SALT TALK: They Call It Instant Justice - Sales Tax on Protective and Detective Services Clarified

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Jan 27, 2020 12:00:00 PM
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For those of you watching the detectives or the receptionists, we have some good news:  A New York State Tax Appeals Tribunal decision[1] provides some clarity and reason.

New York State subjects protective and detective services to sales tax.   The problem has been that there is no definition in the Tax Law as to what these services actually constitute and the Tax Department’s view has been broadening over the years.  One 2011 Advisory Opinion goes as far as to say that lifeguard services constitute protective services and are subject to sales tax.

Building owners and management companies were put in a particularly precarious situation.  How should the services of a building “receptionist” or doorman be treated?  What about a virtual doorman, monitoring multiple buildings remotely?  Does checking guests in and issuing a visitor pass cross the line?  What about informing a visitor that they aren’t expected and can’t enter the building?

Fortunately for AlliedBarton, the “receptionists” were instructed not to confront belligerent guests and didn’t have badges, handcuffs, guns or weapons of any kind!  The Tribunal also noted that New York State did not require license to perform these duties. 

Despite the Department’s foray into taxing the universe of clerical services, the Tribunal correctly stated that this was a simple matter of statutory construction and when the wording and intent of the statute are clear, there is no reason to defer to the expertise of the state agency that administers the statute. 

The Tribunal clarified for us that checking identification and issuing building passes does not rise to the level of taxable protective and detective services.  However, it is critical to be aware that a multitude of services could be provided -- some taxable, some not -- that could result in subjecting the entire service to tax.  It is crucial to review specified duties as set forth in contracts with providers as well as carefully reviewing invoices to ensure that the most tax efficient structure is being utilized. 

Questions about sales and use tax? Contact me at or your Berdon advisor.

Wayne Berkowitz, a tax partner and co-leader of the State and Local Tax Group at Berdon LLP, advises on the unique requirements of governments and municipalities across the nation.

[1] In the Matter of AlliedBarton Security Services LLC, DTA No. 825169 (February 16, 2016).




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