When a company rents out cranes and other self-propelled construction machinery, can it use the reduced motor-vehicle rental tax computation?

Plain-English summary

Clark Rigging & Rental Corp. rents construction machinery to contractors. Much of it is self-propelled: truck cranes (a crane chassis on multiple axles), boom trucks (smaller, faster versions), tractor-trailer combinations, standalone trailers, and occasional pick-up trucks. All are licensed for public-highway use, and Clark pays the registration, insurance, and other nontaxable items. Clark asked whether these machines are "motor vehicles" eligible for the favorable rental-tax computation in 20 NYCRR § 541.9(c)(2)(iii).

That regulation lets a lessor who pays all the nontaxable items compute the rental tax on 82% of the total charge (or 90% where the charge is subject to New York City tax) instead of the full charge. (The Department noted this 82% rule is a regulation, not a statute — if it were repealed, the question would be moot.)

Because the Tax Law does not define "motor vehicle," the Department looked to Vehicle and Traffic Law § 125 (via Tax Law §§ 1115(a)(14) and 1117), which covers vehicles propelled on a public highway by non-muscular power.

The key move is splitting the machine into two functions:

• Under Colonial Sand & Stone (a 1977 State Tax Commission decision on concrete-mixer trucks), the mixer was treated separately from the chassis. The same logic applies here: the crane or boom provides a function "separate and apart from the transportation function" of the chassis — even though the whole thing is a single vehicle for traffic-law purposes.
• Result: the rental value attributable to the chassis gets the 82% / 90% exclusion; the value attributable to the crane or boom does not.

To actually claim the exclusion, Clark must separately state the chassis charge from the crane/boom charge (and the tractor/trailer from the truck chassis). Under § 527.1(b), if taxable and exempt items are sold "as a single unit," tax is collected on the total price — so bundling forfeits the benefit.

Finally, a 1989 amendment added Tax Law § 1115(a)(26): rentals of tractors, trailers, or semi-trailers used in a combination whose gross vehicle weight exceeds 26,000 pounds are fully exempt from sales tax.

What this means for you

Cranes and booms: separate the charge or lose the break

If you rent crane trucks or boom trucks and pay the registration and insurance yourself, you can use the 82% (90% in NYC) computation — but only on the chassis portion. The crane or boom itself is taxed on its full value. The Department is explicit that you must itemize: put the chassis charge and the crane/boom charge on separate lines. A single lump-sum rental charge is taxed in full under § 527.1(b).

Heavy tractor-trailer combinations can be entirely exempt

Renting a tractor, trailer, or semi-trailer that operates in a combination over 26,000 lbs gross weight is exempt under § 1115(a)(26) — a full exemption, not just the 82% computation. This is a distinct rule from the crane/boom split, so identify which category your equipment falls into.

The 82% computation is a regulation, not a statute

The Department flagged that § 541.9(c)(2)(iii) is not grounded in the statute. That is a caution: an administrative rule like this can be changed or repealed, so don't treat the 82% figure as a permanent statutory right.

Common questions

Q: Is a truck crane a "motor vehicle" for the rental-tax computation?
A: Yes — but only the chassis portion qualifies for the 82%/90% computation. The crane or boom portion is taxed on its full rental value.

Q: What do I have to do to get the 82% treatment?
A: Pay the registration, insurance, and other nontaxable items yourself, and separately state the chassis charge from the crane/boom charge. Bundling everything into one price means the whole charge is taxed (§ 527.1(b)).

Q: Are my tractor-trailer rentals taxable?
A: If the tractor, trailer, or semi-trailer is used in a combination over 26,000 lbs gross weight, the rental is fully exempt under § 1115(a)(26).

