Are elevator inspection, consulting, design, and expert-witness services taxable as real property maintenance in New York, or exempt when they're government-mandated code inspections?

Plain-English summary

Seventeen unrelated elevator consulting firms, none of which install, maintain, repair, lubricate, or grease elevators themselves, asked how New York sales tax treats their ten categories of services: (1) evaluating elevator condition for sales/financing, modernization planning, checking a maintenance contractor's work, avoiding code violations, or complying with New York City's mandatory Local Law 10/81 annual elevator inspection; (2) advising on maintenance-contract structure; (3) pedestrian-traffic capacity studies; (4) writing modernization specs and reviewing contractor bids; (5) post-installation evaluations; (6) full design/oversight of new elevator installations; (7) expert witness testimony; (8) and (10) government-hired code-violation surveys; and (9) representing private clients before a building department for permits.

New York's rule for real property: diagnostic/condition inspections of an elevator are treated exactly like the regulations' own example of a taxable diagnostic service on tangible personal property (testing an appliance without repairing it is still taxable) — so voluntary elevator condition inspections done for a sale, financing, modernization planning, checking a contractor's prior work, or getting ahead of a future violation are all taxable maintenance-of-real-property services. But an inspection specifically required by a government code — like NYC's Local Law 10/81 — is exempt, because it's a mandatory compliance inspection, not a discretionary "keep the property in good condition" service. Pure advice-and-analysis work — contract structuring guidance, traffic studies, specification writing and bid review, expert witness testimony, and permit-application assistance — isn't on New York's enumerated list of taxable services at all, so none of it is taxed. Post-installation inspections that are genuinely part of a capital-improvement installation ride along exempt with a proper Certificate of Capital Improvement, and design/oversight work billed together with actual construction is taxed as a construction service unless the same capital-improvement certificate applies. Charges paid by a government entity itself are always exempt outright.

What this means for you

Elevator (and similar building-system) inspection and consulting firms

The taxable line runs through why the inspection happens, not what it physically involves: a condition check performed to inform a business decision (financing, modernization, verifying a contractor's work, heading off a future violation) is taxable real-property maintenance, while the exact same physical inspection performed because a government code specifically mandates it is exempt. Bill these separately when both occur so only the taxable portion is taxed.

Building owners hiring elevator consultants

If you hire a consultant purely for advice — how to structure a maintenance contract, whether your building needs more elevators, reviewing contractor bids, or getting expert testimony for litigation — none of that is taxable. But paying someone to physically evaluate your elevator's current condition (outside of a government-mandated inspection) is a taxable real-property maintenance charge.

Architects, engineers, and general contractors hiring elevator consultants

If you purchase a taxable inspection service from one of these firms for your own use in serving your client, you generally owe sales tax on that purchase; if you're a contractor and provide a proper Contractor Exempt Purchase Certificate, the consultant doesn't have to collect tax from you on otherwise-taxable services.

Common questions

Q: Is every elevator inspection taxable in New York?
A: No. A discretionary condition inspection (for a sale, financing, modernization planning, checking a contractor, or getting ahead of a violation) is taxable as real-property maintenance, but an inspection a government code specifically requires (like NYC's annual Local Law 10/81 inspection) is exempt.

Q: Are consulting services like traffic studies or contract-structuring advice taxable?
A: No — these are pure advisory/consulting services, which aren't on New York's list of enumerated taxable services, so they're not taxed regardless of who performs or purchases them.

Q: Does a post-installation elevator inspection get taxed the same as a routine condition check?
A: Not if it's genuinely part of a capital improvement to the building — in that case a properly completed Certificate of Capital Improvement (Form ST-124) exempts it, the same as the underlying installation.

Q: Are charges for elevator inspections paid by a city or municipality taxable?
A: No — sales to New York governmental entities are exempt outright, and the vendor should keep the government purchase order or contract to document the exemption.

