Are a trade-show display company's charges for delivery, freight, drayage, assembly, and dismantling subject to New York sales tax?

Plain-English summary

A company that manufactures and sells or rents trade show displays -- and also delivers, assembles, disassembles, stores, and dismantles them for customers, using its own staff and outside truckers -- asked how New York sales tax applies to its various line-item charges.

The Department split the analysis into two scenarios. When delivery, drayage, and assembly happen as part of the initial sale or rental of a display (or as part of each periodic rental payment), those charges are simply part of the taxable receipt for the display itself and can't be carved out as nontaxable, even if billed as a separate line item -- shipping/delivery charges are always part of a taxable sale's receipt under New York law. But when the company later provides these same services on their own -- for a subsequent trade show, not tied to a new sale or rental -- each service is analyzed separately: assembly is a taxable service to tangible personal property, while delivery, freight handling, drayage, and disassembly aren't taxed at all (they're not among the enumerated taxable services), and a reasonable dismantling charge escapes tax if it's genuinely purchasable on its own and separately stated. The catch: if the taxable assembly service is bundled with the nontaxable ones for a single, non-separable price, the whole bundled charge becomes taxable. Storage of the displays at the company's own facility is separately taxable. Everything also depends on where delivery actually happens -- New York sales tax is a "destination tax," so sales/rentals delivered outside New York aren't taxed at all.

What this means for you

Trade show display, exhibit, and event-logistics companies

Structure your invoices carefully: bundle delivery/drayage/assembly into the display's sale or rental price and the whole thing is taxable as part of that sale. But if you offer stand-alone delivery, freight, drayage, or dismantling services for a later show (not tied to a new sale), keep assembly billed and priced separately from the nontaxable services -- otherwise the tax treatment of the whole package collapses into "all taxable."

Exhibitors and trade show customers

Ask your display vendor whether delivery/setup charges are bundled with a sale or rental (taxable as part of that transaction) versus billed as standalone services for reusing a display you already own (where delivery, freight, and drayage typically aren't taxed, but assembly is).

Accountants and tax professionals

This is a clean illustration of New York's "single unit" bundling rule (20 NYCRR 527.1(b)): a taxable service sold together with nontaxable services for one inseparable price makes the entire charge taxable, so separate stating and true separate purchasability are what preserve the nontaxable treatment for delivery, freight, drayage, and dismantling.

Common questions

Q: Is a delivery or drayage charge taxable when it's part of buying or renting a display?
A: Yes -- it's part of the taxable receipt for the sale or rental and can't be excluded even if separately stated.

Q: What about delivery/drayage for reusing a display at a later show, not tied to a new sale?
A: Delivery, freight handling, drayage, and disassembly aren't taxed in that scenario; assembly is taxable as a service to tangible personal property.

Q: Is a dismantling charge ever nontaxable?
A: Yes, if it's reasonable, can be purchased separately from other services, and is separately stated on the invoice or receipt.

Q: Does it matter where the display is delivered?
A: Yes -- New York sales tax is a destination tax, so a sale or rental delivered outside New York isn't subject to New York sales tax at all.

Citations and references

Statutes and guidance:

• Tax Law § 1101(b)(3) (receipt; includes vendor shipping/delivery charges)
• Tax Law § 1101(b)(4)(i), (5) (retail sale; sale, selling or purchase)
• Tax Law § 1105(a), (c)(3), (c)(4) (retail sales; installing/servicing tangible personal property; storage)
• 20 NYCRR 525.2(a)(3) (destination tax)
• 20 NYCRR 526.5(e), (g) (receipt; shipping or delivery charges)
• 20 NYCRR 526.7(e) (transfer of possession)
• 20 NYCRR 527.1(b) (taxable and exempt items sold as a single unit)
• 20 NYCRR 527.5(a) (installing tangible personal property)
• TSB-A-82(1)C (Buehler Moving Ltd., Feb. 4, 1982)
• TSB-A-85(16)S (I & D Inc., May 29, 1985)
• TSB-A-03(11)S (PricewaterhouseCoopers LLP, Mar. 25, 2003)
• TSB-A-97(44)S (Salomon & Leitgeb CPAs, LLP, July 23, 1997)
• Petrolane Northeast Gas Service, Inc. v State Tax Commission, 79 AD2d 1043 (3d Dept 1981)

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_28s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-05(28)S
Sales Tax
June 24, 2005

