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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Is laser and IPL hair removal performed by trained but unlicensed technicians in a New York City clinic subject to the city's local sales tax on electrolysis services?
Yes, but only the New York City local tax applies, not New York State tax. Laser and IPL hair removal is similar enough to electrolysis that New York City's local tax on electrolysis and similar cosme…
Can a Qualified Empire Zone Enterprise construction contractor buy tool trucks, cranes, and related equipment tax-free when they spend most of their time at out-of-zone construction sites rather than in the zone yard?
It depends on how each piece of equipment is actually used, not where it's parked. Tool trucks qualify for the QEZE sales tax exemption if at least 50% of their trips originate or end in the empire zo…
Does medical equipment used to perform Lasik eye surgery qualify for the New York investment tax credit?
No. The investment tax credit under section 210.12 (Article 9-A) and section 606(a) (Article 22) requires property used in qualifying activities such as manufacturing or production of goods. A physici…
Does a sub-subcontractor sorting World Trade Center debris for the NYPD owe sales tax on its equipment, rentals, and consumables, even though its ultimate customer is a tax-exempt government agency?
The subcontractor's own purchases and rentals of equipment, tires, maintenance items, and consumables are subject to New York sales tax, even though the ultimate customer is the tax-exempt NYPD — the …
Can a private utility include its section 186-a gross receipts tax in the transmission charges it bills to a municipal electric system?
Yes. The municipal electric system is excluded from the definition of "person" under section 186-a.2(b), so it is not itself a 186-a utility. But the private transmission utility is subject to section…
Are charges for a company's service of retrieving individual police accident reports from local police departments and delivering copies to an auto insurer subject to New York sales tax?
Yes. A company that retrieves individual copies of police accident reports from local police departments (one report at a time, by request) and delivers them to an insurance company is providing a tax…
Is 'tomato pie' — a cold, bread-dough-and-tomato baked good sold by the slice at an Italian deli — exempt from New York sales tax as a bakery item?
Yes. Tomato pie — a bread-dough-and-tomato baked good intended to be eaten cold or at room temperature — is exempt from New York sales tax as a baked good sold for human consumption, as long as it's s…
Is an Internet cafe's charge for computer workstation access exempt as Internet access service, even though food and drinks are also available on the premises from a separate vendor?
Yes. Charges for using an Internet cafe's workstations (view-only computers that just browse the web and email, with no ability to edit, save, print, or run other software) are exempt as Internet acce…
Does an LLC taxed as a partnership owe New York's annual filing fee for a year in which its only income was bank interest on proceeds from a prior property sale, with no other business activity?
No. Because the LLC's only 2003 income was interest on a bank account, and that money was not employed in any business, trade, profession, or occupation carried on in New York, the LLC had no New York…
Must a tax-exempt school district pay the Article 33 insurance tax that its insurer lists as a separately stated charge in the health insurance premium?
The tax is on the insurer, not the school district. A separately stated "state tax" amount in the health insurance premium reflects the Article 33 section 1502-a franchise tax imposed on the insurance…
Is an out-of-state professional employer organization subject to New York franchise tax because it processes payroll for two New York-resident drivers who work outside New York?
No. An Ohio professional employer organization whose only New York connection is processing payroll (for a fee) for two New York-resident truck drivers who work for an Ohio trucking company and do not…
Was a 2003 claim for refund on an amended 1999 New York personal income tax return, filed after the original return itself was filed late, timely under the Tax Law's statute of limitations?
Yes. Because the petitioner's original 1999 New York return was filed (and the tax paid) on August 21, 2001, Tax Law § 687(a) gave him three years from that filing date - until August 21, 2004 - to fi…
Which of a video/audio advertising production company's many line-item charges (scriptwriting, shooting, editing, studio rental, tangible media) are taxable to its clients, and which of its own production purchases qualify for exemption?
It depends on delivery format and purchase category. Selling a finished commercial on tape, CD, or other physical media is a fully taxable sale of tangible personal property — and every itemized produ…
Will the 1934 Rockefeller family trusts become subject to New York State or New York City income tax if their corporate trustee is replaced with a Delaware trust company and the two New York-domiciled members of the trusts' controlling Committee are replaced by people not domiciled in New York?
Not automatically. The trusts are New York resident trusts because the grantor was domiciled here when they became irrevocable, but Tax Law § 605(b)(3)(D) exempts a resident trust from tax if all trus…
Are an HR-outsourcing company's fees for administering health/welfare benefits, retirement plans, COBRA/flex spending, and pre-employment background checks subject to New York sales tax?
Mostly no, with one exception. Start-up and ongoing charges for Health and Welfare Administration, Retirement Services Administration, and COBRA/Flex Spending Account Administration are nontaxable — t…
If nonresident individuals, estates, and trusts are partners in an upper-tier partnership that invests in a lower-tier fund trading securities solely for its own account, is that trading income treated as New York source income - even if the upper-tier partnership also invests in another lower-tier entity that does business in New York?
