Sales tax disputes rarely attract attention outside the audit room, but some decisions quietly reshape how advisors should think about risk, compliance, and when to push back. A recent decision from Albany County Supreme Court did exactly that, holding that government-mandated site safety services are not subject to sales tax under New York Tax Law §1105(c)(8) and rejecting the Department of Taxation and Finance’s assessment position in full.

For CPAs advising construction companies, general contractors operating large or high-rise projects, and site safety management firms that have paid tax or been assessed, the ruling carries practical consequences. It clarifies the limits of New York’s sales tax statute and reinforces a point that is often lost in audits: an Advisory Opinion is not the law.

How the Issue Reached the Court

The Department’s position traced back to a 2020 Advisory Opinion concluding that site safety services required under the New York City Building Code, specifically Site Safety Managers and Site Safety Coordinators, constituted taxable “protective services.” That conclusion quickly migrated from guidance to enforcement. Assessments followed, and many taxpayers and professionals treated the issue as settled law.

It wasn’t.

Several taxpayers challenged the Department’s authority to tax these services, forcing the court to address a narrow but critical question: does the statute actually reach this activity? Because the dispute involved pure statutory interpretation, the court made clear that the Department’s interpretation was entitled to no deference. The outcome would turn entirely on the language of the Tax Law.

What Site Safety Services Actually Do

Site safety services exist because the New York City Building Code requires them. On qualifying construction and demolition projects, site safety professionals monitor compliance with approved safety plans, observe construction activity, document violations, and notify contractors or the Department of Buildings when necessary. Their role is regulatory and observational.

Just as important is what they do not do. Site safety professionals do not stop work, issue violations, order corrective action, or control the job site. They function in an advisory capacity, ensuring that required safety protocols are followed, not enforcing them.

That distinction proved dispositive.

Why “Protective Services” Was the Wrong Category

Tax Law §1105(c)(8) imposes sales tax on “protective and detective services,” a category New York courts and the Tax Appeals Tribunal have long associated with services resembling guards, patrols, watchpersons, and alarm-type systems. Those services involve active protection against theft, fire, damage to property, or immediate threats to persons.

The court rejected the Department’s attempt to stretch that category to cover site safety services. Promoting safety through regulatory compliance is not the same thing as providing security or protection. Not every service connected to safety is taxable, and sales tax statutes are not interpreted by analogy. If a service is not clearly enumerated, it is not taxable by implication.

Because site safety services neither function as guard or patrol services nor operate through alarm or protective systems, they fall outside the scope of §1105(c)(8).

The Court’s Holding

The court granted summary judgment to the taxpayers and declared that Tax Law §1105(c)(8) is wholly inapplicable to site safety services. The Department’s motion was denied, and its assessments were rejected in full, not merely reduced or reclassified.

The decision underscores an important principle: where the Legislature has not clearly imposed a tax, the courts will not allow the Department to do so through interpretation alone.

Practical Implications for CPAs and Construction Clients

For CPAs, this decision is a reminder to scrutinize assessments grounded in Advisory Opinions or aggressive statutory readings. It illustrates how easily administrative guidance can harden into audit positions, and how important it is to evaluate whether those positions can actually be defended in court.

The ruling also raises refund considerations. Companies that collected and remitted sales tax on site safety services may have refund exposure, and construction companies or developers that paid tax as customers may as well, depending on contract terms and who bore the economic burden of the tax. Refund claims in New York are highly fact-specific and time-sensitive, but they begin with a foundational question this case answers clearly: was the tax ever due?

A Broader Takeaway

This case is not just about site safety. It is about the boundaries of administrative authority and the continuing role of courts in enforcing them. New York sales tax is imposed by statute, not assumption. Advisory Opinions guide, but they do not decide.

As this decision demonstrates, challenging the assessment is sometimes not only justified, but you can beat the state on an incorrect sales tax audit.

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