Does an architectural firm owe sales tax on the printed 'bid set' copies of blueprints it separately charges clients for at cost?

Plain-English summary

LaBella Associates is an architectural/engineering firm whose clients are mostly exempt organizations or government entities. At the end of a design project, LaBella delivers an original set of final working drawings (blueprints) to the client as part of its professional service — then separately hires an outside printer to produce a "bid set": multiple copies of those drawings that the client distributes to contractors bidding on the project. LaBella charges its clients separately for the bid set (at LaBella's own printing cost) from its architectural/engineering fee, and clients are always free to skip LaBella and order their own bid set directly from a printer of their choice.

The Department split this cleanly in two. The design/architectural service itself isn't taxable — it's not among the Tax Law's enumerated taxable services. But the bid set is a DIFFERENT transaction: LaBella is reselling printed copies (tangible personal property) to its clients, making LaBella a "vendor" for that separate sale, which IS taxable under § 1105(a) unless the client qualifies for an exemption. Because the copies are optional (clients can buy them elsewhere), separately priced, and separately billed, they don't get swept along as part of the nontaxable design fee.

Two practical mechanics follow. First, LaBella must collect sales tax on the bid set charge from any client that ISN'T an exempt governmental entity or exempt organization — for exempt clients, a signed government contract (for governmental entities) or a properly completed Exempt Organization Exempt Purchase Certificate (Form ST-119.1, for other exempt organizations), received within 90 days, shifts the burden of proving exemption away from LaBella. Second, because LaBella is RESELLING the bid sets rather than consuming them itself, it can buy them from its own printer tax-free using a Resale Certificate (Form ST-120) — and if LaBella already paid tax to the printer before setting this up, it can claim a credit or refund within three years.

What this means for you

Architecture, engineering, and design firms that resell printing

If you separately charge clients for printed copies of your work product (bid sets, presentation boards, additional drawing sets) — priced and billed apart from your professional fee, and something the client could buy elsewhere — that's an ordinary taxable sale of tangible personal property on your part, distinct from your nontaxable design services. Collect tax on it (absent an exemption) and use a resale certificate to buy the printing tax-free from your own printer.

Firms serving exempt governmental or nonprofit clients

Get the right documentation within 90 days of delivering the bid set: a signed contract for a governmental client, or Form ST-119.1 for another exempt organization — either relieves you of the burden of proving the sale was exempt.

Accountants and tax professionals

A clean illustration of how a professional-services firm can simultaneously be a nontaxable service provider AND a taxable vendor of tangible personal property within the same client engagement, as long as the two charges are genuinely separate and the tangible item isn't required to be purchased from the firm.

Common questions

Q: Is an architectural firm's design fee subject to New York sales tax?
A: No — architectural and engineering services aren't enumerated taxable services.

Q: Are separately-charged printed bid set copies taxable?
A: Yes, as an ordinary sale of tangible personal property, unless the client qualifies for an exemption.

Q: Can the firm buy the printing tax-free from its own printer?
A: Yes, using a Resale Certificate (Form ST-120), since it's reselling the copies to its client rather than consuming them itself.

Q: Can another architecture or engineering firm rely on this Advisory Opinion?
A: No. It binds the Department only for the petitioner and facts described; another firm's billing and printing arrangement should be checked independently.

Citations and references

Statutes and regulations:

• Tax Law §§ 1101(b)(4)(i), (5), (8); 1105(a), (c); 1116(a); 1131; 1132(a), (c)(1); 1139(a)
• 20 NYCRR 526.6(c); 529.2(b)(2); 529.3(b)(2); 532.1(b); 541.3(d)(2)(v)

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_42s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-05(42)S
Sales Tax
December 5, 2005