Citations and references

Statutes and regulations:

• Tax Law § 1105(a) — tax on retail sales of tangible personal property
• Tax Law § 1115(a)(26) — exemption for tractors/trailers/semi-trailers in combinations over 26,000 lbs
• Tax Law § 1117 — cross-reference to Vehicle and Traffic Law definitions
• 20 NYCRR § 541.9(c)(2)(iii) — 82% / 90% computation for motor-vehicle rentals where lessor pays nontaxable items
• 20 NYCRR § 527.1(b) — single-unit sale of taxable and exempt items taxed on the total price
• Vehicle and Traffic Law §§ 125, 143, 151-a, 156 — definitions of motor vehicle, semitrailer, tractor, trailer

Cited authority:

• Colonial Sand & Stone Co., Inc., Dec. St. Tx. Comm., June 30, 1977, STH 77-41 (mixer separable from chassis)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1991.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a91_8s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-91 (8)S
Sales Tax
January 15, 1991

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S900425A

On April 25, 1990 a Petition for Advisory Opinion was received from Clark Rigging &
Rental Corp. 3235 Lockport Road, Niagara Falls, New York 14305.
The issue raised by Petitioner, Clark Rigging & Rental Corp., is whether certain self­
propelled construction machinery are "motor vehicles" within the meaning of Section 541.9(c)(2)
of the Sales and Use Tax Regulations.
Petitioner is in the business of, among other things, renting construction machinery to
construction contractors. Some of the construction machinery that Petitioner leases is self-propelled.
The construction machinery may be characterized into the following categories:

1. Truck Cranes:
   Truck cranes are vehicles consisting of a crane chassis sitting upon two, three or four
   axle/wheel assemblies. All truck cranes leased by Petitioner are licensed to operate on public
   highways. None of the truck cranes rented by Petitioner has a maximum speed of less than 30 miles
   per hour. The truck cranes are operated on public highways in traveling between construction sites.
   2.

Boom Trucks:

Boom trucks are similar to the truck cranes described above, but are generally smaller,
faster vehicles. All boom trucks leased by Petitioner are licensed to operate on public highways.
3.

Tractor/Trailers:

When the construction machinery leased by Petitioner to a contractor is not suitable
for operation on a public highway, Petitioner leases flatbed tractor-trailer combinations to transport
the construction machinery. Some of the tractor-trailer combinations are specifically designed for
transporting construction equipment. Petitioner also leases tractor-trailer combinations to contractors
for other special handling needs (e.g. transporting large tanks for chemical companies). Both the
tractors and the trailers rented by Petitioner are licensed for over-the-road use.
4.

Trailers:

Sometimes, Petitioner's customers have a tractor, but need one of Petitioner's
specially-designed trailers for specific hauling purposes. Under these circumstances, Petitioner will
rent only a trailer assembly to these customers. Each of the trailers is separately licensed for over­
the-road transportation.

-2­
TSB-A-91 (8)S
Sales Tax
January 15, 1991
5.

Pick-Up Trucks:

Infrequently, Petitioner will rent to a contractor a pick-up truck for the contractor's
use in construction activities, or to tow one of the trailers also rented by Petitioner. Without
exception, these pick-up trucks are licensed for over-the-road use.
Petitioner pays all insurance, registration and other non-taxable items incurred with
respect to the vehicles listed above.
Section 541.9(c)(2)(iii) of the Sales and Use Tax Regulations provides that:
Where the lessor pays all registration fees, insurance
charges, and other nontaxable items, the tax to be
collected from the contractor on the charges for the
rental or lease of a motor vehicle may be computed on
82% of the total rental or lease charge, unless a charge
is subject to the sales tax in New York City in which
case the tax on each such charge may be computed on
90% of the total charge. When the exclusion is
claimed, the registration fees, insurance charges and
other nontaxable items charged the contractor (other
than the driver's and helper's wages if separately
stated) must be included in the total rental or lease
charges. If the lessee has an option to pay for
additional insurance coverage, such charge, if
separately stated is exempt from the tax.
It should be noted that Section 541.9(c)(2)(iii) of the Regulations is not provided for by
statute and therefore if this section of the Regulations was to be repealed, the issue raised by the
Petitioner would be moot.
The Tax Law does not define the term "motor vehicle" but Sections 1115(a)(14) and 1117
of said law refers to Section 125 of the Vehicle and Traffic Law for such definition. In addition,
Section 1117 refers to Section 156 of the Vehicle and Traffic Law for the definition of "trailer".
Section 125 of the Vehicle and Traffic Law defines motor vehicles as:
Every vehicle operated or driven upon a public highway which is propelled by any
power other than muscular power, except (a) electrically-driven mobility assistance
devices operated or driven by a person with a disability, (b) vehicles which run only
upon rails or tracks, (c) snowmobiles as defined in article forty-seven of this chapter
and (d) all terrain vehicles as defined in article forty-eight-B of this chapter. For the
purposes of title four, the term motor vehicle shall exclude fire and police vehicles.
For the purposes of titles four and five the term motor vehicles shall exclude farm

