New York State Tax Rulings
Free plain-English summaries of state tax letter rulings and advisory opinions issued in New York, with full citations and the original source on every page.
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Are admission charges to haunted houses -- and a combined concert/haunted-house ticket -- subject to NY sales tax?
Yes. A haunted house is a place of amusement, so admission charges to it are taxable under Tax Law 1105(f)(1). And a single ticket that admits a patron to a concert and also lets them enter the haunte…
A CUNY law school is buying a condominium unit and financing the purchase with bond proceeds through a wholly-owned nonprofit financing subsidiary -- the school will convey the property to the subsidiary, lease it back, and both entities will assign the lease and rents to a bond trustee as security. Since both the school and its subsidiary are New York State instrumentalities, are any of these conveyances or the mortgage-recording-tax-triggering rent assignment taxable?
Exempt from both taxes. A CUNY unit planned to buy a commercial condominium as a law school's new home, financed with taxable Build America Bonds and/or tax-exempt governmental bonds issued through a …
Are sales of an automated speech-application program -- delivered as licensed, hosted, or managed-on-premise -- subject to New York sales and use tax?
Yes. The company's automated speech applications (used by clients to handle phone calls -- routing, self-service, product/warranty support) are sold under three models: licensed for the client's inter…
New York Advisory Opinion TSB-A-10(2)C: Does an out-of-state RV maker (Jayco) owe Article 9-A franchise tax when it only solicits New York sales and uses independent dealers for warranty repairs?
Mostly no, but it depends on the facts. An out-of-state recreational-vehicle manufacturer whose only New York activity is soliciting orders (approved out of state) and whose authorized dealers perform…
Are sales of the Mirena intrauterine contraceptive to healthcare providers exempt from New York sales tax?
Yes. Mirena is a levonorgestrel-releasing intrauterine system used for contraception and to treat heavy menstrual bleeding; it releases a hormone (a drug) gradually into the body. Because Mirena and l…
New York Advisory Opinion TSB-A-10(1)C: Are distributions from a charitable remainder unitrust to its corporate beneficiary business income or investment income under Article 9-A?
They are business income. A corporation that receives distributions from a charitable remainder unitrust it set up is taxed on those distributions as Article 9-A business income, not investment income…
Is a SUNY college's mandatory $30 vehicle registration fee subject to NY sales tax when the same fee also grants on-campus parking privileges?
Yes. The college charges one $30 fee that covers both registering a vehicle and the privilege of parking it on campus. Although a SUNY college is an exempt governmental entity (Tax Law 1116(a)(1)), a …
Are a sandwich manufacturer's wholesale sales of sandwiches to convenience stores subject to New York sales tax?
No. The company manufactures sandwiches and sells them at wholesale to convenience stores in NY, NJ, and PA for off-premises resale; it provides no catering. Sandwiches are taxed under Tax Law 1105(d)…
Are website data-mining/warehousing reports and online advertising services subject to NY sales tax?
No -- neither is taxable. The data warehousing/mining reports relate exclusively to the client's own website and the vendor is barred from reselling them, so they qualify for the personal/individual e…
Is Pedialyte subject to NY sales tax?
No -- Pedialyte is exempt from sales tax under Tax Law 1115(a)(3) as a product consumed for the preservation of health. It is specifically formulated and sold for use (under a physician's supervision)…
Does a contractor owe NY tax on the waste portion of granite/marble/stone slabs used in a capital improvement?
Yes. A contractor's purchase of stone slabs to use in a capital improvement is a taxable retail purchase (sales tax if delivered in NY, use tax if bought outside and used here), and the tax is based o…
Do periodic distributions from an unfunded, nonqualified deferred compensation plan sponsored by a former employer qualify for New York's $20,000 pension and annuity income subtraction?
Yes. Because the unfunded plan's periodic payments are made after the recipient's separation from service and after he turned 59½, they constitute pension and annuity income eligible for the $20,000 s…
Are free college textbooks/review copies sent to professors and critics exempt as promotional material, or is use tax due?
Use tax is due. Free books distributed in NY to authors, book critics, professors, awards committees, and exhibitors don't qualify for the printed-promotional-material exemption in Tax Law 1115(n)(4),…
Are the hourly fees customers pay to sit at a gaming center's computers and play video games subject to New York sales tax?
Yes. The hourly play fees are subject to sales tax under Tax Law § 1105(a). The video games are prewritten computer software, which § 1101(b)(6) deems to be tangible personal property, so charging cus…
Did renting hearses, limousines, and flower cars (with a driver) to funeral homes stop being taxable once New York's June 2009 livery-transportation tax took effect?