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

PETITION NO. S050527A

On May 27, 2005, the Department of Taxation and Finance received a Petition for
Advisory Opinion from LaBella Associates, P.C., 300 State Street, Rochester, New York, 14614.
Petitioner, LaBella Associates, P.C., provided additional information pertaining to the Petition on
September 19, 2005.
The issue raised by Petitioner is whether purchases and sales of certain printing services
are subject to sales tax.
Petitioner submits the following facts as the basis for this Advisory Opinion.
Petitioner is an engineering and architectural firm engaged in project design for various
clients. Most of Petitioner’s clients are, for sales tax purposes, exempt organizations or exempt
governmental entities. Typically, at the conclusion of the planning process, Petitioner’s clients
are provided with an original set of blueprints (final working drawings) as a part of Petitioner’s
engineering or architectural service. The final working drawings are produced by Petitioner in­
house and are delivered to the client. Petitioner then engages a third party printer to reproduce
copies of the final working drawings. These copies of the final working drawings are used by
Petitioner’s clients to solicit competitive bids from contractors for projects outlined in the
drawings. Multiple copies of the final working drawings are necessary because these copies
(referred to collectively as the bid set) are distributed by Petitioner’s clients to all qualified
contractors interested in bidding on the project described in the final working drawings.
Petitioner’s contracts with exempt organizations or governmental entities generally
contain a provision that requires Petitioner to provide a maximum number of copies in the bid
set. Petitioner charges its clients separately for the bid set and for the architectural/engineering
fee which includes the final working drawings. Petitioner charges its client at Petitioner’s cost
for the bid set. The client determines the number of copies to be reprinted in the bid set and the
location to which they are to be delivered. Petitioner’s charges for the bid set vary depending on
the number of pages per copy and the number of copies in the bid set requested by the client.
These clients are free to purchase a bid set directly from a printer of their choice without
purchasing the bid set from Petitioner.
Contracts with Petitioner’s nonexempt clients generally do not contain language calling
for a bid set, but these clients often ask Petitioner to order a bid set on their behalf once the
project is designed. Clients may, if they wish, enter into their own contracts with a printer for
bid sets.

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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:
*

*

*

(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. . . .
*

*

*

(5) Sale, selling or purchase. Any transfer of title or possession or both, exchange
or barter, rental, lease or license to use or consume . . . 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.
*

*

*

(8) Vendor. (i) The term "vendor" includes:
(A) a person making sales of tangible personal property or services, the receipts
from which are taxed by this article; . . .
Section 1105 of the Tax Law provides, in part:
Imposition of sales tax - - . . . there is hereby imposed and there shall be
paid a tax . . . upon:
(a) The receipts from every retail sale of tangible personal property, except as
otherwise provided in this article.

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Section 1105(c) of the Tax Law imposes tax on receipts from the sale, except for resale,
of certain enumerated services.
Section 1116(a) of the Tax Law provides for exemption from the sales and compensating
use taxes with respect to purchases by New York State governmental entities, United States
governmental entities, certain nonprofit organizations and other entities who have received
New York State sales tax exempt organization status.
Section 1131 of the Tax Law provides, in part:
Definitions When used in this part IV, (1) "Persons required to collect tax" or
"person required to collect any tax imposed by this article" shall include: every vendor of
tangible personal property or services. . . .
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 . . . to which it applies. If the customer is given any
sales slip, invoice, receipt or other statement or memorandum of the price . . . 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 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 and has not expired as provided in section eleven hundred thirty-four, or (ii) the

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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 1139(a) of the Tax Law provides, in part:
In the manner provided in this section the tax commission shall refund or credit
any tax, penalty or interest erroneously, illegally or unconstitutionally collected or paid if
application therefor shall be filed with the tax commission (i) in the case of tax paid by
the applicant to a person required to collect tax, within three years after the date when the
tax was payable by such person to the tax commission as provided in section eleven
hundred thirty-seven . . . Such application shall be in such form as the tax commission
shall prescribe. . . .
Section 526.6 of the Sales and Use Tax Regulations provides, in part:
Retail sale. (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.
*

*

*

(c) Resale exclusion. (1) Where a person, in the course of his business operations,
purchases tangible personal property or services which he intends to sell, either in the
form in which purchased, or as a component part of other property or services, the
property or services which he has purchased will be considered as purchased for resale,
and therefore not subject to tax until he has transferred the property to his customer.
(2) A sale for resale will be recognized only if the vendor receives a properly
completed resale certificate. . . .
*

*

*

(7) Tangible personal property purchased for use in performing a service not
subject to tax is not purchased for resale.
Example 10: A shoe repairman purchases leather to be used for resoling
shoes. His purchase of the leather is not a purchase for resale, even though
the leather will be transferred to the customer in connection with the
performance of the service because the service he is performing is not
taxable.

