My client rents portable storage units and separately offers an optional transportation service to move the loaded unit to a new location, billed separately whether under the standard rental agreement or a standalone transportation contract -- is that optional moving fee taxable?

Plain-English summary

KPMG LLP petitioned on behalf of its client "ABC," which manufactures and rents portable storage units — an alternative to traditional mini-storage or a tool for household/business moves. ABC generally rents units short-term, either at the customer's site or in ABC's own warehouses, charging rental fees plus pickup/delivery charges; storing a unit in ABC's warehouse triggers an additional warehouse-use fee. Separately, ABC offers transportation services — moving the customer's goods (local or long-distance) to a new location — for an additional, optional fee based on the number of units and mileage. Under ABC's standard "Rental Agreement" (the "Current Agreement"), this optional transportation fee is a separately stated line item that doesn't affect the base monthly rental. ABC was also considering bifurcating this arrangement: keeping the Rental Agreement solely for the storage-unit rental and related charges, while spinning the transportation service into its own standalone "Transportation Service Agreement" that customers sign only if they want to use it — with the fee calculated the same way (units and mileage) either way.

KPMG asked whether the optional transportation fee is taxable under either structure — the bundled Current Agreement, or the bifurcated separate Transportation Service Agreement.

The Department held the transportation fee is untaxed either way, while confirming which of ABC's other charges are taxable:

• ABC's basic rental fee for the storage unit is taxable as a rental of tangible personal property.
• ABC's pickup and delivery charges for an empty unit (to and from the customer's location) are taxable as part of the receipts from that same taxable rental.
• ABC's warehouse storage fee is taxable as a storage service, and the pickup/delivery charges for moving a unit (empty or loaded) between the customer's location and ABC's warehouse in connection with that storage service are likewise taxable as part of the storage receipts.
• But ABC's optional transportation service fee — moving the loaded unit's contents from one customer-designated location to another, separate and apart from any warehouse storage — is not one of the services New York's sales tax law enumerates as taxable (Tax Law §1105(c)). General transportation service is simply not on the taxable list, consistent with the regulations' household-mover examples (an ordinary moving company's transportation charges aren't taxable, and neither is a delivery service's per-package delivery fee). Because the fee is optional, reasonably tied to distance and unit count, and separately stated on the invoice, it stays untaxed regardless of whether it's offered under the bundled Current Agreement or split off into its own standalone Transportation Service Agreement — the corporate paperwork structure doesn't change the underlying tax character of a genuine transportation charge.

What this means for you

Portable storage, moving, and similar rental-plus-transport businesses

The core distinction is: charges tied to the rental/pickup/delivery of the empty container, or to warehouse storage of a loaded one, are taxable. But a genuinely separate, optional transportation charge to move the customer's goods from one place to another — priced by distance/volume and separately stated — is untaxed general transportation service, whether it's part of your standard agreement or a standalone add-on contract.

Businesses restructuring bundled services into separate agreements

Splitting an already-untaxed optional service (like transportation here) into its own standalone agreement doesn't change its tax treatment if the service itself and its pricing stay the same — the Department looks at the substance of the charge, not which contract document it's written into.

Accountants and tax professionals

This opinion is a clean companion to the broader "general transportation service isn't enumerated under §1105(c)" line of authority — useful whenever a client's rental/storage business also offers moving/hauling as a genuinely separate, optional, separately-priced service.

Common questions

Q: Is the rental fee for a portable storage container taxable in New York?
A: Yes — it's taxed as a rental of tangible personal property, along with the pickup/delivery charges for the empty container and any warehouse storage fee.

Q: Is an optional fee to have the storage company move my loaded container to a new location taxable?
A: No, as long as it's a genuinely optional, separately stated charge reasonably based on distance and number of units — general transportation service isn't on New York's list of taxable services.

Q: Does it matter whether the moving fee is part of my rental contract or a separate transportation agreement?
A: No — the Department found the same untaxed result under either structure, since the underlying service and its pricing don't change.

Q: Does this ruling apply to my storage/moving business?
A: Not automatically. This is an Advisory Opinion binding only on the petitioner and only as to the facts it described. Your specific billing structure and pricing basis may differ.

