Are helicopter sightseeing rides and tours a taxable equipment rental or an exempt transportation service, and are aerial photos sold to passengers taxable?

Plain-English summary

Helicorp, Inc. offers helicopter rides and aerial sightseeing tours, ranging from a six-minute ride to an hour-long tour, at fixed prices for fixed durations. Customers pick a destination, but Helicorp's own pilot picks the actual flight path. Helicorp owns and maintains the helicopters, hires and pays its own pilots, and covers all operating costs (fuel, insurance, registration). It also asked about a proposed new line of business: having an employee take aerial photographs during tours to sell to passengers afterward.

The Department applied its long-standing "dominion and control" test (originally developed for bus charters, and already extended to hot-air balloons and boat cruises) to decide whether this is a taxable rental of the helicopter (tangible personal property) or an exempt transportation service. Because Helicorp never gives up possession or control of the helicopter -- it retains the right to hire/fire pilots, chooses routes at its own discretion, pays all operating expenses, and stays responsible for the aircraft throughout -- it keeps "dominion and control," which means the flights are an exempt transportation service rather than a taxable equipment rental. On the photography question, taking pictures during the flight isn't taxed at all if no photo is actually purchased. But once Helicorp sells an aerial photograph to a customer, that's a straightforward taxable sale of tangible personal property (a photograph), regardless of whether it's sold together with the (nontaxable) flight -- as long as Helicorp separately states a reasonable charge for the transportation service so the tax applies only to the photo.

What this means for you

Helicopter, boat, balloon, and similar tour/charter operators

The dominion-and-control test is the recurring key question across this whole category of businesses: do you (the operator) keep possession, choose your own route/pilot, and pay your own operating costs, or does the customer effectively take over control of the vehicle? If you keep control, you're providing an exempt transportation service; if the customer effectively takes the vehicle under their own control (bareboat charters are the classic contrast), you may be making a taxable equipment rental instead.

Tour operators considering add-on merchandise like photos or souvenirs

Selling tangible items (photographs, videos, branded merchandise) alongside an otherwise-exempt tour doesn't make the whole package taxable -- but you do need to separately state a reasonable charge for the transportation portion so tax applies only to the taxable merchandise, not the whole bundled price.

Accountants and tax professionals

This opinion is a clean, short application of TSB-M-84(7)S's five-factor dominion-and-control checklist (no transfer of possession/control, owner hires/fires operators, owner exercises route discretion, owner retains operational responsibility, owner pays all operating expenses) to a new mode of transportation (helicopters), following the same line as hot-air balloon and boat-cruise rulings already in this doctrine.

Common questions

Q: What makes a helicopter tour a transportation service instead of an equipment rental?
A: The operator retaining "dominion and control" of the aircraft -- keeping possession, choosing the pilot and route, and paying all operating expenses -- rather than turning control of the helicopter over to the customer.

Q: Are aerial photographs taken during a tour automatically taxable?
A: No -- only if the customer actually purchases a photograph. Simply taking pictures during a flight that no one buys isn't a taxable event.

Q: If photos are sold together with the flight, is the whole package taxed?
A: No -- only the separately stated, reasonable charge for the photographs is taxable; the transportation charge stays exempt if properly separated on the bill.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(5) (definition of "sale, selling or purchase")
• Tax Law § 1101(b)(6) (definition of "tangible personal property")
• Tax Law § 1105(a), (c) (imposition on tangible personal property and enumerated services)
• 20 NYCRR § 526.7(e) (transfer of possession)
• 20 NYCRR § 526.8(a) (tangible personal property; artistic items)
• TSB-M-84(7)S (bus company transportation service vs. equipment rental)

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_83s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-98(83)S
Sales Tax
December 2, 1998

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S980924A

On September 24, 1998, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Helicorp, Inc., 8473 State Route 69, Oriskany, New York 13424.
The issues raised by Petitioner, Helicorp, Inc., are:
(1) Whether the helicopter services it provides are subject to sales and compensating use
taxes imposed under Article 28 of the Tax Law.
(2) If Petitioner were to offer aerial photographs for sale, would receipts from the charges for
such photographs be subject to sales and compensating use tax?
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner is a helicopter services company engaged in the business of providing the use of
its helicopters, including its services as a pilot, for specified periods of time at predetermined prices.
The amount of time varies from approximately six minutes for a short ride to approximately one
hour for an aerial sightseeing tour. Although the destinations are predetermined and chosen by the
customer, the route taken is determined by the pilot and is generally a straight line to the agreed upon
destination (in the air).
Petitioner is solely responsible for the operation of its helicopters and to pay all registration
fees and miscellaneous expenses such as fuel and insurance. Petitioner has the right to hire and fire
its pilots and pays their wages.
Currently, many of Petitioner’s customers bring photographic equipment on board the
helicopter to take pictures during their tours. Petitioner is contemplating sending one of its
employees on each tour to take aerial photographs and offer them for sale to its customers.
Applicable Authority
Section 1101(b) of the Tax Law provides, in part:
When used in this article for the purposes of the taxes imposed by
subdivisions (a), (b), (c) and (d) of section eleven hundred five and by section eleven
hundred ten, the following terms shall mean:

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(5) Sale, selling or purchase. Any transfer of title or possession or both,
exchange or barter, rental, lease or license to use or consume . . . for a consideration,
or any agreement therefore, including the rendering of any service, taxable under this
article, for a consideration or any agreement therefor.
(6) Tangible personal property. Corporeal personal property of any nature....
Section 1105(a) of the Tax Law imposes sales tax on the receipts from sales (including
rentals) of tangible personal property.
Section 1105(c) of the Tax Law imposes tax upon the receipts from every sale, except for
resale, of certain enumerated services.
Section 526.7(e) of the Sales and Use Tax Regulations provides, in part:
(4) Transfer of possession with respect to a rental, lease or license to use,
means that one of the following attributes of property ownership has been transferred:
(i) custody or possession of the tangible personal property, actual or
constructive;
(ii) the right to custody or possession of the tangible personal property;
(iii) the right to use, or control or direct the use of, tangible personal property.
Section 526.8(a) of the Sales and Use Tax Regulations provides, in part:
Definition. The term tangible personal property means corporeal personal
property of any nature having a material existence and perceptibility to the human
senses. Tangible personal property includes, without limitation:
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(3) artistic items, such as sketches, paintings, photographs, moving picture
films and recordings. . . .
Technical Services Bureau Memorandum TSB-M-84(7)S, dated April 10, 1984, entitled Bus
Company Transactions -- Transportation Service vs. Equipment Rental, provides, in part:

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1. Where a bus company conducts a tour for which it determines the time and
   destination and sells tickets at a predetermined price, the company is providing a
   transportation service which is exempt.
2. Where a bus company charters a bus to a group, and the bus company
   retains dominion and control over the bus, the bus company is engaged in providing
   a transportation service and, therefore, the charges are exempt from sales tax. A
   chartering party’s rights are limited to boarding the bus and riding to the agreed
   destination....
   Dominion and control remains with the owner of a vehicle when pursuant
   to an agreement or contract:
3. there is no transfer of possession, control and/or use of the vehicle during
   the terms of the agreement or contract; and
4. the owner maintains the right to hire and fire the drivers; and
5. the owner uses his own discretion in performing the service ... and
   generally selects his own routes; and
6. the owner retains the responsibility for the operation of the vehicle; and
7. the owner directs the operation, pays all operating expenses, including
   drivers’ wages, insurance, tolls and fuels.
   Opinion
   Petitioner operates a helicopter services business providing rides and aerial sightseeing tours
   to paying customers. Whether the chartering of a helicopter constitutes the furnishing of an exempt
   transportation service rather than a taxable rental of tangible personal property within the meaning
   and intent of Section 1101(b)(5) of the Tax Law turns upon the question of dominion and control
   (see 1000 Island Balloon Co., Adv Op Comm T&F, May 28, 1986, TSB-A-86(22)S; Henry F.
   Geerken, Adv Op Comm T&F, August 25, 1997, TSB-A-97(52)S; Klondike Cruises, Inc., Adv Op
   Comm T&F, July 29, 1998, TSB-A-98(46)S).
   The criteria set forth in TSB-M-84(7)S, supra, are useful in determining whether Petitioner
   has relinquished dominion and control of its helicopter within the meaning of Section 526.7(e) of
   the Sales and Use Tax Regulations. Petitioner provides helicopter rides/tours to predetermined
   destinations for fixed periods of time at predetermined prices. Petitioner retains possession of the
   helicopter, has the right to hire and fire any pilots, uses its discretion in operating the helicopter, pays
   all operating expenses including the pilot’s wages and retains the responsibility for the operation of

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the helicopter at all times. In fulfilling all of the requirements listed in TSB-M-84(7)S, supra,
Petitioner is deemed to retain dominion and control over the helicopter and is thus providing a
transportation service which is not one of the services enumerated under Section 1105(c) of the Tax
Law and, therefore, is not subject to the imposition of sales or use tax (Henry F. Geerken, supra;
Klondike cruises, Inc., supra).
With regard to issue “2,” receipts from Petitioner’s charges to customers for photographing
aerial views are not taxable if the customer does not purchase a photograph. However, such receipts
will be subject to the tax imposed under Section 1105(a) of the Tax Law where the photographs are
transferred to the customer, as such transaction will be considered a sale of tangible personal
property (see Leslie H. Barker, Adv Op Comm T&F, June 23, 1994, TSB-A-94(26)S; The
Association of Professional Art Advisors, Adv Op Comm T&F, July 5, 1991, TSB-A-91(47)S).
In those instances where Petitioner sells photographs together with its transportation service,
Petitioner should collect sales tax only on the charge for the photographs, assuming that Petitioner’s
charges for the nontaxable transportation service are separately stated and reasonable.

DATED: December 2, 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.