Can a charter fishing boat operator buy its boats, fuel, and supplies exempt as commercial fishing, and are its charter fees taxable admissions?

Plain-English summary

Deep Water Fleet, Inc. operates a charter fishing boat that, for a fee, takes groups of people deep-sea fishing; it also fishes during the charters and sells its own catch at the dock, though that income is minor compared with the charter fees. It claimed its activity is commercial fishing and that its purchases of boats, fuel, maintenance, and supplies should be exempt, pointing to federal rulings that group charter boats with the fishing industry.

The Department rejected every exemption theory — the purchases are taxable — but held the charter fees themselves are exempt.

• Not farming (§ 1115(a)(6)). Farming means raising stock, crops, etc. (20 NYCRR 528.7). Deep Water Fleet doesn't raise fish for sale, so no farming exemption.
• Not interstate/foreign commerce (§ 1115(a)(8)). That exemption covers commercial vessels engaged in interstate or foreign commerce — transporting persons or property for compensation between states or countries (20 NYCRR 528.9). Deep Water Fleet does not, so no exemption.
• Not extraction (§ 1115(a)(12) / § 1105-B). These exempt machinery/equipment used directly and predominantly in producing property for sale by extracting — which can apply to commercial fishermen extracting fish for sale. But Deep Water Fleet is predominantly engaged in providing its boat to paying customers for sport fishing, not in extracting fish for sale, so no exemption.
• Result on purchases. Failing every exemption, its purchases (boats, fuel, maintenance, supplies) are taxable under §§ 1105(a) and 1105(c)(3), other than purchases for resale.
• But the charter fee is an exempt participant admission. Section 1105(f)(1) taxes admission charges to a place of amusement except charges "for admission to, or use of, facilities for sporting activities in which such patron is to be a participant." The charge for use of the fishing boat is deemed an admission to a sporting facility in which the patron is a participant, and is therefore exempt from tax.

What this means for you

"Charter fishing" is sport fishing, not commercial fishing, for New York sales tax. A true commercial fisherman extracting fish for sale can reach the extraction exemption for boats and gear. A charter operator whose real business is selling fishing trips cannot — its boats, fuel, and supplies are taxable purchases.

Selling a little of your catch doesn't convert the business. What matters is what you're predominantly doing. Minor dockside catch sales don't make a charter operation "commercial fishing."

The fee your customers pay is on the exempt side of the amusement rules. Because the passengers are participants in the sport (not spectators), the charter charge is an exempt participant-sport fee under § 1105(f)(1) — the same principle that exempts batting cages, paintball, and the participatory parts of charter/hunting packages (see TSB-A-85(41)S, 85(46)S/47S, 85(33)S).

Common questions

Q: I run charter fishing trips. Can I buy my boat and fuel tax-free as commercial fishing?
A: No. Charter sport fishing isn't farming, interstate commerce, or extraction of fish for sale, so your boats, fuel, and supplies are taxable (except items you buy for resale).

Q: I sell some of my catch at the dock. Doesn't that make me a commercial fisherman?
A: Not if it's minor. The exemption turns on what you predominantly do — here, providing sport-fishing trips, not extracting fish for sale.

Q: Do I charge my customers sales tax on the charter fee?
A: No. The charge for use of the fishing boat is an exempt admission to a sporting facility in which the customer is a participant under § 1105(f)(1).

Citations and references

Statutes:

• Tax Law § 1105(a), § 1105(c)(3) — tax on retail sales and on maintaining/servicing/repairing tangible personal property
• Tax Law § 1115(a)(6) — farming exemption (raising stock/crops)
• Tax Law § 1115(a)(8) — commercial vessels engaged in interstate or foreign commerce
• Tax Law § 1115(a)(12) / § 1105-B — machinery/equipment used directly and predominantly in production for sale by extracting
• Tax Law § 1105(f)(1) — admissions tax, with an exclusion for facilities for sporting activities in which the patron is a participant

Regulations:

• 20 NYCRR 528.7 (farming), 528.9 (interstate/foreign commerce), 528.13 (predominant use)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1985.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a85_1s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-85 (1)S
Sales Tax
April 5, 1985

