An advisory opinion determined a taxpayer’s lighting design services were subject to New York sales tax. The taxpayer performs these services as a subconsultant to architects and engineers and occasionally, the actual building owner. New York imposes sales tax on the sale of interior decorating and designing services (whether or not in conjunction with the sale of tangible personal property), by anyone, including interior decorators and designers, architects or engineers. However, New York does provide an exclusion from tax for services that consist of the practice of architecture or engineering, if they are performed by a licensed architect or engineer. This exclusion applies to a licensed architects or engineers sale of architectural or engineering services and not their purchases of design services. Therefore, the taxpayer’s sale of interior design services to architects or engineers do not qualify for the resale exclusion because the architects and engineers are not themselves selling a design service subject to sales tax. The incorporation of the taxpayer’s design work into the architect’s or engineer’s own signed and sealed designs has no bearing on the taxability of taxpayer’s service. The exclusion also does not apply because the taxpayer is performing design services and none of its employees are licensed architects or engineers. The Department also determined that the taxpayer’s sale of design services to the building owners who hire an architect or engineer separately were also subject to sales tax. The incorporation of the taxpayer’s design work into the design performed by an architect or engineer does not affect the taxability of Petitioner’s service.
It was also noted that New York City sales tax does not apply to interior decorating and designing services. Therefore, the charges for the taxpayer’s services delivered in New York City are subject to New York State sales tax (including the tax imposed on behalf of the Metropolitan Commuter Transportation District), but are not subject to New York City sales tax. Interior decorating and design services are subject to State and local sales taxes outside of New York City. (TSB-A-09(61)S, New York Commissioner of Taxation and Finance, October 15, 2009, released January 2010)