Are architectural and interior design drawings, specifications, and rental-space plans taxable interior decorating and design services, or are they exempt when performed by a licensed architect or engineer?

Plain-English summary

Morton L. Coren, P.C. asked on behalf of a New York City client offering architectural and interior design services for relocations and renovations -- needs assessments, space planning, design development, construction documents, project administration, finishes selection, and post-construction management, plus maintaining rental books for landlords. The firm has two partners who meet the education requirements for an architecture license, but only one is actually licensed in New York. About 90% of its work involves preparing, reviewing, and submitting architectural drawings; the remaining 10% involves selecting finishes and furniture, billed on separate invoices. The petition posed five specific scenarios: (1) drawings a licensed architect or engineer is legally required to prepare; (2) the same kind of drawings, but prepared by an unlicensed staffer under a licensee's supervision and review, sometimes not legally requiring a license at all because the project costs under $20,000; (3) an unlicensed individual's interior drawings showing walls, electrical, HVAC, plumbing, sprinklers, and ceilings; (4) the same drawings as scenario 3, but also including engineering fire-rating and floor/wall-covering specifications; and (5) interior space plans prepared for landlords to use in renting out space, sometimes including lease expiration dates.

New York taxes interior decorating and design services generally, but carves out an exception for services that are the actual practice of architecture or engineering (as legally defined) when performed by someone licensed to do that work. Applying this scenario by scenario: (1) drawings legally required to be prepared by a licensed architect or engineer, and actually prepared by one, are exempt. (2) The same drawings, done by an unlicensed staffer but reviewed and certified by a licensee where certification is legally required (including small under-$20,000 projects that don't legally need a license at all but still get one), remain exempt. (3) Interior drawings by an unlicensed person that DON'T require licensed certification are taxable as interior decorating/design services -- unless they're actually part of a supervised, licensed-certified engagement, in which case they stay exempt. (4) Adding fire-rating or floor/wall-covering specifications to otherwise-taxable drawings doesn't change the taxable drawings' status, but if those specific engineering specifications are separately stated and are themselves part of a service requiring licensed certification, that specific charge can be exempt even while the base drawing charge stays taxable. (5) Landlord rental-space plans are a different animal entirely -- they're not treated as a "design service" at all, but as a straight sale of tangible personal property, always taxable regardless of licensing, and regardless of whether lease-expiration dates are included.

What this means for you

Architecture and interior design firms with both licensed and unlicensed staff

Whether a specific drawing or specification charge is taxable turns on whether the work legally requires (or is voluntarily performed under) a licensed architect's or engineer's supervision and certification -- not simply on whether your firm employs a licensed professional somewhere on staff. Track which deliverables are actually certified by the license-holder.

Firms billing mixed interior-design and architecture/engineering services

Separately state charges for licensed-certified work (exempt) from unlicensed interior decorating work (taxable) on your invoices -- bundling them together risks the whole charge being treated as taxable, or at minimum makes it harder to substantiate the exemption.

Landlords and firms preparing rental-space marketing plans

Interior plans prepared to help a landlord market and rent space are taxable sales of tangible personal property, full stop -- the architecture/engineering licensing exception doesn't apply to this category at all, regardless of who prepares the plans.

Common questions

Q: Are architectural drawings always exempt from sales tax if a licensed architect works at the firm?
A: No -- exemption depends on whether the specific drawings actually require (and receive) that licensed architect's or engineer's certification, not merely on the firm employing one.

Q: Does adding technical specifications like fire ratings make an otherwise-taxable drawing exempt?
A: Only if those specific specifications are separately stated AND are themselves part of a service that legally requires licensed engineering certification -- the underlying (non-certified) drawing charge stays taxable either way.

Q: Are rental-space plans for landlords ever exempt as design services?
A: No -- they're treated as a straight sale of tangible personal property, always taxable, regardless of who prepares them or whether they include lease information.