They stay taxable. Renting hearses, limousines, and flower cars (with a driver) to funeral homes is a taxable rental of tangible personal property under Tax Law § 1105(a), not a transportation service…
Is unenhanced diesel motor fuel used to manufacture industrial gases like oxygen and nitrogen exempt from New York's diesel motor fuel, petroleum business, and sales taxes as fuel used to produce tangible personal property for sale?
Yes. Unenhanced diesel motor fuel that a manufacturer uses directly and exclusively, off the highway, to produce industrial gases (such as oxygen and nitrogen) for sale is exempt from the Article 12-A…
Is BP's construction of a wind farm on leased land a capital improvement, and which equipment is exempt?
No, it's not a capital improvement. Because BP installs the equipment on leased land under a lease that keeps title with BP, lets BP move/replace/refurbish it, and requires BP to remove everything (in…
New York Advisory Opinion TSB-A-09(17)C/(60)S: Are IBM's value-added network (VAN) and application services taxable telecommunications, how are receipts apportioned to New York, and do they qualify as exempt Internet access?
They are taxable telecommunications. IBM's value-added network (VAN), EDI, and email services are telephony/telegraphy subject to sales tax and telecommunications subject to the section 186-e excise t…
Which wind-farm components and construction services qualify for New York's exemption for electricity-generation machinery?
A commercial wind farm generating electricity for sale is an eligible production activity, so the wind turbines -- rotor blades, hub, nacelle, and tower as a unitary machine -- plus integrally connect…
Is a tenant's rent that includes utilities supplied by the landlord subject to sales tax as a utility sale?
No. The tenant's payments are a component of rent for real property, so they are not subject to sales or use tax. A landlord's base rent isn't taxable even when the landlord provides utilities as part…
Are receipts from renting photo studio space subject to New York sales tax?
No -- renting photo studio space is the rental of real property, which is not subject to New York sales or use tax, as long as the charge is solely for the space. But if the studio rental is combined …
Are a photo-shoot company's sales and the props, equipment, and services it buys subject to sales tax?
It depends on how the photo is delivered. Photographs delivered on tangible media (disc, print, flash drive) in New York are taxable; photographs delivered electronically are not taxable. Because all …
Are web-based retail site-selection reports taxable, and how is the tax sourced to local jurisdictions?
Yes, they're taxable. The reports draw on a common database of demographic and competitive market data that the provider offers to any customer, so they are taxable information services under Tax Law …
Are a drop-off child-care center's receipts subject to sales tax as admission to a place of amusement?
No. The center's receipts aren't subject to sales tax. It takes custody of and responsibility for the children it cares for -- with sign-in/sign-out contact info, authorized-pickup ID and code words, …
When a landlord reimburses a commercial tenant for the cost of building out the leased space, does the landlord owe sales or use tax on that reimbursement?
No. A landlord's disbursements from a 'Tenant Fund' to reimburse a commercial tenant for the cost of Initial Alterations (build-out) to the leased premises are not receipts from a sale of tangible per…
Are an online auction site's seller listing fees and buyer registration fees subject to sales tax?
No. Sellers' registration and per-item listing fees are charges for advertising their goods on the website -- nontaxable advertising services. Buyers' registration fees aren't taxable either: unlike a…
Are a waste-management consultant's fees and pass-through hauling charges subject to sales tax?
No. The consultant advises clients on managing waste but performs no removal itself, and it buys hauling as its clients' disclosed agent -- written agency agreements, contracts with haulers signed as …
Are in-vehicle telematics service plans subject to sales tax, including the extra 5% tax on aural information services?
They're taxable, but mostly not at the extra 5% rate. The bundled safety plans (crash response, emergency, stolen-vehicle, roadside, diagnostics, door unlock, etc.) are taxable as protective/detective…
When an S corporation's shareholders are bought out and the farmers' school property taxes are paid only after the buyout by the new owners, is the resulting tax credit allocated based on who owned shares when the taxes were actually paid, or split among all shareholders on a per-share-per-day basis?
Absent an IRC §1377(a)(2) election to close the S corporation's books at the date of a shareholder's termination, the farmers' school tax credit must be allocated among all shareholders - both before …
If a single-member LLC that already claims Empire Zone tax credits elects to be taxed as a subchapter S corporation, does that change how its Empire Zone benefits are calculated?
No, in general it does not. The Department concluded that the wage tax credit, EZ investment tax credit, EZ employment incentive credit, and QEZE real property and tax reduction credits all continue o…
Does a contractor running a village's waste facilities owe sales tax on the waste-disposal services it buys?
Yes. The contractor's purchases of waste-disposal (hauling) services are taxable. It isn't buying as the village's purchasing agent: it contracts and is invoiced in its own name, never identifies itse…
My organization is a federally chartered credit union with a payroll big enough to otherwise owe New York's MCTMT. Does federal law exempt us from it?
