NY Sales Tax on Construction Safety Services

Issue: Unfair Taxation of Site Safety Manager & Related Services

The New York State Department of Taxation and Finance (NYSDTF) has unilaterally determined that construction site safety manager, site safety coordinator and concrete safety manager services, all of which are mandated by New York City law, fall within the definition of “protective and detective services” under New York State Tax Law, and are therefore subject to full state sales tax liability.

Making matters worse, NYSDTF is applying this arbitrary determination retroactively, resulting in enormous and unexpected sales tax bills being sent to site safety companies, some of whom are now being saddled with many prior years’ worth of unexpected sales tax liability.

We object to NYSDTF’s taxation of site safety manager services for the following reasons:

• Misclassification: Site safety manager, coordinator and concrete safety manager services should not be included within the definition of “protective and detective services” under New York State Tax Law, because this is not an accurate description of the bulk of services that these companies are mandated to provide under the NYC Building Code. The primary goal and services of site safety companies is to prevent accidents at construction sites, and enhance safety for both construction workers and the public. It is not to provide services that have traditionally been defined as “protective and detective services.”
• Retroactive Application: Site safety companies are now being penalized retroactively for failing to collect sales taxes on services they had no reason to believe should have ever been subject to state sales tax liability in the first place.
• Financial Devastation: The back taxes and penalties recently and unexpectedly imposed by NYSDTF on site safety companies threatens the viability of many of these businesses, particularly the smaller and MWBE site safety companies, which could be put out of business if they remain liable for payment of these taxes.

Call to Action:

To address this inequity, NYCSA is seeking the introduction of remedial state legislation that would:

• Exempt certified site safety managers, coordinators, and concrete safety managers from sales and use tax under New York State Tax Law.
• Retroactively void all tax assessments related to these services dating back to 2015.
• Authorize refunds for taxes already paid, and stop ongoing audits and collection proceedings currently impacting our businesses.
• Promote dialogue with NYSDTF for a fair and equitable tax solution going forward.