Citations and references

Statutes and rules:

• Tax Law § 1105(c)(1), (3), (5) (information services, tangible personal property services, real property maintenance)
• Tax Law § 1116(a)(1) (governmental entity exemption)
• Tax Law § 1132(c) (exemption certificate procedures)
• 20 NYCRR 527.5(a)(3) (diagnostic service example, tangible personal property)
• 20 NYCRR 527.7(a)(1), (b)(1) (real property maintenance definitions and imposition)

Prior advisory opinions relied on:

• National Elevator Inspection Services, Inc., TSB-A-93(49)S (elevator inspection as real-property diagnostic maintenance)
• Elevator Service Companies, TSB-A-96(67)S; Hall & Dettor, LLP, TSB-A-99(53)S (government-mandated code inspections exempt)
• Joseph A. Matocha, TSB-A-90(12)S (non-owner/lessee purchaser of inspection service not taxed)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2005.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a05_11s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-05(11)S
Sales Tax
April 15, 2005

Office of Tax Policy Analysis
Technical Services Division
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S030929A

On September 29, 2003, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Charles Calderone Associates, Inc., George D. Cattabiani & Associates,
Inc., D.T.M. Inc. Elevator Consulting, GMA Consulting, Inc., Hubert H. Hayes, Inc., Landmark
Elevator Consultants Inc., Lerch, Bates & Associates, Inc., Lift-Tech-Ltd, J. Martin Associates,
Inc., Joseph Neto and Associates, Inc., Howard Nugent & Associates Inc., Sterling Elevator
Consultants, LLC, Triboro Technologies Inc., United Elevator Consultants, VDA Associates,
Vertical Systems Analysis, and Walsh Associates, LTD, collectively, Elevator Service
Companies, George Murray & Associates, Inc., 60 Fire Island Avenue, Babylon, New York,
11702.
The issue raised by Petitioners, Elevator Service Companies, is whether charges for the
services performed by Petitioners, as set forth below, are subject to sales tax.
Petitioners submit the following facts as the basis for this Advisory Opinion.
Petitioners are a group of unrelated companies who provide various services to their
customers related to the operation of elevators in their customers’ buildings. Petitioners do not
install, maintain, repair, lubricate or grease any elevators. Petitioners’ employees do not carry
tools, lubricant or grease. Petitioners assert that the services described below are not performed
in conjunction with maintenance, repairs or construction performed by third-party contractors.
After analyzing facts pertaining to their customers’ elevators, Petitioners generally provide their
customers with findings and recommendations in a written report. The services performed by
Petitioners are as follows:
1.

Some Petitioners are hired to evaluate elevator performance. These evaluations
are performed by visual inspection to determine if an elevator meets applicable
building code safety requirements. These services are generally performed under
the following circumstances:
a.

In connection with an acquisition of real estate or the financing of a real
estate project. This evaluation is generally ordered by a purchaser,
financial institution, architect or engineer to determine the remaining life
of an elevator.

b.

In connection with a request for a modernization survey to determine
whether to modernize elevator equipment. Such evaluations generally
include cost estimates with regard to such modernization.

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c.

To determine if maintenance on elevators previously performed by third­
party maintenance contractors has allowed the elevators to meet industry
and regulatory standards. When necessary, Petitioners will provide a list
of corrections to be undertaken by such contractor so that the elevators
meet the proper standards.

d.

Annual or semi-annual evaluations of the client’s elevators in order for the
client to avoid receiving violation notices from the local Building
Department upon their inspection. Petitioners’ evaluations are performed
using the same criteria that a Building Inspector uses when inspecting a
building to determine if there are code violations.

e.

For clients in New York City, annual Elevator and Escalator Inspections
mandated by New York City Local Law 10/81, to determine if the
elevators meet building code standards in accordance with Local Law
10/81. These annual inspections are performed in an identical manner as
the inspections described above, except that Petitioners must file a report
with the city of New York. Sometimes written reports are given to the
client. The punch list used by Petitioners in doing these inspections is
identical to that used by a City Building Inspector when giving a violation
notice.

With respect to items d. and e. above, Petitioners state that the Elevator Safety Code
produced by the American Society of Mechanical Engineers has been adopted by the New York
State Department of State and made applicable to the State Uniform Fire Prevention and
Building Code (State Building Code). Section 1206 of the Elevator Safety Code details proper
maintenance requirements. The State Building Code used throughout the state of New York and
New York City Building Code mandate compliance with these detailed maintenance
requirements. Under the State Building Code, a property owner is punishable for the failure to
have elevator and maintenance inspections as required.
2.

Some Petitioners provide guidance to clients as to the structuring of maintenance
contracts between the client and its third-party maintenance contractor. This
includes delineating the specifications of the subject equipment to be maintained
and the items of maintenance which must be performed by the contractor.

3.

Some Petitioners perform studies of the pedestrian traffic capacity of both new
and existing buildings to determine the elevator equipment necessary to
adequately service the buildings. This study is generally performed by an owner
(or developer) in connection with planned building or renovation of an elevator
system.

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4.

