Does New York sales tax apply to a public relations firm's satellite media tour coordination fees, its purchases of studio time and crew, and its website maintenance service?

Plain-English summary

A public relations firm coordinates satellite media tours, speaking tours, and media appearances for manufacturers, cable channels, and associations across the country. In a satellite media tour, a spokesperson or celebrity sits in one city while reporters elsewhere interview them, with the interview broadcast nationwide or worldwide by satellite; the firm sets up the telephone, satellite, and studio logistics at multiple locations. The firm's accountants asked the Department to sort out the sales tax treatment of (1) the coordination fee it charges its own customers, (2) the items it in turn purchases -- studio rentals, satellite time, uplink/downlink time, makeup artists, cameramen, and reimbursed expenses -- and (3) its website maintenance service.

The Department worked through each piece separately. Coordination itself -- scheduling and setting up the telephone/satellite/studio logistics, plus consulting, project management, and scripting -- isn't a taxable service under the Tax Law, as long as the firm is just selecting and scheduling equipment and facilities rather than actually operating them, and isn't bundled with a sale of taxable tangible property. Studio rentals are taxable equipment rentals only if the firm has the right to direct the studio's operator or to bring its own operator -- in that case possession is treated as transferred to the firm, and the equipment portion is taxable (though separately stated, reasonable charges for the operator's own services and for bare room rent stay untaxed). Cameramen work the same way: hiring a cameraman isn't itself taxable, but it becomes a taxable equipment rental if the firm can direct and control the camera equipment (unless a narrow production-equipment exemption applies), and if the cameraman actually produces a deliverable like a videotape, the whole payment is taxed as a sale of tangible property. Satellite time and uplink/downlink time count as telephony and telegraphy, taxable unless the transmission is genuinely interstate or international -- though any receiving/initiating equipment delivered in New York stays taxable regardless of where the signal goes. Makeup services are taxable only under New York City's own 4% local tax on beauty-type services, not anywhere else in the state, and not under the separate 1/4% Metropolitan Commuter Transportation District tax. Reimbursed expenses (including phone and telegraph charges billed through to the client) are taxable only when the underlying service the firm sold to that client is itself taxable. And website maintenance to keep customers and the public informed with press releases and product updates isn't an enumerated taxable service at all.

What this means for you

Public relations, event, and media-production firms

Break your invoice into its component services and purchases rather than treating the whole engagement as one taxable or nontaxable block. Coordination, consulting, scripting, and web content maintenance are generally untaxed; equipment rentals, satellite/telephony charges, and city-specific services like makeup can each be taxable on their own terms.

Firms renting studios, cameras, or production equipment

Whether a rental is taxable often turns on control: if you can direct the equipment operator, or bring your own, the arrangement is treated as an equipment rental (taxable), not a pure services purchase. Keep the operator's wages and any bare space rental separately and reasonably stated on the invoice to keep those pieces out of the tax base.

Accountants billing pass-through/reimbursed costs to clients

Reimbursed expenses ride on the taxability of the underlying sale to that client -- if your client's charge is nontaxable, the reimbursed expenses you pass through as part of that charge are nontaxable too.

Common questions

Q: Is coordinating a satellite media tour a taxable service in New York?
A: No, provided the coordinator is just selecting and scheduling equipment and facilities (not operating them) and the fee isn't bundled with a taxable sale of tangible property.

Q: When does renting a studio or camera become taxable?
A: When the renter has the right to direct the operator's activities or to supply its own operator -- that's treated as a transfer of possession of the equipment, making the equipment portion of the charge taxable (though separately stated operator wages and bare room rent can stay untaxed).

Q: Are makeup artist charges taxed statewide?
A: No -- only New York City imposes its own local tax (4%) on beauty-type services like makeup application; it doesn't apply outside the City and isn't subject to the separate MCTD surcharge.

Q: Does this ruling apply to my PR or event-production business?
A: Not automatically. An Advisory Opinion binds the Department only for the taxpayer and facts it was issued to, and it can't be relied on by anyone else.

