduction for expenses or early payment discounts and
also including any charges by the vendor to the purchaser for shipping or delivery
. . . regardless of whether such charges are separately stated in the written contract,
if any, or on the bill rendered to such purchaser and regardless of whether such
shipping or delivery . . . is provided by such vendor or a third party, but excluding
any credit for tangible personal property accepted in part payment and intended for
resale. . . .
(4) Retail sale. (i) A sale of tangible personal property to any person for any
purpose, other than (A) for resale as such or as a physical component part of tangible
personal property, or (B) for use by that person in performing the services subject to
tax under paragraphs (1), (2), (3), (5), (7) and (8) of subdivision (c) of section eleven
hundred five where the property so sold becomes a physical component part of the
property upon which the services are performed or where the property so sold is later
actually transferred to the purchaser of the service in conjunction with the
performance of the service subject to tax. Notwithstanding the preceding provisions
of this subparagraph, a sale of any tangible personal property to a contractor,

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subcontractor or repairman for use or consumption in erecting structures or
buildings, or building on, or otherwise adding to, altering, improving, maintaining,
servicing or repairing real property, property or land, as the terms real property,
property or land are defined in the real property tax law, is deemed to be a retail sale
regardless of whether the tangible personal property is to be resold as such before it
is so used or consumed, except that a sale of a new mobile home to a contractor,
subcontractor or repairman who, in such capacity, installs such property is not a
retail sale. . . .
(5) Sale, selling or purchase. Any transfer of title or possession or both,
exchange or barter, rental, lease or license to use or consume (including, with respect
to computer software, merely the right to reproduce), conditional or otherwise, in any
manner or by any means whatsoever for a consideration, or any agreement therefor,
including the rendering of any service, taxable under this article, for a consideration
or any agreement therefor.
(6) Tangible personal property. Corporeal personal property of any
nature. . . .
Section 1105 of the Tax Law provides, in part:
Imposition of sales tax. On and after June first, nineteen hundred
seventy-one, there is hereby imposed and there shall be paid a tax of four percent
upon:
(a) The receipts from every retail sale of tangible personal property, except
as otherwise provided in this article.
Section 1115(a) of the Tax Law provides, in part:
Receipts from the following shall be exempt from the tax on retail sales
imposed under subdivision (a) of section eleven hundred five and the compensating
use tax imposed under section eleven hundred ten:
*

*

*

(15) Tangible personal property sold to a contractor, subcontractor or
repairman for use in (i) erecting a structure or building (A) of an organization
described in subdivision (a) of section eleven hundred sixteen . . . or (ii) adding to,
altering or improving real property, property or land (A) of such an organization . . .
as the terms real property, property or land are defined in the real property tax law;
provided, however, no exemption shall exist under this paragraph unless such

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tangible personal property is to become an integral component part of such structure,
building or real property.
(16) Tangible personal property sold to a contractor, subcontractor or
repairman for use in maintaining, servicing or repairing real property, property or
land (i) of an organization described in subdivision (a) of section eleven hundred
sixteen . . . as the terms real property, property or land are defined in the real
property tax law; provided, however, no exemption shall exist under this paragraph
unless such tangible personal property is to become an integral component part of
such structure, building or real property.
Section 1116(a) of the Tax Law provides, in part:
Except as otherwise provided in this section, any sale . . . to any of the
following . . . shall not be subject to the sales and compensating use taxes imposed
under this article:
(1) The state of New York, or any of its agencies, instrumentalities, public
corporations (including a public corporation created pursuant to agreement or
compact with another state or Canada) or political subdivisions where it is the
purchaser, user or consumer . . .
(2) The United States of America, and any of its agencies and
instrumentalities, insofar as it is immune from taxation where it is the purchaser, user
or consumer . . .
(3) The United Nations or any international organization of which the United
States of America is a member where it is the purchaser, user or consumer . . .
(4) Any corporation, association, trust, or community chest, fund, foundation,
or limited liability company, organized and operated exclusively for religious,
charitable, scientific, testing for public safety, literary or educational purposes, or to
foster national or international amateur sports competition (but only if no part of its
activities involve the provision of athletic facilities or equipment), or for the
prevention of cruelty to children or animals, no part of the net earnings of which
inures to the benefit of any private shareholder or individual, no substantial part of
the activities of which is carrying on propaganda, or otherwise attempting to
influence legislation, (except as otherwise provided in subsection (h) of section five
hundred one of the United States internal revenue code of nineteen hundred
fifty-four, as amended), and which does not participate in, or intervene in (including
the publishing or distributing of statements), any political campaign on behalf of any
candidate for public office;

