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 a not-for-profit independent system operator that controls the bulk electric grid and runs spot markets -- but does not own the grid or buy or sell electricity -- subject to section 186, section 186-a, or the Article 9-A franchise tax?
No. The New York Independent System Operator -- a not-for-profit that has operational control of the bulk electric transmission grid, administers spot markets, and maintains reliability, but does not …
Are an internet risk-management education platform, and separate market-risk and credit-risk analysis/forecasting services sold to financial professionals, subject to New York sales tax?
No, on all three services. Interactive online educational courses in risk management aren't taxable because educational services (interactive or not) aren't among New York's enumerated taxable service…
Does a bankruptcy-claims and class-action administration company, based and printing/mailing entirely out of Oregon, owe New York sales tax on legal notices and claim forms it mails to New York creditors and claimants, even though all its work is performed out of state?
It depends on which service. Producing and mailing legal notices, claim forms, and address labels to recipients in New York is a taxable sale of tangible personal property (paper, envelopes, printing)…
When an out-of-state manufacturer fabricates kitchen cabinets or similar built-ins and installs them in New York as a capital improvement, does it have to charge its customer sales tax, and does it instead owe New York use tax on the materials?
The fabricator does not collect sales tax from its customer, since installing cabinets or similar products as a capital improvement is not a taxable service. But the fabricator itself owes New York co…
Is a company's fee for designing and running a retail sweepstakes subject to New York sales tax, and can it buy the prizes and promotional materials tax-free for resale?
The design/running fee itself is not taxable, since it's a service New York doesn't specifically enumerate for sales tax. But the company owes sales or use tax on the prizes and tickets it buys to giv…
Does a bed and breakfast owe sales tax when it buys soap, shampoo, wine, jam, and jelly that it gives to guests for free?
Mostly yes. A bed and breakfast owes sales tax when it buys soap, shampoo, and wine that it gives to guests for free, because those purchases aren't for resale. Jam and jelly are the exception -- they…
Are a licensed engineering firm's design services, the drilling/testing/lab work it subcontracts, and its construction-management and post-construction-monitoring work subject to New York sales tax?
Professional engineering services themselves -- including the written reports, plans, and specifications that go with them -- are not subject to New York sales tax, and neither are analytical or geote…
When a fuel terminal sells small, emergency amounts of untaxed No. 2 fuel oil to a commonly controlled affiliate through a pump nozzle that could fuel a vehicle, filling five-gallon cans, is that sale subject to New York's diesel fuel and petroleum business taxes?
Yes. Because the fuel is dispensed through a metered nozzle suitable for fueling a motor vehicle into five-gallon cans (a repository from which fuel could be put into a vehicle's tank), the sale does …
Does equipment used to inspect, repair, rebuild and repaint used shipping pallets qualify for the production-machinery sales tax exemption or the investment tax credit as manufacturing?
No. A pallet-pooling company's automated inspection, repair/rebuild and painting/stenciling of used industry-standard pallets is repairing and reconditioning previously manufactured pallets, not the p…
Can a retail company buy paper, ink, photography, and printing/mailing services tax-free when they're used to produce free promotional mailers sent to customers inside and outside New York?
Yes. The materials Corporation X buys and supplies to its printers, and the photography, modeling, and mailing services it purchases, are exempt from New York sales and use tax to the extent the finis…
Are portable, bolted-together steel-frame shelter buildings (and their foundations) taxable as tangible personal property in New York, or exempt as a real-property capital improvement or farm-use equipment?
The prefabricated steel-frame shelters themselves are not capital improvements -- they're bolted together and designed to be portable, so their sale and installation stay fully taxable -- unless a far…
Does an online auction platform that lets independent dealers list and sell collectibles -- handling the website, bidder registration, and credit-card processing, but never taking title to the goods -- become a New York sales-tax vendor itself, or create nexus for the dealers who sell through it?
No, on all three points. The platform itself is not a sales-tax vendor because its role -- hosting listings and handling order/payment logistics for independent dealers -- is internet advertising plus…
Is a stock photo agency's fee for selling customers unlimited reproduction rights to 'royalty free' images -- delivered either on CD-ROM or by internet download -- subject to New York sales tax?
