If an airport parking company also drives customers to and from the airport, can it split its charge into a taxable parking portion and a separate, nontaxable transportation portion?

Plain-English summary

Airport Parking Management, Inc. runs a parking facility near Albany International Airport and shuttles its parking customers to and from the terminal. It proposed billing each parking customer as if 25% of the charge were for parking (taxable) and 75% were for transportation (not taxable), and collecting sales tax only on the 25% "parking" slice.

The Department said no. New York taxes "providing parking, garaging or storing for motor vehicles" under Tax Law § 1105(c)(6). Transportation services by themselves aren't on the list of taxable services — but that only matters if transportation is genuinely sold separately. Here it wasn't: customers who use the parking facility have no reason to use the shuttle unless they're also parking, and the company never offered to sell parking alone without the shuttle. Because the two were never independently for sale, the Department treated the whole thing as one integrated parking service, fully taxable on the entire receipt. The Department added that even if it weren't a single integrated service, an after-the-fact percentage allocation (as opposed to genuinely separate, independently-priced services) wouldn't create a nontaxable slice anyway, citing its own earlier ruling on the same kind of allocation, Allright New York Parking, Inc.

Two other services the same company ran — shuttling hotel/motel guests without parking, and shuttling mall employees without parking, both billed monthly to the hotel or mall rather than per-rider — were not decided in this opinion because they weren't the transportation-allocation issue at hand.

What this means for you

Airport, hotel, and other parking-lot operators

If you offer a shuttle as part of a parking package and don't sell parking without it, you can't carve out a percentage of your charge as "transportation" to avoid tax. The full charge is a taxable parking receipt. To have a genuinely separate, nontaxable transportation charge, you'd need to actually offer and price transportation as an independent service that customers can buy without parking.

Businesses that bundle a taxable and a nontaxable service

This is a recurring New York principle: an after-the-fact percentage split doesn't create tax savings unless the two services are truly and independently sold with their own separately established charges. Simply labeling part of a single bundled fee as "nontaxable" doesn't work.

Accountants and tax professionals

Watch for the same fact pattern anywhere a vendor bundles a taxable enumerated service (here, § 1105(c)(6) parking) with an untaxed service. The test is whether the untaxed piece is independently offered for sale with its own established price — not whether the vendor can justify a reasonable-sounding percentage after the fact.

Common questions

Q: Can I reduce my sales tax by allocating part of a bundled charge to a nontaxable service?
A: Only if that nontaxable service is genuinely and independently offered for sale, with its own separate, established price — not merely assigned a percentage of one combined charge.

Q: Does this mean all airport shuttle services are taxable?
A: No. Free-standing transportation services, sold and priced on their own (not tied to parking), aren't on New York's list of taxable enumerated services. The problem here was that the shuttle was never sold apart from parking.

Q: Can I rely on this ruling for my own parking/shuttle business?
A: No. This Advisory Opinion binds the Department only with respect to Airport Parking Management, Inc. and the facts it described. Your own pricing structure and how independently you actually sell each service will control your result.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(3) (definition of "receipt")
• Tax Law § 1105(c)(6) (tax on providing parking, garaging, or storing motor vehicles)
• 20 NYCRR 526.5(a) (definition of "receipt")

Prior opinions cited:

• Allright New York Parking, Inc., Adv Op Comm T&F, July 26, 2002, TSB-A-02(41)S

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_5s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-08(5)S
Sales Tax
January 22, 2008