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

PETITION NO. S031121A

On November 21, 2003, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Gilbert Displays, Inc., 110 Spagnoli Road, Melville, NY 11747.
Petitioner, Gilbert Displays, Inc., furnished additional information with respect to the Petition on
February 11, 2004.
The issue raised by Petitioner is whether its charges for delivery, freight, drayage and
dismantling of trade show displays are subject to sales tax.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner is a corporation that manufactures displays for sale or rental to customers to
use in trade shows and convention centers throughout the world. In addition, Petitioner contracts
with customers to deliver, assemble and disassemble the displays, and to provide any other
necessary services for exhibiting the displays at trade shows and convention centers. Petitioner’s
staff provides some of the required services, while other services are provided by outside
contractors and trucking companies retained by Petitioner. When needed, Petitioner may rent
furniture and other exhibit components to customers. Petitioner also provides storage at its
facilities for customers’ displays when not in use at trade shows and convention centers. All of
these functions are the sole responsibility, and under the direction of, Petitioner. Petitioner bills
each service separately by line item, including trucking, freight handling, drayage, erecting the
displays, and the other services noted above. Petitioner represents that its charges for drayage
are the cost of moving booths and displays from the trucks to the trade show floor and back.
Each exhibitor is billed based upon the subcontractors’ and truckers’ invoices to Petitioner plus
an added administration fee.
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:
*

*

*

(3) Receipt. The amount of the sale price of any property and the charge
for any service taxable under this article . . . and also including any charges by the
vendor to the purchaser for shipping or delivery . . . regardless of whether such

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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. . . .
(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, 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,
...
*

*

*

(5) Sale, selling or purchase. Any transfer of title or possession or both,
exchange or barter, rental, lease or license to use or consume . . . for a
consideration. . . .
Section 1105 of the Tax Law imposes sales tax, in part, upon:
(a) The receipts from every retail sale of tangible personal property, except
as otherwise provided in this article.
*

*

*

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

*

*

(3) Installing tangible personal property . . . or maintaining, servicing or
repairing tangible personal property . . . not held for sale in the regular course of
business . . . and whether or not any tangible personal property is transferred in
conjunction therewith, . . .

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*

*

*

(4) Storing all tangible personal property not held for sale in the regular course of
business . . . .
Section 525.2(a)(3) of the Sales and Use Tax Regulations provides:
Except as specifically provided otherwise, the sales tax is a "destination
tax." The point of delivery or point at which possession is transferred by the
vendor to the purchaser, or the purchaser’s designee, controls both the tax
incidence and the tax rate.
Section 526.5 of the Sales and Use Tax Regulations provides, in part:
(a) Definition. The word receipt means the amount of the sale price of
any property and the charge for any service taxable under articles 28 and 29 of the
Tax Law, valued in money, whether received in money or otherwise. The
following subdivisions of this section discuss elements of a receipt.
*

*

*

(e) 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.
*

*

*

(g) Shipping or delivery. (1) Shipping or delivery charges by a vendor to
its customer for the cost of transporting tangible personal property to the customer
are part of the vendor's receipt subject to tax where the sale of the property is
subject to tax or where taxable services were performed on the property. This is
so regardless of whether the vendor separately states such charges in a written
contract or on an invoice and regardless of whether the vendor ships or delivers
the property itself or hires a third party to ship or deliver the property. Similarly,
charges by a vendor to its customer for picking up the customer's property upon
which the vendor is to perform taxable services are part of the vendor's receipt
from the sale of the service subject to tax.
Section 526.7(e) of the Sales and Use Tax Regulations provides, in part:
Transfer of possession. (1) Except as otherwise provided in paragraph (3)
of this subdivision, a sale is taxable at the place where the tangible personal

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property or service is delivered, or the point at which possession is transferred by
the vendor to the purchaser or his designee.
Section 527.1(b) of the Sales and Use Tax Regulations provides, in part:
Taxable and exempt items sold as a single unit. When tangible personal property,
composed of taxable and exempt items is sold as a single unit, the tax shall be collected
on the total price.
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.
Opinion
Petitioner manufactures displays for sale or rental to customers to use in trade shows and
convention centers throughout the world. In addition to manufacturing the displays, Petitioner
contracts with customers for the shipment and delivery of the displays to a convention site, and
for drayage, assembling and disassembling of displays at the convention site. The term drayage
is defined in Black’s Law Dictionary 532 (8th ed 2004) as, “A charge for transporting property.”
Petitioner represents that its drayage charge to customers is for the cost of moving booths and
displays from the trucks to the trade show floor and back.
Petitioner also provides storage at its facilities for customers’ displays when they are not
in use at trade shows and convention centers. Petitioner’s staff provide some of the required
services, while other services are provided by outside contractors and trucking companies.
Petitioner may also rent furniture and other exhibit components to customers. Petitioner charges
its customers for each service separately, billed by line item based upon Petitioner’s costs plus an
added administration fee.
Petitioner’s sales of displays are sales of tangible personal property under section 1105(a)
of the Tax Law. Rentals are included within the definition of sale, selling or purchase, under
section 1101(b)(5) of the Tax Law. Therefore the rental of displays, furniture, and other exhibit
components are sales of tangible personal property pursuant to section 1101(b)(5). Petitioner’s
sales or rentals of this property to customers for use at trade shows and conventions are retail
sales subject to sales tax. See section 1101(b)(4)(i) of the Tax Law. Petitioner’s charges to
customers for the initial delivery, drayage and assembly of the displays, furniture and other