It depends entirely on delivery method, not on what the customer is buying. Selling unlimited reproduction rights on a physical CD-ROM delivered in New York is a taxable license to use tangible person…
When a company buys communications towers and equipment buildings, are those assets taxable tangible personal property or exempt real property, and are the fees it charges other carriers to attach antennas subject to sales tax?
The communications towers themselves are taxable tangible personal property, not exempt real property -- even 400-foot towers -- because they're bolted to a concrete pad and can be unbolted and remove…
Are membership and initiation fees at a large multi-activity health and fitness club chain subject to New York State's social/athletic club dues tax or New York City's separate gym/health-salon tax?
No, on both counts. Crunch Fitness's membership and initiation fees are not taxable as dues to a state-defined 'social or athletic club,' since members don't control the club's activities, membership,…
Can an HVAC ductwork fabricator get a sales or use tax refund or credit for the sheet steel that becomes scrap or gets returned to inventory during the cutting process?
No. There is no statutory or regulatory provision allowing a refund or credit for the portion of sheet steel that ends up as scrap or is returned to inventory during the duct-cutting process. The fabr…
Is a foreign life insurer doing business in New York only through investment partnerships subject to Article 33 (not Article 9-A), and must it file a return if its Article 33 tax is capped at zero?
Yes to Article 33, and yes it must still file. A foreign life insurer doing business in New York only through its interests in general and limited partnerships and LLCs is subject to the Article 33 fr…
Do fabric swatches, computer equipment, and color printers/supplies used by a clothing manufacturer's design department to sketch new clothing lines qualify for New York's research and development sales tax exemption?
No. Fabric swatches, color printers, printer cartridges, and paper used by a clothing manufacturer's design department to sketch and print new product designs are used in the preliminary conceptual st…
Does a one-person repair business owe sales tax on parts and labor when it repairs and refurbishes farm mixers that its customer received as trade-ins and will resell to farmers, and does the repairman need to register with the Department?
The parts Petitioner buys to repair the mixers are exempt (bought for resale, since they become part of the property later transferred to the customer) as long as he gives his supplier a timely Resale…
When a customer gives a supplier a blanket resale certificate, must the supplier still figure out and separately tax individual items in the order that the customer probably won't actually resell?
No, generally. A supplier who accepts a properly completed resale or exemption certificate in good faith within 90 days has no duty to investigate or debate with its customer over whether particular i…
After its spin-off from General Motors, is Delphi a new business eligible to elect a refund of its investment tax credit under section 210.12(e)?
Yes, for the period after the spin-off. For the short period while Delphi was still more than 50% owned by GM (a 9-A taxpayer) it was not a new business under section 210.12(j)(1). After GM's May 28, …
Is a gain under a residual sharing agreement -- compensation for market information provided from New York to help an affiliate price a vessel sale -- excluded from gross earnings for section 184 purposes?
No, it is not excluded. A Great Lakes shipping corporation's receipt under a residual sharing agreement -- its 20% share of the proceeds when an affiliate sold a vessel, in return for market and opera…
New York Advisory Opinion TSB-A-96(5.1)I: Now that the federal Amtrak Reauthorization and Improvement Act (ARIA) exempts rail employees who work in more than one state from multi-state income taxation, which Metro-North job categories actually qualify for that exemption?
Only two categories of Metro-North positions: 'train and engine' positions (engineers and conductors) and 'Maintenance of Way' positions (track maintenance workers) - and only when the position is ass…
New York Advisory Opinion TSB-A-93(3.1)I: Now that the federal Amtrak Reauthorization and Improvement Act (ARIA) exempts rail employees who work in more than one state from multi-state income taxation, which Metro-North job categories actually qualify for that exemption?
Only two categories of Metro-North positions: 'train and engine' positions (engineers and conductors) and 'Maintenance of Way' positions (track maintenance workers) - and only when the position is ass…
New York Advisory Opinion TSB-A-93(11.1)I: Now that the federal Amtrak Reauthorization and Improvement Act (ARIA) exempts rail employees who work in more than one state from multi-state income taxation, which Metro-North job categories actually qualify for that exemption?