Q: Does this ruling apply to my architecture or interior design firm's billing?
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. Whether your specific deliverables require licensed certification depends on Education Law provisions and your own facts.

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_82s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-97(82)S
Sales Tax

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO.S961113A

On November 13, 1996, the Department of Taxation and Finance received a
Petition for Advisory Opinion from Morton L. Coren, P.C., 638 Meadow Court,
Westbury, New York 11590-5925.
The issue raised by Petitioner, Morton L. Coren, P.C., is whether the
following services are interior decorating and design services subject to the
sales and compensating use tax imposed under Sections 1105(c)(7) and 1110 of the
Tax Law:
1.

Services involving the preparation of drawings by a licensed
architect or professional engineer that are required to be
prepared by a licensed architect or engineer.

2.

Services described in Number 1 that are rendered by an
unlicensed individual under the general supervision of a
licensed architect or engineer who analyzes and reviews the
drawings. The services may not require a licensed architect
or engineer because the project costs less than $20,000.
Petitioner states that the Education Law
provides that
projects which cost less than $20,000 do not require the
services of an architect or professional engineer.

3.

An unlicensed individual prepares drawings of the interior of
a building.
The drawings show walls, electrical service,
heating,
ventilation
and
air
conditioning,
plumbing,
sprinklers and ceilings. (The drawings may be of existing
walls or new walls.)

4.

The same services rendered in number 3, but also including
engineering specifications for type and fire rating of floor
and wall coverings.

5.

The preparation of interior plans of buildings for landlords.
The plans describe the space and are used by the landlords to
rent the space. The drawings may include the expiration dates
of the leases.

Petitioner submits the following facts as the basis for this Advisory
Opinion.
Petitioner's client is a company that renders services and has an office
in New York City. There are two partners who meet the education requirements for
licensure as architects; however, only one is a licensed architect in New York.

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Sales Tax

Petitioner's client provides architectural and interior design services for
relocations and renovations in New York City and the surrounding counties. The
company has built on its reputation of extensive architectural, design and
project management experience.
Petitioner's client offers a broad range of
services including: needs assessments, space studies, design development,
construction document preparation, project administration, finishes selection,
and post-construction management.
It also maintains rental books of rental
premises for landlords.
Approximately 90% of the services provided involve the preparation, review,
adoption and submission of architectural drawings to clients, contractors and
governmental agencies. The remaining 10% involves the selection of finishes and
furniture for clients. In cases where both types of services are rendered to the
same client, separate invoices are sent for the two different services.
APPLICABLE LAW
Section 1105(a) of the Tax Law imposes a tax upon:
The receipts from every retail sale of tangible personal property,
except as otherwise provided in this article.
Section 1105 (c)(7) of the Tax Law imposes a tax upon:
Interior decorating and design services and designing services
(whether or not in conjunction with the sale of tangible personal
property), by whomsoever performed, including interior decorators
and designers, architects or engineers; notwithstanding the
forgoing, such services shall not include services which consist of
the practice of architecture, as defined in section seventy-three
hundred one of the education law, or the practice of engineering, as
defined in section seventy-two hundred one of the education law, if
the services are performed by an architect or engineer having a
license or permit under the education law.
New York City's tax on interior decorating and design services was repealed
by Chapters 297 and 298 of the Laws of 1995, effective December 1, 1995. See
Repeal of New York City's Sales Tax on Interior Decorating and Design Services,
TSB-M-95(13)S, December 1, 1995.
Section 7201 of the Education Law defines the practice of engineering as
follows:
The practice of the profession of engineering is defined as
performing professional service such as consultation, investigation,
evaluation, planning, design or supervision of construction or
operation in connection with any utilities, structures, buildings,
machines, equipment, processes, works, or projects wherein the
safeguarding of life, health and property is concerned, when such
service or work requires the application of engineering principles
and data.