No, as to the trading fund. Under Tax Law § 631(d) and the tiered-partnership regulation, 20 NYCRR 137.6, income a lower-tier Master Fund earns from trading stocks and securities solely for its own ac…
Can a New York insurance company carry back its 2002 New York net operating loss to 1997 under Article 33 when it could not carry back the federal loss to that year?
No. For Article 33, an insurer's New York NOL deduction must arise from the same source year as its federal NOL deduction. The company could not carry its 2002 federal NOL back to 1997 because its 199…
When two commonly owned manufacturers share one unmetered facility and one pays 'rent' to the other for a share of the electric bill, is that charge a taxable utility resale, and does the manufacturing exemption still apply?
The landlord company's charges to its tenant company for a square-footage-based estimate of electricity usage are NOT a taxable utility resale — since there's no separate meter measuring the tenant's …
Are a securities self-regulatory organization's mandatory bond-transaction reporting fees and its market-data subscription fees both taxable in New York, or just one of them?
Only the market-data fees are taxable. A securities self-regulatory organization's basic fees for members to satisfy their federally mandated corporate-bond transaction reporting (System Fees, Transac…
Are wages paid to an injured firefighter who was reassigned to desk duty (rather than retired) subject to New York State personal income tax and withholding?
Yes. Because the firefighter was reassigned to desk duty rather than retired on disability, and was not permanently and totally disabled, his wages don't qualify for the Tax Law § 612(c)(3-b)(i) disab…
Can a toll galvanizing processor buy forklifts, forklift repairs, and forklift fuel tax-free when the forklifts move customers' steel between storage, the galvanizing plant, and shipping?
It depends on which part of the forklift's job you're looking at. A toll processor (like a galvanizer working on a customer's own steel) still counts as 'producing tangible personal property for sale'…
Does a hunting-preserve lodge owe sales tax on its per-animal charge when a client shoots a game animal, and on its taxidermy or butchering add-ons?
Yes to both. The per-animal fee is a taxable sale of tangible personal property — at the moment the client shoots the animal, it isn't yet an edible food product, so the food exemption doesn't apply, …
When is a seller required to collect New York sales tax on renting or licensing a mailing list to a business or a college?
It depends on what the buyer does with the list and who the buyer is. Renting a mailing list is a taxable sale by default unless the buyer gives the seller a valid exemption document within 90 days. A…
Does a hotel owe New York's hotel occupancy tax on payments its franchisor makes for free rooms given to guests redeeming loyalty-program reward points?
Yes. Even though the guest pays nothing to stay, the hotel is still receiving 'rent' — just from its franchisor instead of the guest — because the franchisor pays the hotel a room-rate-based amount ev…
Is an out-of-state manufacturer subject to New York franchise tax because a director listed the company's phone number in a New York directory without the company's knowledge?
No. An Ohio manufacturer of currency-changing equipment is not subject to Article 9-A where its only New York link was a telephone listing a director placed (using her own home number) in a New York d…
The Army is leasing land at Fort Hamilton Military Base to our LLC for 50 years (no rent) so we can demolish and rebuild deteriorated military family housing, with the Army and a private developer (GMH) as our only two members. The Army will hold no less than 90% of the beneficial interest in the underlying property, with GMH acquiring no more than 10% as its share for managing and eventually capital-contributing to the project. Because this is federal military property and the Army pays no consideration for our lease, is any part of this conveyance subject to New York's Real Estate Transfer Tax?
Partially taxable -- RETT applies, but only to the extent of the private co-member's minority beneficial interest, not the whole property. Under the federal Military Housing Privatization Initiative, …
Are a contractor's charges for mold-mitigation work on homes damaged by fire subject to New York sales tax?
Usually yes — removing damp, musty walls, ceilings, and flooring and drying out a fire-damaged home is a taxable real-property repair service, so the contractor must collect sales tax on its charges (…
Does a tax-exempt social club owe New York's Article 13 minimum tax on unrelated business income when its federal unrelated business taxable income is zero?
Yes. A section 501(c)(7) social club that carries on an unrelated trade or business in New York is subject to the Article 13 tax under section 290(a), which imposes a minimum tax of $250. That minimum…
Is a new subsidiary a "new business" eligible for the refundable Empire Zone wage credit and QEZE benefits when it is wholly owned by an existing New York taxpayer but does different work?
Yes. A new subsidiary (Newco) that will perform healthcare-claims processing -- work unrelated to its parent's New York sales activity -- is a new business under section 210.12(j)/210.19(e) (so the EZ…
Does an out-of-state jewelry maker lose Public Law 86-272 protection by making retail sales and collecting sales tax at New York trade shows?