Citations and references

Statutes and regulations:

• Tax Law §1101(b)(3) (definition of "receipt")
• Tax Law §1101(b)(5) (definition of "sale, selling or purchase")
• Tax Law §1105(a) (tax on tangible personal property)
• Tax Law §1105(c)(4) (tax on storing tangible personal property)
• Sales and Use Tax Regulations §526.5(g) (shipping/delivery/pickup charges as part of taxable receipt; transportation-only charges not taxable)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2008.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a08_49s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Taxpayer Guidance Division

TSB-A-08(49)S
Sales Tax
November 6, 2008

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S080108A

On January 8, 2008, the Department of Taxation and Finance received a Petition for
Advisory Opinion from KPMG LLP, ℅ Dennis C. Prestia, 345 Park Avenue, New York,
New York 10154.
The issues raised by Petitioner, KPMG LLP, are:
1.

Whether the optional transportation services fee charged by ABC under the Current
Agreement is subject to New York sales and use tax.

2.

Whether the optional transportation services fee charged by ABC under the
Transportation Service Agreement is subject to New York sales and use tax.

Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner's client, hereinafter ABC, manufactures and rents portable storage units to the
public for use as an alternative means of storage for the mini-storage market or as an alternative
means for customers to conduct physical moves of household or business goods.
ABC generally provides short-term rentals of portable storage units either at the
customer’s site or in ABC’s warehouses. ABC provides pickup and delivery service of the
storage units. ABC charges the customer rental fees for the lease of storage units, as well as
charges for picking up and delivering the storage units either to the customer’s site or to ABC’s
warehouses. If the customer chooses to store the storage units in ABC’s warehouse, the customer
will be liable for an additional fee for the use of ABC’s warehouse.
In addition to the rental of the storage units, ABC also provides transportation services to
move the customer’s goods to another location. ABC’s transportation services include both local
and long distance moves. In the event the customer decides to avail itself of ABC’s
transportation services, the customer will be charged, in addition to the rental/delivery/pickup
charges, a transportation service charge based upon the number of storage units and a mileage
fee. The transportation service fee is an optional charge elected by the customer.
ABC’s standard agreement used with all customers is titled “Rental Agreement”
(hereinafter known as the “Current Agreement”) for the lease or rental of storage units. Under
the Current Agreement, ABC leases to the customer the storage unit for a monthly rental fee. The
Current Agreement also provides that the customer will pay ABC an additional fee for the
delivery or retrieval of the storage units to or from the customer’s location. In cases where the

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Sales Tax
November 6, 2008

customer elects to contract with ABC for transportation services, the Current Agreement
provides that an additional fee may be incurred in connection with moving the contents of the
storage unit(s) from one location to another. The monthly rental fee is unaffected by the
transportation service fee. In all instances, the optional transportation service fee is a separately
stated charge on ABC’s invoice to the customer.
As an alternative to the Current Agreement, ABC is proposing to bifurcate the
transportation service from the rental of the storage unit. Under this proposal, the Current
Agreement will be maintained by ABC solely for the rental of the storage unit and related
charges (i.e., delivery/pick-up fees, warehouse fee). If the customer chooses to avail itself of
ABC’s transportation services, a separate transportation service agreement (“Transportation
Service Agreement”) will be executed. Under the Transportation Service Agreement, the
customer will separately contract with ABC to move its goods to another location. As under the
Current Agreement, the transportation service fee will be calculated based upon the number of
storage units to be transported and a mileage 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 . . . 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
or transportation, transmission, or distribution 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. . . .
*

*

*

(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

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Sales Tax
November 6, 2008

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.
Section 1105(a) of the Tax Law imposes sales tax on the receipts from every retail sale of
tangible personal property, except as otherwise provided.
Section 1105(c)(4) of the Tax Law imposes sales tax on the receipts from every sale,
except for resale, of the following services:
Storing all tangible personal property not held for sale in the regular course of business
and the rental of safe deposit boxes or similar space.
Section 526.5(g) of the Sales and Use Tax Regulations provides, in part:
(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.
(2) A charge by a vendor to its customer for the cost of transportation of the
property from a supplier, manufacturer, warehouse or catalog or other distribution point
to the vendor’s place of business is also part of the vendor’s receipt from the sale of the
property to the customer subject to tax, whether the charge is designated as
transportation, shipping, handling or in some other manner.
(3) A charge for transporting or delivering property by a transportation or delivery
company to the person or business requesting that the property be transported or
delivered is not a receipt subject to tax, since transportation and delivery are not
themselves services subject to tax.
Example 1: A vendor charges his or her customer $15 for transportation of
the customer’s purchases. The purchases are transported from the vendor’s
place of business to the customer’s home in New York. The customer is
billed as follows:

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Sales Tax
November 6, 2008

Purchases
Transportation charges
Total

$100.00
15.00
$115.00

The vendor’s entire receipt of $115 is subject to tax, since it is for the sale
of taxable property, including the vendor’s separately stated portion of the
receipt labeled “transportation.”
Example 2: A vendor charges his or her customer $15 for shipping of the
customer’s purchases. The purchases are drop-shipped from the
manufacturer to the purchaser in New York. The customer is billed as
follows:
Purchases
Shipping
Total

$100.00
15.00
$115.00

The entire $115 is subject to tax, for the same reason as in Example 1.
*

*

*

Example 6: A delivery service company makes available to the general
public an area in its warehouse where customers may drop off packages to
be delivered to persons or businesses in the United States for a fee. The
customer dropping off a package for delivery is required to complete an
invoice stating his or her name and address, the name and address where
such package is to be delivered, and the contents and value of the package.
The delivery service company charges a fee to the customer for delivering
the package. This fee is based on the weight and value of the package and
the distance it is to be delivered. The company’s charge to the customer
for shipping the package is not subject to sales tax. This is purely a
transportation service, which is not a taxable service.
Example 7: The ABC Moving Company transports household goods for
homeowners from one place to another, as well as business property
owned by businesses moving from one place to another. ABC’s charges
to its household or business customers to move their property are not
subject to tax, since transportation of goods, as such, is not itself a taxable
service.

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Sales Tax
November 6, 2008

Opinion
ABC manufactures and rents portable storage units to the public for use as an alternative
means of storage for the mini-storage market or as an alternative means for customers to conduct
physical moves of household or business goods. ABC provides pickup and delivery service of
the storage units. ABC charges the customer rental fees for the lease of storage units, as well as
charges for picking up and delivering the storage units either to the customer’s site or to ABC’s
warehouses. If the customer chooses to store the storage units in ABC’s warehouse, the customer
will be liable for an additional fee for the use of ABC’s warehouse.
ABC’s charges for the rental of a storage unit are subject to sales tax as a rental or
purchase of tangible personal property. See sections 1101(b)(5) and 1105(a) of the Tax Law.
ABC’s charges for delivery of the empty storage unit to the customer’s location and for return of
the empty storage unit to ABC are subject to sales tax as a part of the taxable receipts from
ABC’s sales or rentals of the tangible personal property. See section 1101(b)(3) of the Tax Law
and section 526.5(g) of the Sales and Use Tax Regulations.
ABC’s fee for the use of space to store the unit in its warehouse is subject to sales tax
under section 1105(c)(4) of the Tax Law. ABC’s charges for delivery and return of the storage
unit (empty or loaded) between the customer’s location and ABC’s warehouse in conjunction
with ABC’s provision of storage services are subject to sales tax as a part of the taxable receipts
from such services. See section 1101(b)(3) of the Tax Law and section 526.5(g) of the Sales and
Use Tax Regulations.
Generally, transportation charges by household movers are not subject to the sales tax. In
this case, ABC generally rents or leases a storage unit to its customer (other than in conjunction
with its provision of storage services). As previously noted, the taxable charges for such rental
or lease include the pickup and return delivery charges. Customers may rent ABC’s portable
storage units (including delivery and pick up) without availing themselves of ABC’s
transportation service. Where the customer does elect to contract with ABC for transportation
services, as provided in the Current Agreement, an additional fee is incurred in connection with
moving the storage unit and its contents from one customer location to another customer
location. This optional transportation service fee is a separately stated charge on ABC’s invoice
to the customer. Transportation services are not enumerated in section 1105(c) of the Tax Law
as a service subject to sales tax. Accordingly, where ABC sells this optional transportation
service to the lessees of its portable storage units and the charges for such services are reasonable
in relation to the service provided (e.g., based upon distance traveled, number of units
transported, etc.), and are separately stated on the bill or invoice rendered to the lessee, such
transportation charges are not subject to sales tax, regardless of whether the transportation

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Sales Tax
November 6, 2008

services are offered in connection with the Current Agreement, or under a separate
Transportation Service Agreement from the rental of the storage unit.

DATED: November 6, 2008

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Taxpayer Guidance Division

An Advisory Opinion is issued at the request of a person or entity. It is
limited to the facts set forth therein and is binding on the Department only
with respect to the person or entity to whom it is issued and only if the
person or entity fully and accurately describes all relevant facts. An
Advisory Opinion is based on the law, regulations, and Department
policies in effect as of the date the Opinion is issued or for the specific
time period at issue in the Opinion.