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Sales Tax

Section 7301 of the Education Law defines the practice of architecture as
follows:
The practice of the profession of architecture is defined as
rendering or offering to render services which require the
application of the art, science, and aesthetics of design and
construction of buildings, groups of buildings, including their
components and appurtenances and the spaces around them wherein the
safeguarding of life, health, property, and public welfare is
concerned.
Such services include, but are not limited to
consultation, evaluation, planning, the provision of preliminary
studies, designs, construction documents, construction management,
and the administration of construction contracts.
Important Notice N-90-16 states in part that:
Interior decorating and design services include, but are not limited
to: the preparation of layout drawings; furniture arranging; design
and planning of furniture, fixtures and other furnishings which are
not permanently attached to a building or structure; selection,
purchase and arrangement of surface coverings, draperies, furniture,
furnishings and other decorations; or any similar service.
Architects and engineers are also required to collect this tax when
the services they provide fall within those generally regarded as
interior decorating and design.
OPINION
While Section 1105(a) of the Tax Law imposes a sales tax on all sales of
tangible personal property with the exception of certain enumerated exemptions,
Section 1105(c) taxes only those services specifically subjected to tax. Section
1105(c)(7) provides that interior decorating and design services are subject to
sales tax unless the design services are performed by licensed architects or
engineers and constitute the practice of architecture or engineering as defined
in the State Education Law. When an architect or engineer performs an interior
design service that does not come within the Education Law's definition of
architecture or engineering, sales tax must be collected on such services.
Petitioner's questions are answered in the order in which they were
submitted.
1.
Services involving the preparation of drawings, which require a licensed
architect or engineer as provided by the Education Law, and are rendered by a
licensed architect or a professional engineer are not subject to sales and
compensating use tax.
2.
If the services performed in Answer Number 1 are rendered by an unlicensed
individual under the general supervision of a licensed architect or engineer who
analyzes, reviews and certifies the drawings, and the drawings are required by

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Sales Tax

the Education Law to be certified by an architect or engineer, they are not
subject to sales and compensating use tax. Projects performed by an unlicensed
individual that consist of the practice of architecture or engineering and that
do not require the services of a licensed architect or engineer only because the
projects are under a certain statutory amount, are also not subject to tax.
3.
Where an unlicensed individual prepares drawings of the interior of a
building that shows walls, electrical service, heating, ventilation and air
conditioning, plumbing, sprinklers and ceilings, the sale of the drawings is
subject to sales and compensating use tax under Section 1105(a) of the Tax Law.
If, however, the drawings are prepared as part of a service performed under the
general supervision of a licensed architect or engineer who analyzes, reviews
and certifies the drawings, and the drawings are required by the Education Law
to be certified by an architect or engineer, the charge for this service would
not be subject to sales and compensating use tax.
4.
Assume that the drawings in Answer Number 3 do not require the
certification of a licensed architect or engineer and are subject to sales and
compensating use tax.
These drawings will still be taxable if they include
specifications for type and fire rating of floor and wall coverings. If such
specifications are provided as part of an engineering service that does require,
under the Education Law, the certification of a licensed engineer, the charge for
the engineering specifications will not be taxable where it is separately stated
on the customer's invoice and could be separately purchased. If the services in
Answer Number 3 do require the certification of a licensed architect or engineer,
their nontaxable status would not be affected by the inclusion of these
engineering specifications.
5.
Sales of interior plans which describe rental space and are used by
landlords to rent the space are not design services but are sales of tangible
personal property that are subject to the tax imposed under section 1105(a) of
the Tax Law. It makes no difference whether or not the plans include lease
expiration dates. (See Paul Carucci & Co. Tax Consultants, Adv Op Comm T & F,
March 19, 1992, TSB-A-92(26)S) The combined rate of tax under Sections 1105, 1107
and 1109 of the Tax Law applicable to sales of tangible personal property in New
York City is 8 1/4%.
In the case of taxable and nontaxable items sold together, the nontaxable
items may be purchased not subject to tax where the invoice breaks down the items
and the items may be purchased separately.

DATED: December 29, 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.