Citations and references

• Tax Law § 1105(b) (telephony and telegraphy service); § 1105(c) (enumerated services)
• Tax Law § 1101(b)(3) (receipt, including reimbursed expenses); § 1101(b)(5) (retail sale, including equipment rental)
• Tax Law § 1109 (Metropolitan Commuter Transportation District); § 1115(a)(12) (production-equipment exemption)
• Tax Law § 1212-A(a)(2) (New York City local tax on beauty/makeup-type services)
• 20 NYCRR § 526.5(e); § 526.7(a)(2), (e)(6); § 526.8(c)(1) (receipts and equipment rental)
• 20 NYCRR § 527.2(d) (telephony and telegraphy)
• Pitney Bowes Management Services, Inc., Adv Op Comm T&F, January 25, 1993, TSB-A-93(10)S
• Gormley & Partners, Adv Op Comm T&F, September 18, 1996, TSB-A-96(55)S
• Satellite Signals Unlimited, Inc., Adv Op Comm T&F, October 15, 1984, TSB-A-84(26)S
• Matter of N.B.E. Productions, LTD., Dec St Tx Comm, February 6, 1985, TSB-H-85(103)S
• Video Memories Associates, Ltd., and Michael Marano, as Officer, Det Tax App Trib, March 14, 1996, TSB-D-96(16)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_44s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-97(44)S
Sales Tax

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO.S961204B

On December 4, 1996, the Department of Taxation and Finance received a
Petition for Advisory Opinion from Salomon & Leitgeb CPA’s, LLP, 534 Old Country
Road, Plainview, NY 11803. Petitioner, Salomon & Leitgeb CPA’s, LLP, submitted
additional information pertaining to the Petition on February 1, 1997.
The issues raised by Petitioner are:
(1)
Whether charges by Petitioner’s client for the service of
coordinating satellite media tours, speaking tours and media appearances are
subject to sales and compensating use tax.
(2)
Whether certain items purchased by Petitioner’s client, including
studio rentals, satellite time, uplink and downlink times, the services of makeup
people and cameramen and reimbursed expenses, are subject to sales and
compensating use tax.
(3)
Whether Petitioner’s client’s maintenance of web sites to keep
customers and the general public informed on press releases, news articles and
updates of product information is subject to sales and compensating use tax.
Petitioner submitted the following facts as the basis for this Advisory
Opinion.
Petitioner’s client is a public relations firm.
Petitioner’s client
coordinates media presentations and live appearances for its customers who are
electronic manufacturers, cable channels, national associations and other
organizations. The customers are located in New York State and throughout the
United States and the world.
Petitioner’s client coordinates telephone,
satellite and studio setups for satellite media tours, speaking tours and media
appearances. In the case of a satellite media tour, a spokesperson, typically
a celebrity, is at a certain location (in New York or elsewhere) to be
interviewed by a reporter from another location. The interview is then broadcast
by satellite nationwide and/or worldwide. These broadcasts can be live or taped.
Petitioner’s client sets up multiple locations throughout the United States for
these broadcasts to be sent. In the case of speaking and media tours, people are
scheduled to make TV, radio and newspaper appearances at selected locations both
in New York and nationwide. The services which Petitioner’s client provides its
customers include production supervision, scripting, consulting, project
management and web site maintenance.

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Petitioner’s client purchases studio rentals, satellite time, uplink and
downlink times and the services of makeup people and cameramen.
Applicable Law and Regulations
Section 1105(b) of the Tax Law imposes a sales tax upon the receipts "from
every sale, other than sales for resale, of . . . telephony and telegraphy and
telephone and telegraph service of whatever nature except interstate and
international telephony and telegraphy and telephone and telegraph service."
Section 1105(c) of the Tax Law imposes tax upon the receipts from every
sale, except for resale, of certain enumerated services.
Section 527.2(d) of the Sales and Use Tax Regulations provides, in part:

Telephony and telegraphy; telephone and telegraph service. (1)
The provisions of section 1105(b) of the Tax Law with respect to
telephony and telegraphy and telephone and telegraph service impose
a tax on receipts from intrastate communication by means of devices
employing the principles of telephony and telegraphy.
(2)
The term telephony and telegraphy includes use or
operation of any apparatus for transmission of sound, sound
reproduction or coded or other signals.
*

*

*

(5) The tax on utility services applies to every charge for
any telephone and telegraph service. Among these charges are . . .
charges for special services, such as installation, change of
location, conference connections, tie-lines, WATS lines and the
furnishing of equipment.
Opinion
For satellite media tours, Petitioner’s client coordinates all of the set­
ups (telephone, satellite, studio) required for broadcasting media appearances
by various speakers and celebrities. Presuming that this service merely consists
of selecting and scheduling the use of equipment and facilities and does not
entail the actual operation of the equipment, Petitioner’s client is not
considered to be performing any of the services enumerated under section 1105(c)
of the Tax Law, nor is it considered to be performing a Section 1105(b) telephone
or telegraph service. (see Pitney Bowes Management Services, Inc., Adv Op Comm
T&F, January 25, 1993, TSB-A-93(10)S). Accordingly, the receipts from charges
to the client’s customers for this service are not subject to state or local
sales tax (see Pitney Bowes Management Services, Inc., supra).
The additional services Petitioner’s client provides its customers include
coordinating and scheduling speaking tours and media appearances, consulting,
project management, scripting and production supervision. None of these services
constitutes a service described in Section 1105(c) of the Tax Law. Accordingly,
Petitioner’s client’s receipts from the sale of these services are not subject