Only two categories of Metro-North positions: 'train and engine' positions (engineers and conductors) and 'Maintenance of Way' positions (track maintenance workers) - and only when the position is ass…
New York Advisory Opinion TSB-A-91(3.1)I: Now that the federal Amtrak Reauthorization and Improvement Act (ARIA) exempts rail employees who work in more than one state from multi-state income taxation, which Metro-North job categories actually qualify for that exemption?
Only two categories of Metro-North positions: 'train and engine' positions (engineers and conductors) and 'Maintenance of Way' positions (track maintenance workers) - and only when the position is ass…
Is an alien corporation providing international callback service through a New York switch doing business under Article 9 or 9-A, and how are its and its US subsidiary's telecommunication receipts sourced?
The alien parent (FORCO) is principally engaged in a telephone business, so it is classified under section 183 rather than Article 9-A, but on these facts it is not doing business in New York and so o…
Is a mutual redevelopment company organized and operating under Article 5 of the Private Housing Finance Law subject to the Article 9-A corporation franchise tax?
No. Two cooperative affordable-retirement housing corporations organized and operating as mutual redevelopment companies under Article 5 of the Private Housing Finance Law are not subject to the franc…
Is a company's stock-benefit-plan administration and reporting service subject to New York sales tax, and can it get a refund for the paper it uses to print reports that get mailed to out-of-state recipients?
The stock-plan administration and report-issuing service itself is not taxable, since it isn't one of New York's specifically enumerated taxable services. But the paper the company buys to print its r…
Six general partnerships, each owning or leasing a different New York City property (some fee, some leasehold), are all beneficially owned by the same six family members in identical 16.66% shares. Each partnership plans to transfer its real property interest to a brand-new, separate LLC in exchange for 100% of that LLC's shares, then distribute those LLC shares out to the same six family members in the same 16.66% shares they've always held. Is each of these six partnership-to-LLC transfers exempt from New York's Real Estate Transfer Tax?
Exempt -- all six conveyances qualify for the mere-change-of-form exemption. Six separate general partnerships (149 Realty Associates, Shelburne Murray Hill, Patrick Denihan et al d/b/a Denart Company…
Are a book distributor's printed catalogs, a rented mailing list used to address them, and the photography/artwork/printing-plate materials used to produce them all exempt from New York sales tax when mailed free to customers?
Yes, on all three points. The catalogs are exempt printed promotional materials because they're mailed free of charge to customers and prospective customers within New York, with a Form ST-121.2 given…
Is a specialized suspended-ceiling-tile cleaning service taxable in New York, or does it qualify for the sales tax exclusion for 'laundering'?
Taxable. Cleaning suspended ceiling tiles with a specialized process and proprietary solution is a taxable maintaining/servicing service, not exempt 'laundering' -- New York's laundering exclusion is …
Does a corporation's section 1452(d) election to remain taxable under Article 9-A survive a merger of its parent bank, a name change, and a change in its business activities?
Yes. The corporation's one-time section 1452(d) election to continue being taxed under Article 9-A (rather than Article 32) was not revoked by the merger of its parent bank into another bank, by its n…
How is a federal IRC section 338(h)(10) election treated for New York tax when the target sold is an Article 9 corporation, and how is the parent's stock-sale gain treated?
The TSB-M-91(4)C treatment of section 338(h)(10) elections is for Article 9-A purposes only. For the Article 9-A parent selling the target's stock: if the parent is a selling affiliate, the election i…
Is the dollar limit on the economic development zone capital credit applied separately to each corporation in a combined group, or once at the combined-group level?
Per corporation. The total economic development zone capital credit allowable to a taxpayer -- the $300,000 aggregate cap and the $100,000 per-category cap under sections 210.20(a), 1456(d)(1) and 151…
Is a chemical skin-peeling treatment exempt from New York sales tax as a 'drug or medicine,' even though the FDA and the state Board of Pharmacy both classify it as a drug?