After performing the modernization survey described in item 1. b., if a
modernization project goes forward, a Petitioner may be requested to put the
recommended equipment changes in "book form," by writing up detailed
specifications and other information necessary for a contractor to bid on installing
the new or updated equipment. Petitioners’ responsibilities often also include
reviewing and analyzing project bids received by third-party contractors.

5.

After the installation of an elevator, Petitioners are often requested to evaluate the
elevator to determine if it was properly installed.

6.

Some Petitioners are requested on occasion to design and oversee the installation
of new elevators. This service usually commences with a study of pedestrian
traffic to determine the number of elevators necessary to service the building.
Thereafter, a Petitioner often creates blueprints, prepares specifications, and
possibly oversees the bidding process. This service may also include approval of
shop drawings, attendance at field meetings and supervision of construction. The
final step of this service is the final inspection of the newly installed elevator.

7.

Some Petitioners are hired by law firms and insurance companies to provide
expert witness testimony.

8.

Some Petitioners are hired by municipalities to determine whether and to what
extent elevators within the municipality are in violation of applicable building
codes, and to prepare a written report to the building owner which addresses any
violations. Such reports are paid for by the municipality.

9.

Some Petitioners are hired by private clients to act as their representative in
obtaining a building permit from a municipal building department. This type of
service is charged either on an hourly or a fixed fee basis.

10.

Some Petitioners are hired by municipalities to determine whether and to what
extent elevators within the municipality are in violation of applicable building
codes and to prepare written reports to owners which address violations. Such
services are billed to and paid by the building owner.

The inspection reports prepared by Petitioners (which are described in items 1, 5, 8 and
10) describe the condition of various components of the elevators, such as hoist, compensating
and car governor ropes, emergency lights, exhaust fans, doors and lighting, brake assemblies,
alarm bells and buzzers, and two-way communication devices, and recommend appropriate
repairs or maintenance. These inspection reports are not intended to be used by the third party
contractors which maintain and service the elevators, but are submitted to the building owners
for their use. According to Petitioners, contractors conduct their own inspections to determine
what maintenance and repairs are necessary for the elevators.

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Some Petitioners are hired by architects, engineers or contractors to provide some of the
services described herein, for use by the architect, engineer or contractor in performing its
contract with its client.
Applicable law and regulations
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 . . . upon:
*

*

*

(c) The receipts from every sale, except for resale, of the following services:

(1) The furnishing of information by printed, mimeographed or multigraphed
matter or by duplicating written or printed matter in any other manner, including the
services of collecting, compiling or analyzing information of any kind or nature and
furnishing reports thereof to other persons, but excluding the furnishing of information
which is personal or individual in nature and which is not or may not be substantially
incorporated in reports furnished to other persons, and excluding the services of
advertising or other agents, or other persons acting in a representative capacity, and
information services used by newspapers, radio broadcasters and television broadcasters
in the collection and dissemination of news, and excluding meteorological services.
*

*

*

(3) Installing tangible personal property, excluding a mobile home, or
maintaining, servicing or repairing tangible personal property, including a mobile home,
not held for sale in the regular course of business, whether or not the services are
performed directly or by means of coin-operated equipment or by any other means, and
whether or not any tangible personal property is transferred in conjunction therewith . . . .
*

*

*

(5) Maintaining, servicing or repairing real property, property or land, as such
terms are defined in the real property tax law, whether the services are performed in or
outside of a building, as distinguished from adding to or improving such real property,
property or land, by a capital improvement as such term capital improvement is defined
in paragraph nine of subdivision (b) of section eleven hundred one of this article . . . .
Section 527.5 of the Sales and Use Tax Regulations provides, in part:

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Installing, repairing, servicing and maintaining tangible personal property.
(a) 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.
*

*

*

(3) Maintaining, servicing and repairing are terms used to cover all activities that
relate to keeping tangible personal property in a condition of fitness, efficiency, readiness
or safety or restoring it to such condition.
*

*

*

Example 6: A company operates a diagnostic service in which it tests an
appliance for a set fee, but does not repair the appliance. The charge for the
diagnostic service is taxable.
Section 527.7 of the Sales and Use Tax Regulations provides, in part:
Maintaining, servicing or repairing real property.
(a) Definitions. (1) Maintaining, servicing and repairing are terms which are
used to cover all activities that relate to keeping real property in a condition of fitness,
efficiency, readiness or safety or restoring it to such condition. Among the services
included are services on a building itself such as painting; services to the grounds, such as
lawn services, tree removal and spraying; trash and garbage removal and sewerage
service and snow removal.
*