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to sales and use taxes provided that they are not performed for customers in
conjunction with the sale of tangible personal property. If a nontaxable service
is performed in conjunction with the sale of taxable tangible personal property,
the entire receipts from the sale are subject to tax unless the charges for the
service and tangible personal property are separately stated and reasonable, and
the service and property may be separately purchased (see Gormley & Partners, Adv
Op Comm T&F, September 18, 1996, TSB-A-96(55)S).
With respect to issue "2", the renting of a studio typically includes the
use of recording equipment along with the services of a recording operator. When
Petitioner’s client has the right either to direct the activities of the
operator, or to supply an operator of its own, possession of the equipment is
deemed to have been transferred to Petitioner’s client. This makes the rental
charge for the equipment subject to tax pursuant to Sections 1105(a) and
1101(b)(5) of the Tax Law and Section 526.7(a)(2) of the Sales and Use Tax
Regulations.
However, the portions of the rental charge allocable to the
operator’s services and rent for the room space itself are not taxable, provided
the charges are reasonable and separately stated on the invoice or bill and the
operator's wages reflect prevailing wage rates. See Sections 526.7(e)(6) and
526.8(c)(1) of the Sales and Use Tax Regulations. If taxable and nontaxable
amounts are not separately stated, the entire amount is taxable.
Likewise, the purchase of the service of a cameraman to film an event is
not in and of itself a taxable transaction. If, however, Petitioner’s client has
the right to direct and control the use of the cameraman's equipment, the
transaction is considered to be the rental of tangible personal property. Camera
equipment rentals are taxable to Petitioner’s client unless qualifying for
exemption under Section 1115(a)(12) of the Tax Law as rentals of equipment used
directly and predominantly in the production of tangible personal property for
sale. As noted above, the cameraman's wages, when separately stated from the
charges for the equipment, are not taxable, provided they reflect prevailing wage
rates. Payments to a cameraman who produces tangible personal property, such as
a videotape, are considered receipts from the sale of tangible personal property
and the entire receipt is subject to sales tax pursuant to Section 1105(a) of the
Tax Law, unless the property is purchased for resale (see Video Memories
Associates, Ltd., and Michael Marano, as Officer, Det Tax App Trib, March 14,
1996, TSB-D-96(16)S).
Purchases by Petitioner’s client of satellite time and uplink and downlink
times are considered to be the purchases of telephony or telegraphy within the
meaning of Section 1105(b) of the Tax Law. The receipts from such services are
subject to tax except where the services are performed on an interstate or
international basis (see Satellite Signals Unlimited, Inc., Adv Op Comm T&F,
October 15, 1984, TSB-A-84(26)S). It should be noted, however, that the rental
by Petitioner's client of any initiating or receiving communication equipment
which is delivered in New York State is taxable regardless of whether the
transmission made by this equipment is intrastate, interstate or international.
With regard to makeup people, the City of New York imposes sales tax at the
rate of four percent on the services of beauty, barbering, hair restoring,
manicuring, pedicuring, electrolysis, massage and similar services pursuant to
the authority of Section 1212-A(a)(2) of the Tax Law. Services of makeup people

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purchased by Petitioner’s client constitute such services within the meaning and
intent of Section 1212-A(a)(2) of the Tax Law and are therefore subject to tax
in New York City at the rate of four percent (see Matter of N.B.E. Productions,
LTD., Dec St Tx Comm, February 6, 1985, TSB-H-85(103)S). Such makeup services
are not subject to tax outside New York City, and are not subject to the 1/4
percent tax imposed by Section 1109 of the Tax Law in the Metropolitan Commuter
Transportation District.
All reimbursed expenses, including telephone and telegraph and other
service charges, incurred by Petitioner’s client and included in the charge to
its customers are included in the definition of "receipt" in Section 1101(b)(3)
of the Tax Law and Section 526.5(e) of the Sales and Use Tax Regulations.
Therefore, the charge to a customer for such reimbursed expenses is subject to
tax only when the receipts from Petitioner's client's sale is subject to tax.
When Petitioner's client makes a nontaxable sale, the amount charged to its
customers, including such reimbursed expenses, is not subject to tax.
With respect to issue "3", the web site maintenance service described by
Petitioner is not an enumerated service under Section 1105(c) of the Tax Law and
is therefore not subject to sales and use tax.

DATED: July 23, 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.