Yes, it loses protection and is taxable. An out-of-state jewelry manufacturer that attends New York wholesale trade shows to take orders (approved out of state) would stay within Public Law 86-272 sol…
Emma Fonti, over 60, deeded her home to her two adult children (both under 60) while keeping a life estate, and now wants a reverse mortgage with her children as co-mortgagors. Does that reverse mortgage qualify for New York's mortgage recording tax exemption, given that some titleholders are under 60 and there's no living trust involved?
Exemption NOT established on these facts. Emma Fonti, over 60, wanted a reverse mortgage on her New York residence, but had earlier deeded the property to her two children (both under 60), retaining a…
If a Connecticut domiciliary who spends over 183 days working in New York donates the use of his East Hampton house to a charity for three months, does he still maintain a permanent place of abode in New York for statutory residency purposes?
No. Because the individual executes a written lease giving the charity sole and exclusive use of the house for a continuous three-month period and has no access to it during that time, the East Hampto…
Is a company's fee for a phone-in employee time-and-attendance monitoring service subject to New York sales tax, and does the company owe tax on the telephone service it buys to run it?
No on the service fee — a phone-in employee time-and-attendance tracking service isn't sales-taxable because it isn't a taxable telephone answering service (taking messages is only incidental to it) a…
Are a physician support company's per-message voice-mail lab-results service and its after-hours nurse triage-call service subject to New York sales tax?
Split result. The lab-results voice-messaging service — where a physician calls in and records a message a patient later retrieves by PIN — is a taxable telephone/voice-mail service, because every par…
When a home builder sends buyers to a related materials supplier for paid upgrades, who does the supplier have to charge sales tax to — the builder or the home buyer — and can it accept a Certificate of Capital Improvement?
The supplier must charge sales tax to the builder, not the home buyer, even when the home buyer pays part of the upgrade cost directly to the supplier. A materials supplier's sale of building material…
Can a broker-dealer claim the investment tax credit on a building it owns when part of it is used by affiliated banks that are regulated securities dealers?
Yes, if the combined qualifying use exceeds 50%. For the section 210.12 investment tax credit, property is eligible if it is principally used in qualifying broker-dealer activities under section 210.1…
Can an LLC's members still claim New York's empire zone wage tax credit for 2003 and 2004 if the credit's five-year window already began back in 1998?
No. Under Tax Law § 606(k), the empire zone wage tax credit is allowed for only five consecutive taxable years, beginning with the first year a taxpayer's wages qualified. Because Petitioner's members…
Does a record label owe sales tax on hairstylist and makeup artist services it hires for CD, video, and DVD cover-art photo shoots?
Not state tax — hairstylist and makeup artist services aren't among the services New York State taxes under section 1105(c), so no state or MCTD sales tax applies, even though the label is using them …
Must a gas vendor include in its section 186-a gross receipts the money it receives from selling natural gas to an independent power producer that burns the gas to generate electricity?
Yes. The vendor is a utility under section 186-a, and its receipts from selling natural gas to an independent power producer that uses the gas to generate electricity in New York are taxable gross rec…
Are membership dues paid to a traditional fox-hunting and trap-shooting club subject to New York's club dues sales tax?
No. Since October 1, 1996, dues and initiation fees paid to a genuine rod or gun club — including a hunting club like this one, which maintains a trap range and fox-hound/beagle kennels for hunting ra…
Does a fabless semiconductor company's production-testing of chips made by contract foundries count as manufacturing for the New York investment tax credit?
Yes. A fabless semiconductor company's Manufacturing Production Test Process -- testing the packaged devices that contract foundries and assemblers produced to its specifications -- is part of produci…
Is an independent contractor's service of turning a record company's flat promotional poster into a 3-D in-store display taxable in New York?
Yes, if the finished 3-D poster is delivered to and used at a store in New York. Converting a customer-furnished flat poster into a three-dimensional version is a taxable fabricating service, and beca…
Are lease payments for satellite transponders included in the New York property factor, and how are they valued?
Only the tangible portion is included. A satellite transponder lease covers both tangible property (the transponder, which is tangible personal property under section 208.11) and intangible property (…
We're a joint venture between the U.S. Army and a private housing manager, formed under the federal Military Housing Privatization Initiative to rebuild military housing at Fort Hamilton. We'll issue bonds secured by a leasehold mortgage that the Army will execute and record as co-mortgagor. Is that mortgage exempt from New York's mortgage recording tax because the Army is a party?
Exempt. Fort Hamilton Housing LLC is a joint venture between the U.S. Army and a private military-housing manager (GMH), formed under the federal Military Housing Privatization Initiative (10 U.S.C. s…
If a Connecticut resident occasionally works in New York, then later takes a New York City job and buys a Manhattan apartment, when does he have to file a New York nonresident or resident personal income tax return, and how does he allocate his wages?