*

*

(b) Imposition. (1) The tax is imposed on receipts from every sale of the services
of maintaining, servicing or repairing real property, whether inside or outside of a
building.
Opinion
Petitioners are a group of unrelated companies who provide various services, as described
above, to their customers related to the operation of elevators in their customers’ buildings.
With regard to item 1, Petitioners may evaluate elevator performance in order to
determine if an elevator meets applicable building code safety requirements. These are not

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inspections required by a governmental entity. Item 1. a. indicates that such an inspection may
be done in connection with the sale of the building or structure to determine the remaining life of
an elevator.
Item 1. b. indicates that such an inspection may be done in connection with a request for
a modernization survey. Such a survey would generally include a cost estimate with regard to
such modernization. It is reasonable to conclude that such a survey may result in a
recommendation that the elevator equipment should be repaired, replaced or otherwise
rehabilitated along with the cost estimates for such recommendation.
Item 1. c. indicates that such an inspection may be performed to determine if maintenance
on elevators previously performed by third-party maintenance contractors has allowed the
elevators to meet industry and regulatory standards and are, therefore, in a condition of fitness,
efficiency, readiness or safety.
Item 1. d. indicates that such an inspection may be performed to determine whether
elevators meet the particular locality’s building codes, but the inspection is not required by a
governmental entity. Rather, these inspection services are performed so that repairs can be made
to the elevators prior to the mandatory inspection required for governmental code compliance,
thus avoiding fines or other sanctions imposed under those codes.
Item 1. e. indicates that such an inspection is performed as a New York City Local Law
10/81 mandated Elevator and Escalator Inspection.
All of the inspection services described in item 1 are performed to ascertain whether the
elevators are in a condition of fitness, efficiency, readiness and safety or need to be restored to
such condition. None of the inspection services described in item 1, except for item 1. e., are
required by a governmental entity to show compliance with building codes.
The services described in items 1. a. through d. constitute maintenance services to real
property. In each case, an inspection is performed to evaluate the state of repair of an elevator
for various reasons. In accordance with the rationale set forth in section 527.5(a)(3) of the Sales
and Use Tax Regulations, the inspection of elevators is a diagnostic service for keeping real
property in a condition of fitness, efficiency, readiness and safety, as contemplated in Example 6
of section 527.5(a)(3) with respect to tangible personal property. See National Elevator
Inspection Services, Inc., Adv Op Comm T & F, September 17, 1993, TSB-A-93(49)S. Pursuant
to section 1105(c)(5) of the Tax Law, the inspection of elevators constitutes the maintaining of
real property. Such service is subject to tax pursuant to section 1105(c)(5) of the Tax Law and
section 527.7(b)(1) of the Sales and Use Tax Regulations. The inspection service described in
item 1.e., however, is not subject to tax since it is a government mandated inspection for code
compliance. See Elevator Service Companies, Adv Op Comm T & F, October 7, 1996,
TSB-A-96(67)S; Hall & Dettor, LLP, Certified Public Accountants, Adv Op Comm T & F,
November 30, 1999, TSB-A-99(53)S.

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It is noted, however, that if the purchaser of the elevator inspection service is not the
owner or lessee of the real property which is the subject of the elevator inspection report, or
someone purchasing the inspection service on behalf of such owner or lessee, the charge paid by
the purchaser for the service will not be subject to sales tax. See Joseph A. Matocha, Adv Op
Comm T & F, March 21, 1990, TSB-A-90(12)S.
With regard to item 2, Petitioners may provide guidance to clients as to the structuring of
maintenance contracts between the client and its third-party maintenance contractor, including
specifying the equipment to be maintained and the items of maintenance which must be
performed by the contractor. Such guidance is in the nature of consulting services not
enumerated as taxable in section 1105(c) of the Tax Law. Charges for such service are not
subject to sales tax.
With regard to item 3, Petitioners may perform studies of the pedestrian traffic capacity
of both new and existing buildings to determine the elevator equipment necessary to adequately
service the buildings in connection with planned building or renovation of an elevator system.
Performance of such studies is in the nature of consulting services not enumerated as taxable in
section 1105(c) of the Tax Law. Charges for such service are not subject to sales tax.
With regard to item 4, Petitioners may, if the modernization survey described in item 1.
b. determines that a project should go forward, write up detailed specifications and other
information necessary for a contractor to bid on installing new or updated equipment, and review
and analyze project bids received by third-party contractors. Such services are in the nature of
consulting services not enumerated as taxable in section 1105(c) of the Tax Law. Charges for
such service are not subject to sales tax.
With regard to item 5, Petitioners may be hired to evaluate an elevator subsequent to its
installation. These inspections are performed solely to ascertain whether the elevators have been
properly installed.
When performed in conjunction with an installation of an elevator which qualifies as a
capital improvement to real property for sales tax purposes, the service described in item 5 is
considered part of the capital improvement to the real property. Petitioners should obtain a
properly completed Certificate of Capital Improvement (Form ST-124) from their customer to
substantiate that the charges by Petitioner to its customer are not subject to sales tax. If
Petitioners’ customer is the contractor making the installation, Petitioners should obtain a copy
of the certificate of capital improvement issued by the property owner to the contractor.
With regard to item 6, Petitioners may be hired to design and oversee the installation of
new elevators commencing with a study of pedestrian traffic to determine the number of
elevators necessary to service the building, subsequently creating blueprints, preparing
specifications, overseeing the bidding process, approving shop drawings, attending field