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(5) A post or organization of past or present members of the armed forces of
the United States, or an auxiliary unit or society of, or a trust or foundation for, any
such post or organization. . . .
*

*

*

(6) The following Indian nations or tribes residing in New York state:
Cayuga, Oneida, Onondaga, Poospatuck, Saint Regis Mohawk, Seneca, Shinnecock,
Tonawanda and Tuscarora, where it is the purchaser, user or consumer.
(7) A not-for-profit corporation operating as a health maintenance
organization subject to the provisions of article forty-four of the public health law.
(8) Cooperative and foreign corporations doing business in this state pursuant
to the rural electric cooperative law.
Section 1132 of the Tax Law provides, in part:
(a) (1) Every person required to collect the tax shall collect the tax from the
customer when collecting the price, amusement charge or rent to which it applies.
If the customer is given any sales slip, invoice, receipt or other statement or
memorandum of the price, amusement charge or rent paid or payable, the tax shall
be stated, charged and shown separately on the first of such documents given to him.
The tax shall be paid to the person required to collect it as trustee for and on account
of the state.
*

*

*

(c)(1) For the purpose of the proper administration of this article and to
prevent evasion of the tax hereby imposed, it shall be presumed that all receipts for
property or services of any type mentioned in subdivisions (a), (b), (c) and (d) of
section eleven hundred five . . . are subject to tax until the contrary is established,
and the burden of proving that any receipt . . . is not taxable hereunder shall be upon
the person required to collect tax or the customer. Except as provided in subdivision
(h) or (k) of this section, unless (i) a vendor, not later than ninety days after delivery
of the property or the rendition of the service, shall have taken from the purchaser
a resale or exemption certificate in such form as the commissioner may prescribe,
signed by the purchaser and setting forth the purchaser's name and address and,
except as otherwise provided by regulation of the commissioner, the number of the
purchaser's certificate of authority, together with such other information as the
commissioner may require, to the effect that the property or service was purchased
for resale or for some use by reason of which the sale is exempt from tax under the
provisions of section eleven hundred fifteen, and, where such resale or exemption

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certificate requires the inclusion of the purchaser's certificate of authority number or
other identification number required by regulations of the commissioner, that the
purchaser's certificate of authority has not been suspended or revoked . . . or (ii) the
purchaser, not later than ninety days after delivery of the property or the rendition
of the service, furnishes to the vendor: any affidavit, statement or additional
evidence, documentary or otherwise, which the commissioner may require
demonstrating that the purchaser is an exempt organization described in section
eleven hundred sixteen, the sale shall be deemed a taxable sale at retail.
Section 1133(a) of the Tax Law provides:
Except as otherwise provided in section eleven hundred thirty-seven, every
person required to collect any tax imposed by this article shall be personally liable
for the tax imposed, collected or required to be collected under this article. Any such
person shall have the same right in respect to collecting the tax from his customer or
in respect to nonpayment of the tax by the customer as if the tax were a part of the
purchase price of the property or service, amusement charge or rent, as the case may
be, and payable at the same time; provided, however, that the tax commission shall
be joined as a party in any action or proceeding brought to collect the tax.
Section 526.5(e) of the Sales and Use Tax Regulations provides, in part:
Expenses. All expenses, including telephone and telegraph and other service
charges, incurred by a vendor in making a sale, regardless of their taxable status and
regardless of whether they are billed to a customer are not deductible from the
receipts.
Section 526.6 of the Sales and Use Tax Regulations provides, in part:
(a) The term retail sale or sale at retail means the sale of tangible personal
property to any person for any purpose, except as specifically excluded.
(b) Special rule--sales specifically included as retail sales.
(1) A sale of any tangible personal property to a contractor,
subcontractor or repairman for use or consumption in erecting structures or
buildings or adding to, altering, improving, maintaining, servicing or
repairing real property, property or land, is deemed to be a retail sale,
regardless of whether the tangible personal property is to be resold as such
before it is used or consumed. (See Part 541 of this Chapter.)
Section 526.7 of the Sales and Use Tax Regulations provides, in part:

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Sale, selling or purchase. (Tax Law, §1101(b)(5)) (a) Definition. (1) The
words sale, selling or purchase mean any transaction in which there is a transfer of
title or possession, or both, of tangible personal property for a consideration.
(2) Among the transactions included in the words sale, selling or purchase are
exchanges, barters, rentals, leases or licenses to use or consume tangible personal
property.
Section 527.5(a) of the Sales and Use Tax Regulations provides, in part:
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.
Section 529.7(h) of the Sales and Use Tax Regulations provides, in part:
Sales to exempt organizations. (1) Any sale or amusement charge to or any
use or occupancy by an exempt organization to which an exempt organization
certificate has been issued is exempt from sales and use tax.
(2) In order to exercise its right to exemption the organization must be the
direct purchaser, occupant or patron of record. It must also be the direct payer of
record and must furnish its vendors with a properly completed exempt organization
certification. Direct purchaser, occupant or patron as used in this paragraph includes
any agent or employee authorized by the organization to act on its behalf in making
such purchases, provided the organization and its agent or employee are both
identified on any bill or invoice. An organization is the direct payer of record where
direct payment is made by the organization or from its funds directly to the vendor.
Section 532.1(d) of the Sales and Use Tax Regulations provides:
Vendor's remedy for customer's failure to pay tax. (1) Every person required
to collect any tax imposed by article 28 and pursuant to the authority of article 29 of
the Tax Law shall have the same right in respect to collecting the tax from his
customer or in respect to nonpayment of the tax by the customer as if the tax were
a part of the purchase price of the property or service, amusement charge or rent, as
the case may be, and payable at the same time; provided, however, that the
Commission of Taxation and Finance shall be joined as a party in any action or
proceeding brought to collect the tax.

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(2) The joining of the Commissioner of Taxation and Finance as a party in
any action or proceeding brought to collect the tax shall be effected by service upon
the Commissioner of Taxation and Finance of a summons and complaint naming the
Commissioner of Taxation and Finance as a plaintiff or defendant thereon.
Section 533.2 of the Sales and Use Tax Regulations provides, in part:
(a) General. (1) For the proper administration of the Sales and Use Tax Law
and to prevent evasion of the sales tax, it is statutorily presumed that all receipts
from sales and purchases of property or services of any type mentioned in
subdivisions (a) through (d) of section 1105 of the Tax Law . . . are subject to the
tax until the contrary is established. The burden of proving that any receipt,
amusement charge or rent is not taxable is on the vendor or the customer. To satisfy
his burden of proof, a vendor must maintain records sufficient to verify all
transactions.
(2) Upon audit by the department, or at such other times as the department
requests, the vendor or user must present all the records described in this Part, kept
in a manner suitable to determine the correct amount of tax due, together with such
documentation, summaries and schedules, including any New York State or Federal
tax returns or schedules as the department may request. The vendor or user may
elect to retain records as hard-copy records, electronic records, or both. Such vendor
or user must provide the auditors of the department with suitable facilities for
conducting their audit or examination. In those instances where the vendor or user
maintains or processes records on an electronic data processing system, the
department reserves the right to have such records presented on machine-sensible
form, and the vendor or user must furnish access to such equipment or records as is
necessary for the department to carry out its standard audit procedures. . . .
(3) All records required to be kept by this Part shall be preserved for a period
of three years from the due date of the return to which they relate, or the date of
filing, if later, except as provided in paragraph (4) of this subdivision, and longer
than three years if their contents are material to any period open or extended pursuant
to statute, or in any action or proceeding pending before the Department of Taxation
and Finance or in a judicial proceeding or action. . . .
*