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Section 529.2(b)(2) of the Sales and Use Tax Regulations provides:
New York State governmental entities as purchasers, users, consumers, occupants
or patrons must exercise their right to exemption through the issuance of governmental
purchase orders or the appropriate exemption document.
Section 529.3(b)(2) of the Sales and Use Tax Regulations provides:
United States governmental entities as purchasers, users, consumers, occupants or
patrons must exercise their right to exemption through the issuance of governmental
purchase orders or the appropriate exemption document.
Section 532.1(b) of the Sales and Use Tax Regulations provides, in part:
Statement of and reference to tax. (1) Whenever 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.
(2) Whenever the sales and use tax is separately stated on such document, it may
be referred to as tax.
(3) The words tax included or words of similar import, on a sales slip or other
document, do not constitute a separate statement of the tax, and the entire amount
charged is deemed the sales price of the property sold or services rendered.
Section 541.3(d)(2)(v) of the Sales and Use Tax Regulations provides, in part:
Documents. (a) If the customer is a governmental entity, copies of signed
contracts and government purchase orders are sufficient evidence to establish the exempt
status of the job between the governmental entity and the prime contractor. With respect
to the documents required between a prime contractor and the subcontractors, a signed
document between them which identifies the project, location, and exempt owner, will
form the basis for tax exemption of tangible personal property purchased for
incorporation into the exempt project. When purchasing such tangible personal property
for the exempt project, the contractor or subcontractor will issue a properly completed
contractor exempt purchase certificate to the supplier.
Opinion
Petitioner’s architectural and engineering services are not services enumerated in section
1105 of the Tax Law and receipts from the sale of these services are not subject to sales tax.
However, all purchases of tangible personal property and taxable services used or consumed by

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Petitioner in providing its architectural and engineering services are subject to sales tax. See
section 526.6(c)(7) of the Sales and Use Tax Regulations.
Petitioner provides a "bid set" (printed copies of the final working drawings) to its clients
who have requested it either as part of their contract with Petitioner or after the contract for
design services is completed. Clients are free to obtain their bid set directly from a printer of
their choice and are not required to purchase the bid set from Petitioner. Petitioner charges its
client separately for the bid set. Petitioner’s charges to its clients for bid sets are its cost of
having the bid sets printed.
Based on the facts in this Opinion, Petitioner is considered to be making sales to its
clients of tangible personal property in the form of printed matter that are separate from its sales
of architectural and engineering services. Accordingly, Petitioner is a vendor of tangible
personal property for sales tax purposes. See section 1101(b)(8) of the Tax Law. Petitioner’s
sales of such tangible personal property are subject to the sales tax imposed by section 1105(a) of
the Tax Law, unless otherwise exempt.
Petitioner is required to collect sales tax from its client on sales of the bid set unless the
client qualifies as an exempt organization or governmental entity under section 1116(a) of the
Tax Law. Where Petitioner’s client is an exempt governmental entity, a copy of the signed
contract with such entity received by Petitioner within 90 days of delivery of the bid set will be
sufficient to relieve Petitioner of the burden of proving the exempt status of the sale of the bid
set. See sections 529.2(b)(2), 529.3(b)(2) and 541.3(d)(2)(v) of the Sales and Use Tax
Regulations. If Petitioner’s client is an exempt organization other than a governmental entity, a
properly completed Exempt Organization Exempt Purchase Certificate (Form ST-119.1)
received by Petitioner within 90 days of delivery of the bid set will be sufficient to relieve
Petitioner of the burden of proving the exempt status of the sale of the bid set. See section
1132(c)(1) of the Tax Law. If Petitioner’s client is not otherwise exempt from sales tax,
Petitioner is required to collect the sales tax on the charges shown on its bill, invoice or contract
for the bid set. The sales tax must be stated, charged and shown separately on the first of such
documents given to the client. See section 1132(a)(1) of the Tax Law and section 532.1(b) of the
Sales and Use Tax Regulations.
Since Petitioner is making sales of bid sets to its clients, Petitioner may purchase the bid
sets without the payment of sales tax as purchases for resale. Petitioner should provide the
printer of the bid sets with a properly completed Resale Certificate (Form ST-120) within 90
days of the delivery of the bid sets in order to relieve the printer of the burden of proving the
exempt status of the sale of the bid sets. See section 1101(b)(4)(i) of the Tax Law and section
526.6(c) of the Sales and Use Tax Regulations. If Petitioner has paid tax on its purchase of bid
sets purchased for resale, it may claim a credit or refund on its periodic sales tax return for such
sales tax paid. Such credit or refund must be claimed within three years of the due date of the

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sales tax return on which the tax was paid or payable by the printer of the bid sets. See section
1139(a) of the Tax Law.

DATED: December 5, 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.