Taxable. Even though the FDA and the New York State Board of Pharmacy both classify this chemical skin-peeling treatment as a drug, it's marketed and used as a cosmetic to improve appearance and treat…
I bought a $1,175,000 property that includes a vacant, un-modernized one-family house, intending to redevelop it as a residential subdivision or assisted-living facility -- I have no intention of using the existing house as anyone's personal residence, and the seller didn't live there either. I paid the 1% mansion tax at closing but I'm seeking a refund since neither of us actually used or intended to use the house as a residence. Am I entitled to that refund?
No refund -- the mansion tax was correctly assessed. Petitioner purchased property in New Rochelle, New York for $1,175,000 that included an existing, vacant, un-modernized one-family dwelling, and pa…
Are a billing-services company's separately stated charges for preparing customer bills, supplying extra report copies, reimbursed pass-through expenses, and envelope stuffing/postage all taxable in New York?
It splits by item. The core bill-preparation service (data processing, printing, formatting, plus bill stock/forms/envelopes) is not taxable, since preparing customer bills isn't an enumerated service…
Does a standalone casket retailer that sells directly to consumers (not through a funeral home) have to charge New York sales tax, even though funeral homes don't charge tax on the caskets they sell?
Yes, taxable. New York's sales tax exemption for caskets only applies when sold by a mortician, undertaker, or funeral director -- a standalone casket retailer selling directly to consumers, without b…
Are charges for audio-conference bridging services -- conference management without providing the transmission -- subject to New York sales tax or to the section 186-e and 186-a gross receipts taxes?
No. When a provider supplies only audio-conference bridging services -- reserving and programming a bridge, issuing passcodes, verifying participants and assisting them, while the participants buy tra…
If I move my home and domicile out of New York but keep working for my New York-based employer from my new state, is my pay still taxed as New York-source income?
No, not once you have actually relocated. New York's Department of Taxation and Finance concluded that a stockbroker who changed his domicile from Westchester County to Wyoming, stopped reporting to t…
How is a dividend that a New York S corporation receives from its foreign (alien) subsidiary sourced for a nonresident shareholder's New York personal income tax?
The dividend is New York source income only to the extent of the alien subsidiary's issuer's allocation percentage under Article 9-A of the Tax Law (Tax Law § 210.7 and § 210.3(b)(1)). Because that pe…
If a professional service corporation shareholder had to add back excess pension contributions to New York income before 1988, can later withdrawals from a rollover IRA be excluded from New York income until that add-back amount is recovered?
Yes. Because the taxpayer's entire aggregate section 612(b)(7) add-back could be recovered within three years, the Department applied the three-year rule from TSB-M-82(3)-I(Rev.): the amounts the taxp…
Do monthly payments a retiree receives for life under a former employer's non-qualified deferred compensation plan qualify as an 'annuity' eligible for New York's $20,000 pension and annuity income subtraction?
Yes. Because the retiree's monthly payments are paid in money, at a fixed percentage of his final average compensation, for life (or 10 years certain if longer) under a written employer plan, they mee…
Can a janitorial-services company buy its plastic trash can liners tax-free as a 'resale,' since some of them stay in the customer's trash cans?
No. Plastic trash can liners purchased by a janitorial contractor -- whether used to carry trash off the premises or left in office and restroom trash cans on the customer's site -- are treated as ord…
When an asbestos-removal contractor buys disposable plastic bags, poly sheeting, and protective clothing for a job at a tax-exempt organization's property, does the contractor owe sales tax on those supplies, and can it get that tax back?
The contractor's purchases of the plastic bags, plastic poly, and protective clothing are taxable retail sales when bought. But because the exempt organization's site is where the service is performed…
When a building owner lets another company occupy a whole floor for a monthly fee to store its own equipment, is that a taxable 'storage service' or an exempt real-property lease?
Not taxable, on these facts. New York taxes the service of storing goods in space the storage company controls, but it does not tax a genuine real-property lease -- and giving a tenant a specific floo…
Is the Article 9-A exclusion for dividends received from subsidiary capital limited to the amount of those dividends excluded for federal income tax purposes?
No. In computing entire net income under Article 9-A, the exclusion for dividends received from subsidiary capital under section 208.9(a)(1) is not limited to the amount the corporation excluded (or d…
Is a custom software developer's work for clients subject to New York sales tax, and does it matter whether the software, artwork, or a web site is delivered on disk or transmitted electronically?