*

*

(b)(4) Exemption certificates must be dated and retained in order to prove
exempt sales. Once a properly completed certificate is obtained, it relieves the seller
of liability to collect the tax on transactions to which the certificate applies. Every
vendor accepting an exemption certificate must maintain a method of associating a
sale made for exempt purposes with the certificate on file. The burden of proving

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the validity of any properly completed certificate rests with the customer or other
person who issues the certificate.
Section 541.3(d)(2)(iv) of the Sales and Use Tax Regulations provides, in part:
Except for agency contracts, contractors' purchases of construction supplies
which do not become part of an exempt organization's real property and are used or
consumed by the contractor, as well as purchases of taxable services, such as
electricity used by the contractor, are subject to the tax.
The following types of property and services are representative, but not
intended to be all-inclusive, of contractor's purchases which are subject to tax,
irrespective of whether the contractor has a time and material, lump sum, or other
type of contract (except agency contract), with an exempt organization:
(a) construction machinery and equipment, including rentals and repair parts;
(b) contractors' office supplies;
(c) contractors' supplies, tools, and miscellaneous equipment, whether
purchased or rented, including materials to make forms and scaffolding; and
(d) any other items purchased or rented by a contractor for his use in
performing the contract and not incorporated into the realty.
Example 7: Lumber and other materials which are used to build
forms are not exempt since they do not become a component part of
the structure.
Example 8: Equipment rentals under the dominion and control of the
contractor, such as rentals of cranes, bulldozers, backhoes, etc. for
use in building a structure for an exempt organization are subject to
tax.
Section 541.9(a) of the Sales and Use Tax Regulations provides, in part:
General. The purchase, rental, lease or license to use construction equipment
. . . by a contractor is subject to sales and use tax.
Section 541.9(c)(1) of the Sales and Use Tax Regulations provides, in part:
Rentals and leases of equipment to contractors.

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(i) Where a contractor leases equipment, the contractor is liable for
the combined State and local sales and use tax on the total charges at the
highest rate in effect in any jurisdiction in which the equipment is used
during the lease payment period, (e.g., daily, weekly, monthly, depending on
the frequency of payment).
*

*

*

(iv) All expenses incurred by a lessor in determining the amount
charged for rental of tangible personal property to a contractor, such as:
setting up, assembling, installing and/or dismantling, are elements of the total
receipt subject to tax, regardless of their taxable status and whether they are
separately billed to the lessee.
Opinion
Petitioner is in the business of renting scaffolding, hoisting equipment and pedestrian
walkways to its various customers. Included with the rental charge for such equipment are charges
for the installation and subsequent removal of the equipment. Such charges may be separately stated
on Petitioner’s bill or invoice to its customer. Petitioner also provides safety netting which is
ultimately transferred to its customer. Customers may be building owners or general contractors.
The building owners may be non-exempt private persons, exempt organizations or government
entities. The general contractors may be providing services for private persons, exempt
organizations or exempt governmental entities, or as an agent of an exempt governmental entity.
The projects for which the scaffolding, hoisting equipment, temporary pedestrian walkways, or
netting are provided may be capital improvement projects or repair and maintenance projects.
Petitioner requests guidance regarding its sales and use tax obligations when purchasing
equipment and supplies, and, when charging its customers for equipment, supplies and related
services.
Purchases of tangible personal property exclusively for resale are not retail sales subject to
sales tax. See section 1101(b)(4)(i) of the Tax Law and section 526.6(c) of the Sales and Use Tax
Regulations. A rental or lease of tangible personal property constitutes a sale for sales tax purposes.
See section 1101(b)(5) of the Tax Law and section 526.7(a)(1) and (2) of the Sales and Use Tax
Regulations. Therefore, Petitioner’s rentals of equipment such as scaffolding, temporary pedestrian
walkways, or hoisting equipment are retail sales of tangible personal property for purposes of
section 1105 of the Tax Law. The provision of safety netting by Petitioner to its customers is also
a retail sale of tangible personal property. Petitioner is not a construction contractor for sales tax
purposes since it does not alter, improve, repair or maintain real property. Rather, Petitioner is a
vendor of tangible personal property and related services. See section 541.2(d), (e) of the Sales and
Use Tax Regulations. Therefore, Petitioner’s purchases of equipment (i.e., scaffolding, hoisting
equipment and pedestrian walkways) which it intends exclusively for rental to customers are

