The New York State Department of Taxation and Finance, Office of Counsel, Advisory Opinion Unit recently issued an opinion concerning the application of sales tax on the installation, rental and dismantling of temporary pedestrian walkways (sidewalk sheds) on capital improvement projects.  A taxpayer had posed two questions for an advisory opinion, (1) are such sales taxable when the compensation is stated as a lump sum for the rental and the service combined, and (2) would the tax be applicable if the rental and installation charges were separately stated on invoices?

In a brief opinion, the Unit concluded that as long as the installation and equipment was a “temporary facility” that is a “necessary prerequisite” to a capital improvement, the lump sum of rental and service would not be subject to sales tax charges.

As to the second question concerning separately stating charges, the Unit advised that separately stating charges for the installation and dismantling services would not be subject to sales tax, provided they were reasonable in relation to the total price.  However, the separate changes for rental costs would be taxable.  In such a case, if the equipment were purchased for subsequent rental, the petitioner could present a resale certificate to the seller to purchase the equipment to avoid incurring sales tax.

In the event the petitioner had collected and paid sales taxes when not due for reasons set forth in the opinion, petitioner could claim a credit provided the tax had been refunded to the customer.  Refund claims can be made up to three years after the tax was payable to the Department.  (See Opinion, TSB-A-13(11)S, April 11, 2013.)