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

PETITION NO. S061127B

On November 27, 2006, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Airport Parking Management, Inc., P. O. Box 271835, West Hartford,
Connecticut 06127.
The issue raised by Petitioner, Airport Parking Management, Inc., is whether certain
proposed charges for transportation of customers to and from Petitioner's parking facility and
Albany International Airport constitute separate charges for nontaxable transportation service.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner’s business is located near Albany International Airport (the “Airport”).
Petitioner provides parking and transportation services to its customers. The categories of service
include, but are not limited to:
(1) providing parking for travelers who use the Airport and providing transportation from
Petitioner’s facility to the Airport and back.
(2) providing transportation to and from the Airport for travelers who are staying in local
hotels and motels and who do not need parking services; and
(3) providing shuttle transportation services for shopping mall employees at area
shopping malls (but not to and from the Airport) during the holiday season, without providing
parking services for them.
Customers who purchase Petitioner’s parking services in category (1) are provided with
parking facilities during the time that those customers are away on travel. Petitioner also
provides these customers with transportation to and from the nearby Airport. Neither parking
nor transportation is independently offered for sale by Petitioner to these customers.
Petitioner proposes to charge its customers in category (1) based upon an allocation of
25% of its charges for parking and 75% of its charges for transportation. Petitioner proposes to
collect sales tax on the charges allocated to parking but not on the charges allocated to
transportation.
The category (2) services, providing transportation to and from the Airport without
parking for travelers who are staying in local hotels and motels and, thus, do not need parking
services, are charged to the hotel or motel directly on a monthly basis and not to any individual
on a per occurrence basis. The category (3) services, providing shuttle transportation services
without the provision of parking services to employees at area shopping malls during the holiday

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TSB-A-08(5)S
Sales Tax
January 22, 2008

season, are charged to the shopping malls directly on a monthly basis and not to any individual
on a per occurrence basis.
Only the charges made on a per transaction basis to customers who are provided parking,
as described in the category (1) services, are at issue in this Advisory Opinion.
Applicable law and regulations
Section 1101(b)(3) of the Tax Law provides, in part:
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. . . .
Section 1105(c) of the Tax Law imposes the sales tax upon receipts from the sales, except
sales for resale, of certain enumerated services.
Section 1105(c)(6) of the Tax Law provides, in part, for the imposition of sales tax on
parking as follows:
Providing parking, garaging or storing for motor vehicles by persons operating a
garage (other than a garage which is part of premises occupied solely as a private one or
two family dwelling), parking lot or other place of business engaged in providing
parking, garaging or storing for motor vehicles provided, however, this paragraph shall
not apply to such facilities owned and operated by a public corporation, as defined by
section sixty-six of the general construction law, other than a public benefit corporation,
as defined by such section sixty-six, created by interstate compact or at least half of
whose members are appointed by the governor, or any agency or instrumentality of a
municipal corporation or district corporation as defined by such section sixty-six. . . .
Section 526.5(a) of the Sales and Use Tax Regulations provides, in part:
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 . . . .

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TSB-A-08(5)S
Sales Tax
January 22, 2008

Opinion
Petitioner is a vendor of the service of providing parking or garaging of motor vehicles.
Such service is subject to sales tax under section 1105(c)(6) of the Tax Law. Petitioner’s parking
facility provides parking service to customers of Albany International Airport (the “Airport”)
during the time that those customers are traveling. Petitioner also provides those customers with
transportation to and from the nearby Airport. Transportation services are not included among
the enumerated services subject to sales tax under section 1105(c) of the Tax Law. However,
such customers in the present case have no reason to avail themselves of Petitioner’s
transportation if they are not utilizing Petitioner’s parking facility. In addition, Petitioner has not
indicated that it ever charges its customers solely for parking services without including
transportation to and from the Airport. Therefore, Petitioner’s charge for parking and shuttle
service to customers who use Petitioner's parking facility is a charge for the integrated service of
parking or garaging motor vehicles and shuttling its customers to the Airport and back.
It should be noted that even if Petitioner's airport parking service were not a single
integrated service, Petitioner's proposed allocation based on 75% of the total amount paid by the
customer fails to reflect separate sales of parking and transportation services that have separate
established charges. See Allright New York Parking, Inc., Adv Op Comm T & F, July 26, 2002,
TSB-A-02(41)S for a discussion of a similar percentage allocation of fees.
The facts presented by Petitioner in this case do not support its claim that transportation
service is separately sold to the customers of Petitioner's parking facility. Neither parking nor
transportation service is independently offered for sale to such customers. Accordingly,
Petitioner's purported charge for transportation services is merely part of the receipt for
Petitioner's parking services that are subject to sales tax under section 1105(c)(6) of the Tax
Law. See section 1101(b)(3) of the Tax Law. Therefore, Petitioner is charging its customers
who use its parking facility a taxable charge for parking or garaging motor vehicles and is liable
for and must collect tax on the entire receipt. See Allright New York Parking, Inc., supra.

DATED: January 22, 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.