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considered to be purchases for resale not subject to sales tax. Likewise, purchases of safety netting
which Petitioner intends exclusively for resale are not subject to sales tax.
It is presumed that all receipts for property or service of any type mentioned in section 1105
of the Tax Law are subject to tax until the contrary is established. The burden of proving that any
receipt is not taxable shall be upon the person required to collect the tax and the customer. See
section 1132(c) of the Tax Law and section 532.4 of the Sales and Use Tax Regulations. Petitioner’s
receipts from rentals to contractors are subject to the combined State and local sales and use taxes
at the rate in effect in the jurisdiction in which such equipment is delivered to the contractor. If the
contractor uses the equipment in a locality with a higher rate than the locality where it took delivery
of the equipment, it owes the tax on the difference. See section 541.9(c)(1)(i) of the Sales and Use
Tax Regulations. Accordingly, Petitioner, as a vendor of such equipment, is required to collect sales
tax on its sales and rentals of safety netting, scaffolding, temporary pedestrian walkways and
hoisting equipment, whether the customer’s project is a capital improvement or a repair, unless the
purchaser can establish that it is exempt from tax or the sale is otherwise exempt. The additional
charges for installation and removal are not deductible from the taxable rental or sale charges
regardless of whether those charges are separately stated. These charges are a necessary component
of the rental of the property. See Shroid Construction, Inc., Adv Op Comm T & F, July 12, 2002,
TSB-A-02(30)S. Since Petitioner is merely renting or selling pedestrian walkways and other
equipment to its customers, Petitioner is required to collect the sales tax on the full amount of its
charges at the rate in effect in the jurisdiction in which the tangible personal property is delivered
to the contractor.
When Petitioner, within 90 days of the transaction, accepts in good faith from its customer
an appropriate and properly completed exemption document showing that the purchase is exempt
from sales tax, Petitioner is relieved of its burden of proving that the transaction is exempt and need
not collect tax on sales or rentals to that customer. See section 1132(c) of the Tax Law. Petitioner’s
failure to collect tax from a customer who does not provide such exemption documents makes
Petitioner personally liable for the tax it failed to collect unless it can otherwise show that the
transaction is exempt from tax. See section 1133(a) of the Tax Law. In this regard, it should be
noted that a Certificate of Capital Improvement (Form ST-124) does not allow a contractor or any
other person to purchase or rent tangible personal property exempt from tax.
When Petitioner’s customer is a building owner that is not an organization or governmental
entity exempt from sales tax, Petitioner is making a taxable sale or rental of equipment to its
customer when it rents scaffolding, equipment, pedestrian walkways and sells safety netting. When
its customer is a building owner that is an organization exempt from sales tax, Petitioner’s rental
or sale of equipment will be exempt from tax. Organizations described in section 1116(a)(3), (4),
(5), (6), (7) or (8) of the Tax Law may make tax exempt purchases by giving Petitioner a properly
completed Exempt Organization Exempt Purchase Certificate (Form ST-119.1). The organization
claiming exemption from the tax must be the purchaser of record on Petitioner’s bill or invoice and
must be the payer of record. See section 529.7(h) of the Sales and Use Tax Regulations.

