Is a state-certified inspector's fee for testing medical and dental x-ray equipment for mandatory safety-code compliance subject to New York sales tax?

Plain-English summary

Richard T. Smokowski is a certified radiation equipment safety officer (CRESO), independently certified by the New York State Department of Health to inspect medical and dental x-ray equipment as required by the State Sanitary Code (10 NYCRR Part 16). He performs the testing and gives each customer a report on the results and his recommendations, but he does not do any repair or maintenance work on the equipment himself. He asked whether his inspection fees were subject to sales tax.

Ordinarily, New York taxes services that maintain, service or repair tangible personal property, and the Department's own regulation gives an example of a taxable "diagnostic service" -- testing an appliance for a fee without repairing it. But the Department drew a line for inspections whose sole purpose is proving compliance with a government-mandated code: because Smokowski's testing exists only to demonstrate compliance with the State Sanitary Code, and isn't connected to any repair, maintenance or servicing work, it isn't one of the taxable enumerated services at all. If the same kind of inspection were performed for some other purpose (not mandatory code compliance), it would be taxable.

What this means for you

Equipment inspectors and safety compliance professionals

If your inspection service exists solely to satisfy a government-mandated code requirement -- not to diagnose a problem for repair purposes, and not bundled with any maintenance or repair work -- your fees likely escape New York sales tax entirely. The moment your inspection work shifts toward general diagnostics or gets bundled with servicing, that protection disappears.

Medical and dental practices hiring equipment inspectors

Mandatory safety inspections required by state code (like x-ray equipment testing under the Sanitary Code) shouldn't carry sales tax if the inspector's work is limited to code-compliance testing and reporting. If your inspector also does diagnostic work beyond code compliance, or performs any repair/maintenance alongside the inspection, expect tax to apply to that portion.

Accountants and tax professionals

The key precedent cited here is Elevator Service Companies, TSB-A-96(67)S -- useful background for any inspection-service fact pattern where a licensed or certified inspector's work is driven purely by a mandatory code requirement rather than ordinary maintenance diagnostics.

Common questions

Q: Would this analysis change if the inspector also repaired the equipment?
A: Yes -- the ruling specifically notes Smokowski performs no maintenance or repair in conjunction with his testing. Bundling repair or maintenance work in would likely make at least that portion taxable.

Q: Are all equipment inspections exempt from sales tax?
A: No. Inspections performed for purposes other than mandatory government code compliance are taxable under Tax Law § 1105(c)(3), per the Department's own diagnostic-service example.

Q: Can another inspector rely on this ruling?
A: No. This advisory opinion binds the Department only as to Richard T. Smokowski and the specific facts about his CRESO inspection work.

Citations and references

Statutes and regulations:

• Tax Law § 1105(c)(3) (installing, maintaining, servicing or repairing tangible personal property)
• 20 NYCRR § 527.5(a)(3) (definition of maintaining, servicing and repairing)
• 10 NYCRR Part 16 (New York State Sanitary Code, radiation equipment)

Prior rulings referenced:

• Elevator Service Companies, Adv Op Comm T&F, October 7, 1996, TSB-A-96(67)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1997.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a97_18s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-97(18)S
Sales Tax

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO.S961210C

On December 10, 1996, the Department of Taxation and Finance received a
Petition for Advisory Opinion from Richard T. Smokowski, 102 Magnolia Street,
Lackawanna, NY 14218.
The issue raised by Petitioner, Richard T. Smokowski, is whether the
inspection services he performs on medical and dental x-ray equipment as a
certified radiation equipment safety officer ("CRESO") of the New York State
Department of Health are subject to sales and compensating use tax.
Petitioner submitted the following facts as the basis for this Advisory
Opinion.
Petitioner is a certified radiation equipment safety officer ("CRESO") of
the New York State Department of Health. Petitioner, an independent contractor,
is certified by the Department of Health to provide inspection services for
medical and dental x-ray equipment as required by 10 NYCRR, Part 16 of the New
York State Sanitary Code. Petitioner does not provide any maintenance or repair
services on the x-ray equipment in conjunction with the testing and inspection
he performs. Petitioner provides an individual report to his customer describing
the testing services performed on the customer’s equipment, the results of the
tests and Petitioner’s recommendations.
Applicable Law and Regulations
Section 1105 of the Tax Law imposes sales tax, in part, upon:
(c) The receipts from every sale, except for resale, of the
following services:
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3) Installing tangible personal property, excluding a mobile home,or
maintaining, servicing or repairing tangible personal property,
including a mobile home, not held for sale in the regular course of
business, whether or not the services are performed directly or by
means of coin-operated equipment or by any other means, and whether
or not any tangible personal property is transferred in conjunction
therewith . . .
Section 527.5(a) of the Sales and Use Tax Regulations provides, in part:
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(3) Maintaining, servicing and repairing are terms used to cover
all activities that relate to keeping tangible personal property in
a condition of fitness, efficiency, readiness or safety or restoring
it to such condition.

-2­
TSB-A-97(18)S
Sales Tax

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Example 6:
A company operates a diagnostic service in which it
tests an appliance for a set fee, but does not repair the appliance.
The charge for the diagnostic service is taxable.
Opinion
Petitioner is a certified radiation equipment safety officer of the New
York State Department of Health. A certified radiation equipment safety officer
is defined as "an individual who holds an unexpired certificate as a radiation
equipment safety officer issued by the department." (10 NYCRR 16.2(a)) The
inspection services Petitioner performs are required by the New York State
Sanitary Code, Title 10 NYCRR, Part 16.
This Part applies to all radiation
equipment and radioactive material within the jurisdiction of the New York State
Department of Health.
The sole purpose of the inspection services provided by Petitioner is to
demonstrate compliance with State codes. Inspection services performed solely
for purposes of mandatory governmental code compliance, and which are not related
to or performed in conjunction with repairing, maintaining or servicing tangible
personal property or real property are not enumerated taxable services.
Therefore, the receipts received from the performance of these services are not
subject to State and local sales and use taxes (see Elevator Service Companies,
Adv Op Comm T&F, October 7, 1996, TSB-A-96(67)S).
Inspection services of
tangible personal property performed for other than code compliance purposes are
subject to tax pursuant to Section 1105(c)(3) of the Tax Law.

DATED:

March 27, 1997

NOTE:

/s/
John W. Bartlett
Deputy Director
Technical Services Bureau

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