Are a New York mover's business forms and selling supplies taxable if bought from an out-of-state franchisor and used for interstate moves?

Plain-English summary

Bay Shore Warehouse, Inc. is a New York mover that does local, intrastate, and interstate work. For its interstate operations it runs under a franchise with an out-of-state van line, which requires it to use the van line's forms and selling supplies. Bay Shore buys those from the franchisor, takes delivery in New York, and the franchisor charges no sales tax. Knowing that trucks/tractor-trailers (Tax Law § 1115(a)(22), (26)) and some packing materials (TSB-M-82(22)S) can be exempt, Bay Shore asked whether its forms and selling supplies are exempt too when used for interstate moves.

The Department said no — they're taxable.

• Forms and selling supplies are taxable use in New York. Property used in business conducted from New York locations is not exempt. It doesn't matter that it's shipped in from another state, carried in by the buyer, or accompanies shipments out of state — using it in New York-based operations is "use within this state" (Tax Law § 1101(b)(7), § 1110), so use tax applies.
• Packing material — exempt only under strict conditions. Packing material that becomes the customer's property isn't taxable to the mover only if the mover (1) separately states the packing charge on all customer bills (whatever the destination) and (2) collects tax on that packing charge for moves terminating in New York. The mover then buys such packing exempt with a Resale Certificate (Form ST-120) and may seek a refund of tax paid on packing later resold.
• Packing that stays with the mover is taxable. Packing material that does not become the customer's property is taxable to the mover when purchased.
• Bottom line for Bay Shore: its forms, selling supplies, and non-transferred packing are subject to New York State and local sales/use tax. Untaxed out-of-state purchases must be reported on the sales tax return under "purchases subject to use tax."

What this means for you

"For interstate moves" doesn't make your office supplies tax-free. If you use forms, sales materials, and similar supplies to run a business from a New York location, that's a taxable New York use — regardless of where you bought them or that they travel with out-of-state shipments. Buying from an out-of-state franchisor who doesn't charge tax just means you owe the use tax.

Report your untaxed out-of-state buys. When a supplier (or franchisor) doesn't collect New York tax on taxable supplies, self-assess: list them as "purchases subject to use tax" on your return. Skipping this is a common audit exposure for franchised movers.

Packing materials get a narrow break — follow the conditions exactly. Packing that ends up as the customer's property can be bought for resale (Form ST-120) only if you separately state the packing charge on every bill and collect tax on it for New York-terminating moves. Packing you keep is taxable to you. Get the mechanics right or the exemption doesn't apply.

Common questions

Q: My franchisor ships me forms and sales supplies from out of state and charges no tax. Am I in the clear?
A: No. Using them to run your business from a New York location is a taxable use. You owe New York use tax and must report the untaxed purchases as "purchases subject to use tax."

Q: Aren't my supplies exempt because I use them on interstate moves?
A: No. The trucking exemptions cover trucks/tractor-trailers and (conditionally) certain packing materials — not business forms and selling supplies. Interstate use doesn't exempt them.

Q: How do I handle packing materials?
A: Packing that becomes the customer's property can be bought for resale with Form ST-120, but only if you separately state the packing charge on all bills and collect tax on it for moves ending in New York. Packing you keep is taxable to you when purchased.

Citations and references

Statute, regulation, and memorandum:

• Tax Law § 1105(a) — imposes tax on receipts from every retail sale of tangible personal property; a "retail sale" is a sale for any purpose other than resale (§ 1101(b)(4)(i))
• Tax Law § 1101(b)(7) and § 1110 — the complementary use tax applies to "use within this state" of taxable property on which sales tax wasn't paid; using property in New York-based operations is such a use
• Tax Law § 1101(b)(4)(i)(B) — resale exclusion for property the mover actually transfers to the customer in connection with a taxable service
• TSB-M-82(22)S (Transportation and Related Services Provided by Movers, Aug. 17, 1982) — treatment of packing materials: exempt to the mover only if separately stated on all bills and taxed on New York-terminating moves, purchased with a Resale Certificate (Form ST-120), with refunds available for tax paid on packing later resold; noting trucking exemptions under Tax Law § 1115(a)(22), (26)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1988.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a88_34s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-88(34)S
Sales Tax
June 24, 1988

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S880203A

On February 3, 1988, a Petition for Advisory Opinion was received from Bay Shore
Warehouse, Inc., 265 Marcus Blvd., Smithtown, New York 11787.
The issue raised is whether purchases of forms and selling supplies by a franchisee doing
business in New York State from its out-of-state franchisor are subject to sales or use taxes if they
are used for interstate commerce transactions.
Petitioner, a mover, is engaged in local, intrastate and interstate transportation. The latter
operations are conducted under a franchise agreement with an out-of-state van line who requires
franchisees to use its forms and selling supplies. The franchisor sells these materials to the Petitioner
who takes delivery in New York State. The franchisor does not collect sales tax on such sales.
Aware of certain tax exemptions available to the trucking industry for the purchase or rental
of trucks or tractor-trailers (Tax Law §1115(a) 22 and 26) and packing materials (Technical Services
Bureau Memorandum TSB-M-82(22)S), Petitioner asks whether forms and selling supplies also
qualify for exemption when used for interstate moves.
Sales tax is imposed on the receipts, unless specifically exempt, from every retail sale of
tangible personal property. Tax Law §1105(a). A retail sale is defined as "a sale of tangible personal
property to any person for any purpose, other than for resale as such" .... Tax Law §1101(b)(4)(i).
The state and local use taxes complement the sales taxes; they are due upon in-state use by a New
York resident of taxable items on which sales tax has not been paid because an in-state or out-of­
state vendor failed to collect it. 20 NYCRR 531.1, 531.3.
Forms and selling supplies (except certain packing materials discussed below) used in
business transactions conducted from New York State locations are not exempt from tax. It is not
relevant for determining taxability whether such property is delivered from another state or brought
into the State by the purchaser, nor is it material that it may accompany shipments to another state.
Tax liability is established because employment of the property in New York based business
operations constitutes "use within this state" pursuant to Tax Law §1101(b)(7) and §1110.
Purchases, by a mover, of packing material that becomes property of the customer are not
taxable, but only if:
(1) the mover states charges for such packing material separately on all customer
billings - without regard to move destination - and
(2) the mover collects sales tax on charges for such packing material when used in
moves terminating in New York State.
RODERICK G. W. CHU, COMMISSIONER
TP-8 (3/83)

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

-2­
TSB-A-88(34)S
Sales Tax
June 24, 1988

When purchasing exempt packing material the mover must give a properly completed Resale
Certificate (Form-120) to the supplier. The mover may request a refund of tax paid on packing
material that is later resold. Technical Services Bureau Memorandum Transportation and Related
Services Provided by Movers, August 17, 1982, TSB-M-82(22)S.
Packing materials that do not become property of the customer are taxable when purchased
by the mover. Accordingly, Petitioner's purchases of such materials and other selling supplies as
well as business forms are subject to New York State and local sales or use taxes. Untaxed out-of­
state purchases of supplies subject to tax must be reported on the sales tax return covering the date
of purchase in the space designated "purchases subject to use tax".

DATED: June 24, 1988

s/FRANK J. PUCCIA
Director
Technical Services Bureau

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