Yes. A federal credit union with quarterly payroll expenses over $2,500 would otherwise be an "employer" subject to MCTMT under Tax Law § 800(b). But 12 U.S.C. § 1768 broadly exempts federal credit un…
Are a lighting-design firm's services taxable when its work is incorporated into a licensed architect's or engineer's sealed drawings?
Yes. Architectural lighting design is a taxable interior decorating and designing service under Tax Law 1105(c)(7), and none of the firm's employees are licensed architects or engineers, so the statut…
Are sales of an injectable collagen implant to medical practitioners subject to sales tax?
Yes. The collagen implant -- an injectable bovine-collagen bulking agent used to treat urinary incontinence -- is a medical/surgical supply item, taxable when bought by medical practitioners for use i…
Are a medical practice's purchases of dermal fillers (Radiesse, Restylane) subject to sales tax?
Yes. Dermal fillers such as Radiesse and Restylane are medical/surgical supply items, and supplies are taxable when bought by someone performing medical services for compensation. They don't qualify a…
Which of a supermarket's products are taxable: fudge, halva, maple sugar candy, prepackaged sushi, or food gift baskets?
Fudge, halva, and maple sugar candy are taxable. They count as candy or confectionery, which is carved out of the food exemption (Tax Law 1115(a)(1)); selling fudge in the bakery section doesn't make …
Are a translation company's receipts for document, telephone, and on-site translation subject to sales tax?
No. Translation is a professional service that isn't one of the services New York's sales tax lists, so receipts for translating documents (delivered electronically), real-time telephone translation, …
Is providing a driver to drive the customer's own vehicle, with no vehicle supplied, a taxable transportation service?
No. Taxable transportation service (livery) requires the provider to furnish a motor vehicle with a driver. This staffing company supplies only a driver to operate the customer's own (or the customer'…
Are a web service provider's advertising, listing, support-database, and ASP fees subject to New York sales tax?
It varies by service. Banner ads, web listing/catalogue advertising fees for retailers and for residential leasing agents/owners, and separately stated photo setup fees are nontaxable advertising serv…
I'm an inmate at a New York State correctional facility and buy cigarettes and tobacco products from the prison commissary. Are inmate purchases exempt from New York's cigarette and tobacco products excise taxes?
No. Inmates of New York correctional facilities receive no exemption from the Article 20 excise taxes on cigarettes and tobacco products. Cigarettes sold to inmates through the prison commissary must …
If an S corporation shareholder can't deduct her full flow-through loss on her federal return because of a basis limitation, does she still have to add back the entire bonus depreciation amount for New York tax purposes?
Yes. New York provides no relief: the shareholder must add back the full $1,200,000 of IRC § 168(k) bonus depreciation passed through from her S corporation under Tax Law § 612(b)(8), regardless of th…
Can a cleaning/restoration firm buy dehumidifiers and air movers tax-free for resale when it rents them to clients?
Only if it meets four conditions. The firm cleans fire/smoke/flood-damaged buildings and offers clients optional dehumidifiers and air movers as a separate, value-added rental. Because it doesn't perm…
Can an auto repair shop pass its sales tax on consumable supplies through to the customer in the taxable repair bill?
Yes. An auto body shop properly owes sales/use tax on consumables it buys and uses up in a repair -- things like masking tape, sandpaper, plastic sheeting, and tack cloth -- because it's the user of t…
Are licenses to use customizable prewritten software taxable, and how is the tax sourced when users are in several states?
Yes, the license fees are taxable sales of prewritten software, taxed to the extent the customer's employees access the software in New York. Prewritten software is tangible personal property regardle…
Are buy-out payments a professional sports team pays a nonresident athlete to terminate his employment contract taxable as New York source income?
No. Under 20 NYCRR 132.22(b)(4)(i), termination pay and contract or option-year buy-out payments are specifically excluded from the definition of compensation for services rendered as a member of a pr…
New York Advisory Opinion TSB-A-09(16)C: Are two-way paging services subject to the Public Safety Communications Surcharge under Tax Law section 186-f?
No. A two-way paging service that runs over the provider's own mobile radio network, is not interconnected with the public switched telephone network, and gives users no real-time access to 911 or eme…
If a retired New York public school teacher rolls over her IRC §403(b) tax-deferred annuity into an IRA, are the later IRA distributions subject to New York State personal income tax?
The portion of each IRA distribution that represents a return of the rollover contribution from the school-district-funded 403(b) plan is exempt from New York tax under Tax Law § 612(c)(3)(i), because…
Can a retail gas-station operator claim the prepaid sales-tax credit for motor fuel lost to shrinkage and evaporation?