-3­
TSB-A-91 (8)S
Sales Tax
January 15, 1991
type tractors and all terrain type vehicles used exclusively for agricultural purposes,
or for snow plowing, other than for hire, farm equipment, including self-propelled
machines used exclusively in growing, harvesting or handling farm produce, and self­
propelled caterpillar or crawler-type equipment while being operated on the contract
site.
The State Tax Commission in Colonial Sand & Stone Co., Inc., Dec St Tx Comm, June 30,
1977, STH 77-41 held that the chassis part of concrete mixer trucks which were used in the
transportation of ready-mix concrete to construction sites did not constitute machinery and
equipment for use and consumption directly and exclusively in the production of tangible personal
property for the purposes of Section 1115(a)(12) of the Tax Law although the cement mixer parts
which were attached to the chassis were entitled to the exemption provided by said section. The
same reasoning, which allows the taxability of the mixer to be separated from the taxability of the
chassis, applies to truck cranes and boom trucks since the crane or boom portions of said trucks
provide a function separate and apart from the transportation function provided by the chassis
portions of the trucks. This is true even though the truck cranes and boom trucks may be considered
to be a single unit for vehicle and traffic law purposes. Therefore the rental value attributable to the
chassis portion of the truck cranes and boom trucks are entitled to the exclusion contained in Section
541.9(c)(2)(iii) of the Sales and Use Tax Regulations, where the rental value attributable to the crane
or the boom is not entitled to said exclusion.
Section 527.1(b) of the Sales and Use Tax Regulations provide that "When tangible personal
property, composed of taxable and exempt items is sold as a single unit, the tax shall be collected
on the total price."
Therefore when Petitioner rents tangible personal property such as trailers along with the
tractors, boom trucks and truck cranes, it must separately state its charge for the tractor and trailer
as well as the truck chassis from the boom and crane in order to avail itself of the exclusion
contained in Section 541.9(c)(2)(iii) of the Sales and Use Tax Regulations.
The Tax Law was amended effective January 1, 1989 by adding paragraph 26 to Section 1115
to provide an exemption from sales tax for:
Tractors, trailers or semi-trailers, as such terms are defined in article one of
the vehicle and traffic law, and property installed on such vehicles for their
equipping, maintenance or repair, provided such vehicle is used in combination
where the gross vehicle weight of such combination exceeds twenty-six thousand
pounds.
Tractors, trailers and semi-trailers are defined in the Vehicle and Traffic Law as follows:
§ 143. Semitrailer

-4­
TSB-A-91 (8)S
Sales Tax
January 15, 1991
Any trailer which is so designed that when operated the forward end of its
body or chassis rests upon the body or chassis of the towing vehicle.
§ 156. Trailer
Any vehicle not propelled by its own power drawn on the public highways by
a motor vehicle as defined in section one hundred twenty-five operated thereon,
except motorcycle side cars, vehicles being towed by a non-rigid support and vehicles
designed and primarily used for other purposes and only occasionally drawn by such
a motor vehicle.
§ 151-a. Tractor
A motor vehicle designed and used as the power unit in combination with a
semitrailer or trailer, or two such trailers in tandem. Any such motor vehicle shall
not carry cargo except that a tractor and semitrailer engaged in the transportation of
automobiles may transport motor vehicles on part of the power unit.
Therefore if Petitioner rents tractors, trailers or semi-trailers whose gross combined weight
exceeds 26,000 lbs., then such rental is exempt from the imposition of sales tax.

DATED: January 15, 1991

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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