Sec. 528.9. Commercial vessels

Tax Law, §§ 1105(c)(3)(iv), 1115(a)(8)

(a) Definitions.

The definitions in this section shall apply only for the purpose of the exclusions and the exemptions provided by Tax Law, sections 1105(c)(3)(iv) and 1115(a)(8) with respect to commercial vessels.

(1) Vessel. A vessel shall mean any type of water craft used for the transportation of property or persons on water. Marine cargo containers which are constructed for “containerships” are deemed to be an integral part of such vessel.

(2) Marine cargo container. A marine cargo container is an article of transport equipment which is:

(i) fully or partially enclosed to constitute a compartment intended for containing goods;

(ii) of a permanent character and accordingly strong enough to be suitable for repeated use;

(iii) specially designed to facilitate the carriage of goods, by one or more modes of transport, without intermediate reloading;

(iv) designed for ready handling, particularly when being transferred from one mode of transport to another;

(v) designed to be easy to fill and to empty; and

(vi) having an integral volume of one cubic meter or more.

The term marine cargo container shall include the accessories and equipment of the container, appropriate for the type concerned, provided that such accessories and equipment are carried with the container. The term marine cargo container shall not include vehicles, accessories or spare parts of vehicles, or packaging.

(3) Commercial vessel. A Commercial vessel is any vessel used or engaged in the transportation for hire of persons or property on water. Any vessel used or engaged for other purposes on more than an occasional basis is not a commercial vessel.

(4) Commercial vessel primarily engaged in interstate or foreign commerce. A commercial vessel primarily engaged in interstate or foreign commerce when 50 percent or more of the receipts from the vessel's activities are derived from interstate or foreign commerce.

(5) Interstate or foreign commerce. Interstate or foreign commerce means the transportation of persons or property between states or countries.

(b) Exemption.

(1) Receipts from the sale of the following are exempt from the sales and compensating use tax:

(i) commercial vessels primarily engaged in interstate or foreign commerce;

(ii) property used by or purchased for the use of such vessels for fuel, provisions, supplies, maintenance and repairs; and

(iii) the services of installing, maintaining, servicing or repairing such commercial vessels or property. (See section 527.5 of this Title, installing, maintaining, servicing and repairing tangible personal property.)

(2) The exemption from the sales and use tax does not apply to:

(i) property purchased for or used in the original equipping of a new ship; or

(ii) the services of installing such property in the equipping of a new ship.

(c) Property used by or purchased for the use of commercial vessels.

The following are examples of property used by or purchased for the use of commercial vessels:

(1) Sea stores includes all articles, supplies and provisions taken on board a vessel, necessary for the sustenance and maintenance of its passengers and crew during a voyage. Some specific sea stores are:

foods

medicines

soap

toilet articles

rubber boots

uniforms

paper towels

toilet tissue

tooth paste

razor blades

overalls

rain and foul weather gear

(2) Ships stores includes all articles, materials or supplies taken aboard a vessel, necessary and used for the maintenance of the ship during a voyage. Some specific ships stores are:

bolts

nuts

nails

grease

oil

spare parts

paints

varnishes

paint brushes

hand tools

(3) Ships equipment includes all articles which are necessary for navigation or operation of the vessel or for the safety or accommodation of persons or cargo aboard. Some specific ships equipment is:

anchors

chains

lines

cables

rigging

sails

lifeboats

wireless equipment

search lights

furniture

carpet

china

urinals

lamps

glassware

tableware

fixtures

ballast

lifesaving apparatus

bathtubs

tackles

winches

nautical instruments

signal lights

tableware

kitchen utensils

table utensils

bedding

sheets and blankets

towels

cabin furniture

electric lightbulbs

flexible metal hose

(See subparagraph [b][2][i] of this section.)

(d) Services performed on or for commercial vessels.

The following are some of the services performed on or for commercial vessels.

(1) Services exempt from the sales tax includes the maintenance or repair of the vessel itself or components of the vessel and the installation or servicing of replacement equipment on vessels. Some of the exempt services are:

painting

hull cleaning

carpentry

hold cleaning

ship sealing

repair and maintenance of:

radar

navigational aids

on-board cargo handling equipment

marine cargo containers

canvas

office equipment

(2) Some of the services not subject to tax are:

stevedoring

cargo weighing

piloting

clerking and checking during cargo handling

(3) Tug boat services are considered to be exempt transporting services.

(4) The following are taxable:

(i) trash and garbage removal from the pier or docking area;

(ii) the purchase or rental of tangible personal property for the performance of stevedoring services; and

(iii) the purchase of on-dock gas, electric and telephone services, except out-of-state telephone calls.