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exhibit components are considered to be part of the total charge to the customer for the sale or
rental of the display, furniture or other exhibit components. Under the provisions of section
1101(b)(3) of the Tax Law and section 526.5 of the Sales and Use Tax Regulations, such charges
are not deductible from the taxable receipt.
Accordingly, Petitioner is liable for collecting and remitting State and local sales taxes on
the total receipts, including shipping, drayage and assembly charges, from its sales or rentals of
displays, furniture or other exhibit components in any transaction where delivery of the tangible
personal property occurs within New York State, regardless of whether the customer’s business
location is within or outside New York State. However, if delivery of the displays and related
property occurs outside New York State, the receipts from the sales or rentals are not subject to
State or local sales tax. See sections 525.2(a)(3) and 526.7(e) of the Sales and Use Tax
Regulations.
The service of dismantling is not one of the services taxed under section 1105(c) of the
Tax Law. Petitioner’s charge for dismantling will not be subject to tax if the charge is
reasonable in relation to the charges for other services provided, the dismantling service may be
purchased from Petitioner separately from the other services provided, and the charge is shown
separately on the invoice or receipt given to Petitioner’s customer.
Petitioner’s charges to customers for storage services provided at a location in New York
State are subject to the sales tax imposed under section 1105(c)(4) of the Tax Law.
After the initial delivery and setup of a display which is manufactured for and purchased
by customers, Petitioner may additionally provide its customers with delivery, freight handling,
drayage, assembling and disassembling of displays at subsequent events. If Petitioner, other than
in conjunction with the rental or initial sale of a display, separately offers these services, and the
charges for these services are separately stated on its invoices or in its contracts, the taxability of
each of the charges is determined separately. The assembly of displays is a service to tangible
personal property taxable under section 1105(c)(3) of the Tax Law. Accordingly, Petitioner’s
charges for this service are subject to sales tax when performed in New York State. Delivery,
freight handling, drayage and disassembling are not included among the enumerated services
taxable under section 1105(c). See Buehler Moving Ltd., Adv Op St Tx Comm, February 4,
1982, TSB-A-82(1)C; I & D Inc., Adv Op St Tx Comm, May 29, 1985, TSB-A-85(16)S.
Accordingly, the charges for each of these services, when sold by Petitioner other than in
conjunction with the rental or initial sale of a display to a customer, are not subject to tax if the
charge for such service is reasonable; the service may be separately purchased from Petitioner;
and the charge is shown separately on the invoice or receipt given to the client. However, if
assembly service, which is taxable, is sold with one or more of the other nontaxable services
(delivery, freight handling, drayage, disassembling) and the services are provided for a single
price, or cannot be purchased separately, the entire charge is taxable. See section 527.1(b) of the
Sales and Use Tax Regulations. See also PricewaterhouseCoopers LLP, Adv Op St Tx Comm,
March 25, 2003, TSB-A-03(11)S; Salomon & Leitgeb CPA’s, LLP, Adv Op St Tx Comm,

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July 23, 1997, TSB-A-97(44)S. If these additional services for subsequent events are provided
outside New York State, the charges are not subject to State or local sales tax. See sections
525.2(a)(3) and 526.7(e) of the Sales and Use Tax Regulations.
In the case of a rental of tangible personal property, each periodic rent payment is
considered a separate sale for purposes of Article 28 of the Tax Law. See Petrolane Northeast
Gas Service, Inc. v State Tax Commission, 79 AD2d 1043 (3d Dept 1981). Therefore, the
charges for delivery, drayage and assembly of the rented displays are considered to be a
constituent part of the taxable rental. Such charges whether or not separately stated and billed in
conjunction with the rental are a part of the taxable receipt for such rental. However, as
previously noted, reasonable and separately stated charges for the service of dismantling may not
be subject to sales tax under section 1105(c) of the Tax Law.

Dated: June 24, 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.