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S840702A

On July 2, 1984 a Petition for Advisory Opinion was received from Deep Water Fleet, Inc.,
45 Fairview Road West, Massapequa, New York 11758.
The issue raised is whether the purchase of charter and head boats, fuel and related
maintenance and supplies are exempt from the New York State sales tax.
Petitioner operates a charter fishing boat which, for a fee, provides transportation to groups
of individuals for the purpose of deep sea fishing. Petitioner also fishes during these charters and
sells its catch at the dock. The income from the sale of petitioner's catch is minor compared to the
income from charter fishing. It is the petitioner's contention that its activities constitute commercial
fishing and, therefore, qualify for exemption. Petitioner points to various federal rulings, programs
and procedures which tend to classify charter boats as part of the overall fishing industry as a basis
for exemption.
Section 1105(a) of the Tax Law imposes a sales tax on the receipts from every retail sale of
tangible personal property unless otherwise excluded or exempt.
Section 1105(c)(3) of the Tax Law imposes a sales tax on maintaining, servicing, installing,
or repairing tangible personal property not held for sale in the regular course of business.
Petitioner is subject to the sales tax imposed under section 1105(a) and 1105(c)(3) unless it
qualifies for one of the exemptions to such tax as discussed below.
Point I
Section 1115(a)(6) of the Tax Law provides an exemption from the sales tax for "tangible
personal property for use or consumption directly and predominantly in the production for sale of
tangible personal property by farming . . ."
Regulation section 528.7 defines farming as "raising stock, dairy, poultry, or fur bearing
animals, fruit and truck farming, operating ranches, nurseries, greenhouses, or other similar
structures used primarily for raising of agricultural, horticultural or floriculture commodities and
operating orchards."
Since petitioner does not raise fish or other marine life for sale in a manner which might be
considered farming, petitioner does not qualify for the exemption under section 1115(a)(6) of the
Tax Law.

RODERICK G. W. CHU, COMMISSIONER
TP-8 (3/83)

GABRIEL B. DiCERBO, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

-2­
TSB-A-85 (1)S
Sales Tax
April 5, 1985

Point II
Section 1115(a)(8) of the Tax Law provides an exemption from the sales tax for "commercial
vessels engaged in interstate or foreign commerce and property used by or purchased for the use of
such vessels for fuel, provisions, supplies, maintenance and repairs (other than articles purchased
for the original equipping of a new ship.)"
Regulation section 528.9 states, in part that: "engaged in interstate or foreign commerce
means the transportation of persons or property for compensation between states or countries."
Since petitioner does not transport persons or property for compensation between states or
countries, it is not primarily engaged in interstate or foreign commerce and accordingly does not
qualify for the exemption under section 1115(a)(8) of the Tax Law.
Point III
Section 1115(a)(12) of the tax law provides an exemption from the sales tax for "machinery
or equipment for use or consumption directly and predominantly in the production of tangible
personal property . . . for sale by . . . extracting . . . ." Section 1105(B) of the Tax Law provided for
a gradual withdrawal of the state sales tax on machinery parts, tools and supplies used in the manner
as provided in section 1115(a)(12).
Regulation section 528.13 states, in part that: "Machinery or equipment is used
predominantly if over 50% of its use is directly in the production process."
The exemptions from sales and use tax granted by sections 1115(a)(12) and 1105-B of the
Tax Law are applicable to commercial fishermen's purchases of machinery or equipment (vessels,
etc.) and certain supplies and services when used directly and predominantly in the extracting of fish
for sale.
However, petitioner is not predominantly engaged in the extraction of fish for sale, but rather
is predominantly engaged in providing the use of its boat to paying customers for the purpose of
sports fishing. Accordingly, petitioner does not qualify for the exemption under section 1115(a)(12)
of the Tax Law.
Accordingly, since it fails to meet the criteria for any of the aforementioned exemptions,
petitioner is liable for the payment of sales tax on its purchases, (other than purchases for resale).

-3­
TSB-A-85 (1)S
Sales Tax
April 5, 1985

Additionally, it should be noted that section 1105(f)(1) of the Tax Law imposes a sales tax
on "any admission charge to or for the use of any place of amusement . . . except charges to a patron
for admission to, or use of, facilities for sporting activities in which such patron is to be a
participant . . . ." Petitioner's charge to its customers for use of its fishing boat is deemed to be an
admission to a sporting facility in which the patron is a participant and is exempt from tax in
accordance with section 1105(f)(1) of the Tax Law.

DATED: March 15, 1985

s/FRANK J. PUCCIA
Director
Technical Services Bureau

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.