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meetings, supervising construction and conducting a final inspection of the newly installed
elevator.
If Petitioners are hired by the property owner to design and oversee the installation of
new elevators and Petitioners’ bill includes the construction of the elevator, charges for such
service are in the nature of charges for construction services. If the installation constitutes a
capital improvement to real property, Petitioners should obtain a properly completed Certificate
of Capital Improvement (Form ST-124) from the property owner and provide copies of such
certificate to all subcontractors on the job. If Petitioners’ customer is the contractor making the
installation, and Petitioners are merely designing and overseeing the installation of new
elevators, and providing other services described in item 6, Petitioners should obtain a copy of
the certificate of capital improvement issued by the property owner to the contractor to
substantiate that these services are not subject to sales tax.
With regard to item 7, Petitioners may be hired by law firms and insurance companies to
provide expert witness testimony. The provision of expert testimony is in the nature of
consulting services not enumerated as taxable in section 1105(c) of the Tax Law. Charges for
such service are not subject to sales tax.
With regard to item 8, Petitioners may be hired by municipalities to determine whether
and to what extent elevators within the municipality are in violation of applicable building codes
and to prepare a written report to the building owner which addresses any violations. Such
reports are paid for by the municipality. Charges to a New York State municipality or other
governmental entity are exempt from sales tax pursuant to section 1116(a)(1) of the Tax Law.
Petitioners should retain the governmental purchase order or copy of the contract with the
governmental entity to substantiate the exempt nature of the transaction.
With regard to item 9, Petitioners may be hired by private clients to act as their
representative to assist them in obtaining a building permit from a municipal building
department. These services are charged either on an hourly or a fixed fee basis. The provision of
such assistance is in the nature of consulting services not enumerated as taxable in section
1105(c) of the Tax Law. Charges for such service are not subject to sales tax.
With regard to item 10, Petitioners may be hired by municipalities to determine whether
and to what extent elevators within the municipality are in violation of applicable building codes
and to prepare written reports to owners which address violations. Such services are billed to
and paid by the building owner. If the inspection performed is mandated by a governmental
entity for purposes of code compliance, such inspection is not subject to sales tax regardless of
whether Petitioners are hired by an exempt governmental entity or a nonexempt private entity.
See Hall & Dettor, LLP, Certified Public Accountants, supra.
If Petitioners are hired by architects or engineers to perform inspection services of a kind
that are subject to tax, for use by architects or engineers in providing professional services to

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their clients, the architects or engineers will generally be required to pay sales tax on their
purchases of such services. If Petitioners perform inspection services that are taxable in nature
for a contractor, Petitioners will not be required to collect tax if they receive in good faith a
properly completed Contractor Exempt Purchase Certificate (Form ST-120.1) or other
exemption document from the contractor. See section 1132(c) of the Tax Law.
The preceding conclusions in this Advisory Opinion with respect to the taxable status of
items 1 through 10 are consistent with the previously issued advisory opinion, Elevator Service
Companies, supra. Elevator Service Companies concluded that certain elevator inspections are
not taxable based on the assumption that such services are performed solely for purposes of
mandatory governmental code compliance. If elevator inspections are not mandated by a
governmental entity for purposes of code compliance, such inspections may be subject to sales
tax as discussed above.
If nontaxable services discussed above are sold in conjunction with taxable services,
Petitioners need not collect tax on the charges for the nontaxable services provided the charges
for such nontaxable services are separately stated on the bill or invoice rendered to the customer
and such charges are reasonable in relation to the total charges.

DATED: April 15, 2005

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.