It depends on what's actually built and how it's delivered. Genuinely custom software designed to one client's specifications is exempt regardless of delivery method, but software built by modifying o…
Does a company that manages conference calls (reserving lines, monitoring audio quality, running the bridge equipment) have to charge New York sales tax on its fees, the way a phone company charges tax on the calls themselves?
No. New York taxes telephone and telegraph transmission service, but a conference-call management company that only reserves lines, monitors call quality, and runs bridge equipment -- without itself s…
Three unrelated companies formed an LLC that was designated by a state development corporation to redevelop the old 14th Street Armory site into a mixed-use project -- retail, senior housing, and a university faculty residence -- with each company intending to end up owning and running its own separate piece. We have to hold the whole property through one LLC at first because NYC won't let us record separate condominium units until construction is 'as built,' and because the city wanted a joint venture team, not three separate developers. Once construction is done and we convert to a condominium, will distributing each finished unit to the company that's always been designated to own it trigger New York's Real Estate Transfer Tax?
Exempt -- no transfer tax on the conversion or the resulting unit conveyances. Armory Place LLC, formed by three separate companies (Orda, Chancellor of the Armory, and Armory Retail Associates), was …
If a bus company bought its large buses before New York's new omnibus sales-tax exemption took effect on December 1, 1997, can it get a refund of the tax it already paid on those buses, even partially?
No refund. New York's sales tax exemption for large omnibuses took effect December 1, 1997, and applies only to sales, services, and uses occurring on or after that date -- there's no provision, prora…
Is a construction project management consulting service -- coordinating architects, contractors, and schedules as the owner's agent, without doing any construction or design work itself -- subject to New York sales tax?
No. Project management consulting -- coordinating and monitoring designers, contractors, schedules, budgets, and quality control as the owner's agent, without performing any construction, design, or i…
Are membership dues at a member-governed golf and tennis country club subject to New York sales tax, even though it's a not-for-profit corporation?
Yes. Skaneateles Country Club's membership dues are subject to sales tax as dues paid to a social or athletic club, because its members elect the board of directors, sit on committees, participate in …
Does a multi-sport health and racquet club with initiation and membership fees have to charge New York State/local sales tax or New York City's separate gymnasium tax on its membership charges?
No. A multi-sport club's membership and initiation fees for participant sporting activities (swimming, tennis, squash, basketball, etc.) aren't taxable admission charges; they escape the separate athl…
Is the equipment a touring circus-style show rents (tent, stage, costumes, lighting, sound) exempt from New York City sales tax as property used in a dramatic or musical arts performance?
No. New York's sales tax exemption for property used in live dramatic or musical arts performances doesn't cover Cirque du Soleil's touring show, because the Department already determined in an earlie…
When a private company operates a municipality's wastewater treatment facility under a service contract, does the company have to pay sales tax on its own operating supplies, given that the municipality itself is tax-exempt?
Yes, generally taxable. A contractor operating a municipality's exempt facility under a service agreement (not an agency contract) owes sales and use tax on its own purchases of supplies used to run t…
Are physician-targeted 'drug sample plus prescription pad' promotional mailers exempt from sales tax as promotional materials mailed free of charge to customers, even though the physicians who receive them don't buy the drug themselves?
No, not exempt. New York's promotional-materials exemption only covers materials mailed free to a company's own customers or prospective customers -- and physicians who receive drug samples and prescr…
Does transferring title of a car to your own revocable living trust for estate planning purposes trigger New York sales tax?
It depends on consideration. Re-registering a vehicle from your own name into your revocable living trust is a transfer of tangible personal property to a separate legal entity, so sales tax applies i…
Does in-store paint-tinting equipment at a retail paint store -- machines that mix custom colorant into a base paint for each customer -- qualify for New York's manufacturing-equipment sales tax exemption?
Yes. A paint retailer's Color Matching Systems, Automatic Colorant Dispensers, Shakers, and related computer equipment used to blend custom colorant into white base paint for each customer are used di…
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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.