No. The up-to-2% credit for gallons lost to shrinkage, evaporation, and handling (Tax Law 1132(h)(1)(ii)) is available to a distributor holding fuel in bulk storage -- not to fuel held for sale at ret…
New York Advisory Opinion TSB-A-09(15)C: What documentation supports the telecommunications-excise-tax exemption for telecom sold to an ISP to provide Internet access?
There is no special form. To support the telecommunications-excise-tax exemption for telecom services sold to an ISP to provide Internet access, the provider should keep records for three years showin…
Are Fruit Snacks, Fruit Gushers, and Craisins taxable candy or exempt food in New York?
They're exempt food, not taxable candy. Food and food products are exempt under Tax Law 1115(a)(1) except candy and confectionery. Fruit Snacks and Fruit Gushers are substantially similar in ingredien…
New York Advisory Opinion TSB-A-09(37)S: Is a monthly license fee for the right to use a payroll processing provider's software, and are related payroll processing charges, subject to New York sales tax?
The monthly license fee for the right to use the provider's prewritten payroll software is subject to New York State and local sales tax, because a license to use prewritten computer software is a tax…
Does equipment used in a flywheel energy-storage facility that helps stabilize the electrical grid's frequency qualify for New York's sales tax exemption for machinery used to produce electricity for sale?
No. Equipment in a flywheel-based frequency-regulation facility does not qualify for New York's production exemption because it stores and returns electricity generated by others rather than generatin…
If my cleaning company buys garbage bags and trash liners to remove trash from a customer's building, do I owe sales tax on those bags, even if I bill the customer separately for them?
Yes, for bags the cleaning company uses itself. Garbage bags and liners a cleaning company consumes while removing trash from a customer's building are taxable purchases for the cleaning company, even…
If I rent reusable shipping containers to farmers who return them after use, do I have to charge sales tax on the rental, the delivery charges, and the deposit?
Yes. Because the farmers were required to return the containers instead of keeping them, the rental didn't qualify for New York's packaging-materials exemption, so the rental fee, pallet and delivery …
We're building a new power plant and selling all its output to the New York Power Authority (NYPA) under a 20-year Tolling Agreement. NYPA will be a co-mortgagee alongside our private lenders on the plant's mortgage, with the right to foreclose if we default. Is that mortgage exempt from recording tax?
Exempt, if specific conditions are met. The petitioner planned to build and operate a new power plant converting NYPA-owned natural gas into electricity, selling 100% of the output to the New York Pow…
If my company lets customers access software over the Internet from my own servers (a SaaS model), rather than installing it on their computers, do I still have to charge New York sales tax on it?
Yes. New York taxes a customer's Internet-based access to software hosted on the vendor's own servers the same as a sale of prewritten software, because the customer gains the right to use and control…
Are a publisher's payments to freelance editors who compile e-newsletter content subject to sales tax?
Yes. The independent-contractor editors compile and aggregate content from multiple trade publications and write headlines and summaries -- that's a taxable information service under Tax Law 1105(c)(1…
New York Advisory Opinion TSB-A-09(14)C: How are royalty receipts from licensing intellectual property allocated to New York for the Article 9-A business allocation percentage?
To where the licensee sells the products. Royalty receipts from licensing copyrighted and non-copyrighted intellectual property are allocated to New York based on where the activity that generates the…
We're a bank co-financing small-business real estate projects under the SBA 504 Loan Program alongside a certified development company (CDC) organized as a section 1411 not-for-profit local development corporation. Because the CDC can't fund its share until SBA debentures sell, we plan to temporarily hold its second mortgage ourselves and later assign it back. Is any part of this structure -- the CDC's mortgage, or the assignments between us -- subject to mortgage recording tax?
Exempt for the CDC's mortgage and its assignments; the bank's own first mortgage remains taxable. In a typical SBA 504 Loan Program deal, a bank lends a small business at least 50% of project costs se…
If a NYS Police and Firefighters Retirement System member rolls over a lump-sum distribution into an IRA, 457 Plan, or Roth IRA, how are later distributions from that account taxed for New York income tax purposes?
The rollover itself is not taxed. For a non-Roth IRA or 457 Plan, later distributions are exempt under Tax Law § 612(c)(3)(i) only to the extent they represent a return of the NYSPFRS contribution (tr…
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These are official tax letter rulings and advisory opinions issued by New York's revenue authority in response to questions from specific taxpayers about how the tax law applies to their facts. A ruling is binding on the department only for the taxpayer who requested it and cannot be relied on by anyone else, but it is strong evidence of how the state reads the law. Every ruling above has a plain-English question and short answer, plus a link to the full original source.