In each year described, the individual - a Connecticut domiciliary who never met both parts of New York's statutory residency test (a permanent place of abode maintained substantially all year plus mo…
Can a leasing LLC buy an aircraft tax-free and pass the commercial-aircraft sales tax exemption through to the affiliated and unrelated companies that lease and operate it?
Yes, as long as the corporate structure is respected and the lessees actually meet the commercial-aircraft test. A holding company whose only activity is leasing out an aircraft can buy it tax-free as…
Does a retailer owe sales tax when it resells USPS postage stamps and pre-stamped Priority Mail envelopes at or below face value?
No. Buying a postage stamp for its intended purpose — prepaying for mail delivery — is really just buying an intangible right to USPS delivery service, not buying tangible personal property, so it's u…
When a related corporation merges into a new Empire Zone corporation, can the survivor count the predecessor's employees for the Empire Zone wage tax credit?
Yes, with conditions. When a related corporation merges into a newly formed Empire Zone corporation, the merged corporation's rights and obligations as to its employees transfer to the survivor and do…
Can a car dealership get a refund of the sales tax it paid on gasoline used to fill a new vehicle's tank before delivery to the customer?
Only if the dealer can show it's contractually or documentarily committed to providing a full tank as part of the sale — a manufacturer's window sticker listing a full tank in the MSRP, or the dealer'…
Does a resort owe hotel occupancy tax on its separate self-contained housekeeping units, given that it already collects tax on its adjoining motel rooms?
It depends entirely on rental length and services provided, not on what the resort does with its motel rooms next door. Weekly (or longer) rentals of the resort's self-contained housekeeping units — w…
Is a New York-organized corporation eligible for franchise tax exemptions, and what must it do to claim Empire Zone wage credits and become a QEZE?
A New York-organized corporation (SLIC) cannot use the section 209.2 exemptions, which apply only to foreign corporations, so it is subject to Article 9-A. The Empire Zone wage tax credit (section 210…
Is an out-of-state life insurer that invests in New York mortgages through a partnership and receives orphan premiums subject to Article 33 instead of Article 9-A, and what is its tax?
It is subject to Article 33, not Article 9-A, and its computed tax is zero but it must still file. The insurer is doing business in New York through a partnership that invests in New York-secured mort…
Is an out-of-state life insurer that invests in New York mortgages through a partnership and receives orphan premiums subject to Article 33 instead of Article 9-A, and what is its tax?
It is subject to Article 33, not Article 9-A, and its computed tax is zero but it must still file. The insurer is doing business in New York through a partnership that invests in New York-secured mort…
Is an out-of-state life insurer that invests in New York mortgages through a partnership and receives orphan premiums subject to Article 33 instead of Article 9-A, and what is its tax?
It is subject to Article 33, not Article 9-A, and its computed tax is zero but it must still file. The insurer is doing business in New York through a partnership that invests in New York-secured mort…
Is an out-of-state life insurer that invests in New York mortgages through a partnership and receives orphan premiums subject to Article 33 instead of Article 9-A, and what is its tax?
It is subject to Article 33, not Article 9-A, and its computed tax is zero but it must still file. The insurer is doing business in New York through a partnership that invests in New York-secured mort…
For the brownfield redevelopment tax credit, do new buildings built on a remediated site count toward the tangible property credit, can LLC partners claim their share on their personal income tax returns, and do cleanup costs paid before the credit's 2005 effective date still qualify?
Yes to all three questions, as long as the underlying conditions are met. New buildings and their structural components built on a remediated brownfield site can qualify as tangible property under Tax…
Does an online travel-booking intermediary have to collect New York hotel occupancy tax on payments consumers make through its website?
No — not under the facts described here. The hotel operator, not the online booking company, is the one required to collect and remit New York hotel occupancy tax, because the booking company never op…
Is installing a hard-wired home security system a tax-exempt capital improvement, a taxable equipment installation, or a taxable protective service?
It depends on three specific conditions, not just on whether wires run through the walls. A hard-wired alarm system is a tax-exempt capital improvement ONLY if it (1) substantially adds to the home's …
Does a media/PR company owe New York sales tax on its fees for producing and distributing news stories, satellite/wire transmissions, and other media-relations services to news outlets?
No, in general — producing and placing news stories, video and audio features, satellite media tours, and similar public-relations services with news outlets is treated as a form of advertising, which…
Can a newly formed bank holding company elect to be taxed under Article 9-A, and must it file a combined Article 32 return with its banking affiliates, for its first short year?
Yes to the election, and no combined Article 32 return is required. A newly formed wholly owned domestic subsidiary that registers for the first time as a bank holding company and elects financial hol…
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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.