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When Petitioner’s customer is a building owner that is a governmental entity qualifying for
exemption from sales tax under section 1116(a)(1) or (2) of the Tax Law, Petitioner’s rental or sale
of equipment will be exempt from tax. Petitioner must obtain a governmental purchase order from
its customer to substantiate the exempt nature of the sale or rental. Petitioner’s invoice must name
the governmental entity as the purchaser.
Diplomatic missions and diplomatic personnel are eligible to make exempt purchases of
tangible personal property to the extent authorized by the United States Department of State Office
of Foreign Missions. See section 529.5 of the Sales and Use Tax Regulations. Certain nonprofit
property and casualty insurance companies are also exempt from State and local sales and use taxes.
See section 6707 of the Insurance Law. Limited dividend housing companies are exempt from State
(but not locally imposed) sales and use tax. See section 93(1) of the Private Housing Finance Law.
These organizations should give a vendor a copy of a letter from the Exempt Organization Unit of
the Department of Taxation and Finance naming the specific company as exempt to substantiate
their exempt status. Federally chartered credit unions are also exempt from State and local sales and
use taxes, and must issue a properly completed Exempt Organization Exempt Purchase Certificate
(Form ST-119.1).
When Petitioner's customer is a general contractor and the contractor is doing work for an
exempt organization, Petitioner's rental or sale of equipment is subject to tax. It does not matter
whether the contractor is making a capital improvement to the exempt organization's real property
or doing repair or maintenance services to the organization's real property. Since the equipment
does not become an integral component part of the exempt organization's real property, it does not
qualify for exemption under section 1115(a)(15) or (16) of the Tax Law. Accordingly, there is no
acceptable exemption document that a contractor may offer Petitioner in lieu of paying the sales tax.
When Petitioner’s customer is a general contractor who has been appointed as an agent of
an exempt organization other than an Industrial Development Agency (IDA), Petitioner’s rental or
sale of supplies or equipment to such contractor is exempt from sales tax. Purchases of supplies and
equipment by a contractor who is a bonafide agent of an organization must be within the scope of
the agency agreement, the exempt organization must be legally liable for the purchase, and, in the
case of the sale of equipment, the exempt organization must receive title to the equipment. Where
the scope of the agreement between the exempt organization or governmental entity and the
contractor does not encompass the purchase of supplies and equipment to be used by the named
contractor, Petitioner must collect tax on sales or rentals of such supplies and equipment.
When Petitioner’s customer is a bonafide agent of an IDA, Petitioner’s customer must obtain
a letter from the IDA written on IDA letterhead, which is signed by a responsible officer of the IDA,
contains a statement identifying the contract, the project, and the contractor, and authorizes the
contractor to make purchases of equipment and supplies for the project as agent of the IDA. When
making purchases as agent of the IDA, the contractor need only provide Petitioner with a copy of
this letter to establish the exemption. For sales made to an IDA or its agent, each bill or invoice
issued by Petitioner must identify the IDA project, identify the purchaser and indicate whether the

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purchaser was the IDA or a contractor acting as an agent for the IDA. If the letter from the IDA
provided by the contractor to Petitioner does not state that the contractor is an agent of the IDA for
purposes of purchasing supplies and equipment to be used by the named contractor, Petitioner must
collect tax on sales of supplies and rentals of equipment. See Technical Services Bureau
Memorandum Tax Status of IDA Projects, April 1, 1987, TSB-M-87(7)S.
Generally, Petitioner is required to maintain records sufficient to substantiate its taxable and
exempt purchases and sales for a period of three years after the due date of the sales and use tax
return to which such purchases and sales relate, or the actual date the return was filed, whichever
is later. Under certain conditions, Petitioner may be required to maintain certain records for a period
of more than three years. Petitioner must maintain a system of associating various exemption
documents with specific sales transactions. See section 533.2 of the Sales and Use Tax Regulations.
Where Petitioner’s customer fails to pay sales tax appearing on Petitioner’s bill or invoice
or fails to provide an appropriate and properly completed exemption document, Petitioner is
personally liable for the tax it was required to collect. However, the customer remains liable for the
payment of the tax and Petitioner has the same right in respect to collecting the tax from its customer
or in respect to nonpayment of the tax by the customer as if the tax were a part of the purchase or
rental price of the property and payable at the same time. The Commissioner of Taxation and
Finance must be joined as a party in any action or proceeding brought to collect the tax. See section
1133(a) of the Tax Law.
Petitioner asks if there are special statutory provisions concerning sales and purchases made
in connection with work performed at the site of the World Trade Center of which it should be
aware. Currently, there are no special exemptions from sales tax pertaining to Petitioner’s sales and
rentals with regard to work being done at the site of the World Trade Center.

DATED: July 17, 2003

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.