When a photo studio ships finished photographs, does New York sales tax depend on where they're delivered — including when out-of-state clients have them dropped at a New York address first?

Plain-English summary

A CPA asked, on behalf of a New York City photography studio, whether finished photographs delivered to various locations are subject to New York sales tax. The studio has three delivery patterns:

1. Out-of-state client, shipped out of state by postal courier.
2. Out-of-state client, delivered first to a New York City address the client specifies, for later transmittal via intercompany mail to the non-New York location.
3. New York client, delivered to a New York location.

The Department applied the destination-tax rule (20 NYCRR 525.2(a)(3)) — the point of delivery controls the tax incidence and rate:

• Situation 1 — no tax. When the studio ships the photos out of state to a non-New York purchaser via postal courier, no sales tax is collected because the purchaser takes possession outside New York.
• Situation 2 — taxable New York sale. Delivery to the client's designee within New York is a New York sale notwithstanding the photos' later removal from the state (F. & M. Schaefer Brewing Co. v. Gerosa; Savemart v. State Tax Commission; Seafarer Fiberglass Yachts). The studio must collect tax unless the purchaser presents a proper exemption document, such as an Exempt Organization Certificate (Form ST-119.1).
• Situation 3 — taxable unless resale/exempt. Delivery to a New York client in New York is taxable; the studio should collect tax unless the purchaser presents a proper exemption document, such as a Resale Certificate (Form ST-120).
• Amount and rate. In situations 2 and 3, tax applies to the total amount charged (Victor La Sala), at the state rate plus the local rate where delivery is made.

What this means for you

Where you hand over the photos decides the tax — not where the client is based. Shipping to an out-of-state customer is untaxed, but dropping the work at a New York address makes it a taxable New York sale, even for an out-of-state client and even if the photos are forwarded out of state afterward.

A New York drop-off doesn't escape tax by being "just a way station." The Department treats delivery to the client's New York designee as the taxable event; the subsequent intercompany transfer out of state doesn't undo it. If the sale is genuinely exempt, get the right certificate at the time of sale.

Charge on the full price at the delivery-location rate. Tax applies to the total amount charged, using the state rate plus the local rate in effect where you deliver.

Common questions

Q: We ship photos to an out-of-state client out of state. Do we charge New York tax?
A: No. The purchaser takes possession outside New York, so no New York sales tax applies.

Q: An out-of-state client has us deliver to their New York office first. Taxable?
A: Yes. Delivery to the client's designee in New York is a taxable New York sale, even though the photos are later transmitted out of state — unless the client provides a proper exemption document.

Q: What rate do we use and on what amount?
A: The state rate plus the local rate where delivery is made, applied to the total amount charged for the photographs.

Citations and references

Statutes and regulations:

• Tax Law § 1105(a) — taxes the receipts from every retail sale of tangible personal property
• 20 NYCRR 525.2(a)(3) — New York sales tax is a "destination tax"; the delivery point controls incidence and rate

Cases and determinations cited:

• F. & M. Schaefer Brewing Co. v. Gerosa, 4 N.Y.2d 423 (1958)
• Savemart v. State Tax Commission, 105 A.D.2d 1001 (1984)
• In the Matter of Seafarer Fiberglass Yachts, Inc., 474 F. Supp. 1097 (1979)
• Victor La Sala, Advisory Opinion of the State Tax Commission, Oct. 7, 1981, TSB-A-81(41)S — tax on the total amount charged

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1987.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a86_48s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-86(48)S
Sales Tax
December 4, 1986

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S860805A

On August 5, 1986, a Petition for Advisory Opinion was received from Bruce
MacCorkindale, CPA, 301 Riviera Drive South, Massapequa, New York 11758.
The issue raised is whether finished photographs delivered by a photography studio to various
locations within and without New York State as specified by the purchaser are subject to New York
sales tax.
Petitioner's client is a corporation located in New York City. The corporation's only business
is that of a photography studio.
The corporation is involved in three different types of sale and delivery transactions involving
New York and non-New York clients.
1.

Sale to a non-New York State client whereby the finished photographs are shipped
to the client outside of the state via a postal courier.

2.

Sale to a non-New York State client whereby the finished photographs are delivered
to a New York City location specified by the client for eventual transmittal via
intercompany mails to the non-New York location.

3.

Sale to a New York State client whereby the finished photographs are delivered to
a New York State location.

Section 1105(a) of Article 28 of the Tax Law imposes a tax on "the receipts from every retail
sale of tangible personal property, except as otherwise provided in this article." The Sales and Use
Tax Regulations provide that "The sales tax is a "destination tax," that is, the point of delivery or
point at which possession is transferred by the vendor to the purchaser or its designee controls both
the tax incident and tax rate." 20 NYCRR 525.2(a)(3).
In the first of these situations, the corporation ships the finished photographs out of New
York State to a non-New York purchaser via a postal courier. No sales tax should be collected on
such sale because the purchaser takes possession of the goods outside of New York State.
The second situation involves the delivery of the finished photographs to clients or clients'
designees within New York State for eventual transmittal via intercompany mails to a non-New York
location. Such sales are New York sales notwithstanding the subsequent removal of the photographs
from New York. F. & M. Schaefer Brewing Co. v. Gerosa, 4 NY2d 423 (1958); Savemart v. State
Tax Commission, 105 AD2d 1001 (1984); In the Matter of Seafarer Fiberglass Yachts, Inc. 474 F.
Supp. 1097 (1979).
RODERICK G. W. CHU, COMMISSIONER
TP-8 (3/83)

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

-2­
TSB-A-86(48)S
Sales Tax
December 4, 1986

Accordingly, the photography studio is required to collect sales tax on all such sales unless
the purchaser presents a properly completed exemption document, such as an Exempt Organization
Certificate (Form ST-119.1).
The third situation involves the sale and delivery of the finished photographs to clients in
New York State. Under these circumstances, the photography studio should collect sales tax unless
the purchaser presents a properly completed exemption document, such as a Resale Certificate (Form
ST-120).
It should be noted that in the second and third situations above, sales tax is applicable to the
total amount charged by the photography studio. Victor La Sala Advisory Opinion of the State Tax
Commission, October 7, 1981, TSB-A-81(41)S. The applicable rate of sales tax to be collected is
the State rate plus the local sales tax imposed by the locality in which delivery is made.

DATED: December 4, 1986

s/FRANK J. PUCCIA
Director
Technical Services Bureau

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