Does a licensed architect and engineer's litigation-support research, reports, and expert-witness testimony for attorneys get taxed as a service or as a sale of the drawings and reports it produces?

Plain-English summary

Architectural/Engineering Investigations, P.C., owned by a licensed architect and a licensed professional engineer, provides litigation-support services to attorneys: researching and analyzing architecture and structural-engineering problems (often accident sites), preparing presentation drawings and sketches, writing detailed reports, and testifying in court as an expert witness. The firm asked whether it should be collecting sales tax on these services.

The Department said no. New York's sales tax reaches only specifically enumerated services, and architectural and engineering services aren't on that list. Citing its own prior rulings on licensed engineers furnishing technical advice, the Department confirmed that a professional's research, analysis, and report-writing fall entirely outside the sales tax, even when the report is accompanied by drawings, sketches, or photocopies, as long as those materials are furnished as an incidental part of delivering the professional service itself, not sold separately. The one caveat: if drawings are prepared and billed under a separate contract, apart from the underlying professional-services engagement, that separate drawing charge would be taxed as a sale of tangible personal property.

What this means for you

Architects, engineers, and other licensed professionals providing expert or consulting services

Your core professional service (research, analysis, opinions, and any reports or drawings that go along with delivering that service) is exempt from sales tax, because architectural and engineering services aren't enumerated taxable categories. This applies even to litigation-support and expert-witness work.

Firms billing separately for drawings, plans, or report copies

Keep your billing structured as one engagement for the professional service, with any accompanying drawings or reports included as part of that same contract. If you instead bill drawings under a separate, standalone agreement, that separate charge becomes a taxable sale of tangible personal property.

Accountants and law firms retaining expert consultants

This ruling, alongside the Department's R.H. McDermott and EMCON precedents, establishes a consistent rule: licensed engineers' and architects' technical-advice services (including litigation support) are outside the sales tax base, regardless of whether the deliverable includes a written report, sketch, or drawing, so long as it's incidental to the underlying professional engagement.

Common questions

Q: Are all consulting or professional services exempt from New York sales tax?
A: Not automatically -- it depends on whether the specific profession's services are among the enumerated taxable service categories under Section 1105(c). Architectural and engineering services specifically are not enumerated, so they're exempt.

Q: Does furnishing a written report or drawing as part of the service change the answer?
A: No, as long as the report or drawing is furnished as an incident to the exempt professional service under a single engagement, rather than billed under a separate contract just for the drawing.

Q: What would make a drawing charge taxable?
A: Billing it under a separate contract or agreement apart from the contract for the underlying non-taxable professional service would make that separate charge a taxable sale of tangible personal property.

Q: Can another architecture or engineering firm rely on this ruling?
A: No. It's an Advisory Opinion binding the Department only as to Architectural/Engineering Investigations, P.C. and the facts it described, though it reflects a consistent line of Department rulings on licensed professionals' technical-advice services.

Citations and references

• Tax Law § 1105(a) (tax on retail sales of tangible personal property)
• Tax Law § 1105(c) (enumerated taxable services)
• R.H. McDermott Corp., TSB-A-88(22)S (March 2, 1988)
• EMCON, TSB-A-96(79)S (December 16, 1996)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1998.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a98_48s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-98(48)S
Sales Tax
July 31, 1998

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO.S980212A

On February 12, 1998, the Department of Taxation and Finance received a
Petition for Advisory Opinion from Architectural/Engineering Investigations,
P.C., 1930 Stump Road, Marcellus, New York 13108-9746.
Petitioner,
Architectural/Engineering Investigations, P.C., submitted additional information
with respect to the Petition on May 26, 1998.
The issue raised by Petitioner is whether Petitioner should be collecting
sales tax from its customers when Petitioner renders certain services.
Petitioner submits the following facts as the basis for this advisory
opinion.
Petitioner is a professional corporation formed pursuant to Sections 402
and 1503 of the Business Corporation Law.
Petitioner consists of two
shareholders, Seymour Ribyat, P.E. (Professional Engineer) and A. Keith Turner,
R.A. (Registered Architect).
Both shareholders are licensed professionals.
Petitioner provides the service of research and analysis on problems relating to
architecture and structural engineering for the legal profession. The research
and analysis consists of studying the problem and exploring literature on the
subject, preparation of presentation drawings, writing detailed reports and
testifying in court as an expert witness.
Petitioner submitted a sample of a typical report that was prepared for a
client/attorney related to a case dealing with a personal injury accident. The
report consists of an analysis of the area where the accident took place and a
conclusion was reached with respect to whether the accident area represented a
safety hazard. The report is accompanied by a drawing or sketch of the accident
area which is meant to help the reader understand the details and to support the
conclusion reached.
Applicable Law
Section 1105(a) of the Tax Law imposes the sales tax on the "receipts from
every sale of tangible personal property, except as otherwise provided in this
article."
Section 1105(c) of the Tax Law imposes tax upon the receipts from every
sale, except for resale, of certain enumerated services. However, architectural
and engineering services are not among the enumerated services.

-2­
TSB-A-98(48)S
Sales Tax
July 31, 1998

Opinion
In R.H. McDermott Corp., Adv Op Comm T&F, March 2, 1988, TSB-A-88(22)S, it
was concluded that the furnishing of technical advice by a licensed professional
engineer is not deemed to be the sale of tangible personal property or the sale
of an enumerated service even if a written report is furnished as an incident to
the engineering service being performed. Such a professional service is outside
the scope of the sales tax.
Also, in EMCON, Adv Op Comm T&F, December 16, 1996, TSB-A-96(79)S, it was
concluded that the "rendering of technical advice by a licensed professional
engineer, the charge for said services, including amounts charged for copies of
reports, maps or plans furnished as an incident to these services, is not subject
to sales or use tax.... In the event the photocopies are supplied and billed
pursuant to a separate contract or agreement apart from the contract or agreement
for the sale of the engineering service, then the charges for such photocopies
will be subject to sales and compensating use tax, although the charges for the
engineering service will not be subject to said tax."
The services provided by Petitioner are performed by a licensed architect
and a licensed engineer. The services consist of research and analysis relating
to architecture and structural engineering.
Since these services are not
included in the enumerated taxable services under Section 1105(c) of the Tax Law,
the receipts of Petitioner derived from the provision of these services are not
subject to sales tax. Also, in accordance with R.H. McDermott Corp. and EMCON
supra, amounts charged for the preparation and furnishing of presentation
drawings and copies of reports are not subject to sales tax to the extent that
the drawings and copies of reports are furnished as an incident to the non­
taxable service being provided.
However, to the extent, for example, that drawings are prepared and
furnished by Petitioner to a customer pursuant to a separate contract or
agreement apart from the contract or agreement for the sale of a non-taxable
service, then the charge for the drawing would be subject to sales tax as a
receipt from the sale of tangible personal property.

DATED: July 31, 1998

NOTE:

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

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