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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Can an asbestos-removal contractor get a refund of the sales tax it paid on disposable supplies (bags, suits, filters, encapsulant) that get contaminated and are transferred to its clients as part of the job?
Yes, mostly. An asbestos-removal contractor may claim a refund or credit for sales tax paid on disposable supplies (filters, bags, suits, gloves, tape, encapsulant, and similar items) that become cont…
Was wine used in a New York winery's wine tastings exempt from sales and use tax before the wine-tasting exemption's December 1, 1997 effective date?
No. New York's wine-tasting exemption (Tax Law § 1115(a)(33)) only applies to wine used in tastings on or after its December 1, 1997 effective date; wine used in tastings before that date remains subj…
Is installing a retractable synthetic awning on a house a capital improvement, so it's exempt from New York sales tax?
Yes. Installing a retractable awning made of a durable synthetic fabric (not canvas), bolted to brackets on the roof so that removing it would damage the roof, is an exempt capital improvement, follow…
Are the display 'counterbooks' a sewing-pattern maker sells to retailers, and the equipment used to make them, exempt from New York sales tax?
Yes, largely. A sewing-pattern manufacturer's 'counterbooks' (retailer display catalogs) qualify for the resale exemption when purchased from an outside printer, and machinery and equipment used direc…
Is a membership magazine that's mostly advertising for the publisher's own services taxable when mailed to members, sold to non-members, or handed out free at the counter?
It depends on how the publication is distributed. AAA's 'Destinations' magazine doesn't qualify as an exempt periodical because it's mostly advertising for AAA's own services, but copies mailed free t…
Is a computer company's point-of-sale system maintenance agreement -- covering both hardware repairs and software support -- taxable, and what about travel charges and order-cancellation fees?
A point-of-sale system maintenance agreement that bundles taxable elements (prewritten software upgrades, hardware repair) with nontaxable elements (software consulting, diagnostics, training) is full…
Is rent paid to store inventory in a warehouse, where the space is controlled by the warehouse operator, included in the property factor of the Article 9-A business allocation percentage?
No. The amount a company pays to store its inventory at an unaffiliated warehouse, where the charge is computed by the cubic feet used for a designated space and the space is under the control of the …
Is rent paid to store inventory in a warehouse, where the space is controlled by the warehouse operator, included in the property factor of the Article 9-A business allocation percentage?
No. The amount a company pays to store its inventory at an unaffiliated warehouse, where the charge is computed by the cubic feet used for a designated space and the space is under the control of the …
When a utility buys its parent holding company's publicly traded stock on the open market and keeps it, is that a constructive dividend subject to the section 186 excess dividends tax?
No. When Rochester Gas & Electric buys the publicly traded common stock of its parent holding company on the open market and continues to hold it, there is no distribution of property to its sharehold…
If a nonresident is the sole general partner of a limited partnership that only buys and sells options for its own account through him as an AMEX Options Principal Member, is his distributive share of that income taxable as New York-source income?
No. Because Petitioner traded only as an Options Principal Member (OPM) - who may buy and sell options solely for the partnership's own account and can never act as a Specialist or execute customer/ag…
Does a sale of a subsidiary in an IRC section 338(a) transaction require the target to recapture the investment tax credit it previously claimed under section 210.12?
Yes. When a section 338(a) election treats the sale of a target's stock as a deemed sale of all its assets, that is a 'disposition' for New York investment tax credit purposes, so the old target must …
We're an investor-owned utility. Years ago, a state energy authority issued bonds to finance pollution-control facilities at our power plants, backed by our first mortgage bonds, and the Department ruled that arrangement was exempt from mortgage recording tax. Now the authority wants to refinance (refund) those bonds with new ones, requiring us to amend and restate the same mortgage bonds. Does the exemption still apply to this refunding transaction?
Still exempt. Niagara Mohawk Power Corporation's first mortgage bonds had originally secured 1985 pollution-control revenue bonds issued by the New York State Energy Research and Development Authority…
Can a company building a facility through an Industrial Development Agency deal buy, lease, install, and maintain the project's property tax-free when it acts as the agency's disclosed agent?
Yes, largely. When a company acts as the disclosed agent of an Industrial Development Agency (IDA) -- with purchase invoices and contracts naming the IDA as purchaser, lessor, or lessee -- its purchas…
Is a computer systems-integration consulting firm's charges for hardware, software, and support services subject to New York sales tax?
It depends on which service is being billed. Pure consulting, project management, systems management, and technology planning are not taxable; selling and installing computer hardware is taxable; sell…
Is a service that collects driving-complaint calls and reports them to the vehicle owner subject to New York sales tax?
No. A service that collects driving-complaint calls through a toll-free number and reports them only to the individual subscriber (never incorporated into reports shared with others) qualifies as exem…
Our nonprofit hospital is building a new emergency facility, ICU, and parking structure using an off-balance-sheet 'synthetic lease' financing: we'll ground-lease our own land to a trust controlled by our lender for 49 years (nominal $1/year rent), the trust will lease it right back to us on a triple-net basis for up to 15 years while we actually build and pay for the improvements, and at the end we'll almost certainly exercise an option to buy back the trust's position. We have a sales tax exemption certificate as a nonprofit. Does this lease-and-leaseback structure trigger sales tax on construction materials/services, mortgage recording tax on the lease documents, or New York's Real Estate Transfer Tax on any part of the transaction (including our eventual buyback)?
Exempt across all three taxes, though for different reasons in each case. Beth Israel Medical Center ('Petitioner'), a voluntary nonprofit hospital and Tax Law Section 1116(a)(4) exempt organization, …
How are New York's College Choice Tuition Savings Program and its participants taxed for franchise tax, personal income tax, and estate and gift tax purposes?
The Program (and its trust fund and LLC) is a governmental arrangement, not a corporation or association, so it owes no franchise tax, income tax, or unrelated-business income tax. For participants: c…
Do a public warehouse's added services -- contract negotiation, site visits, and quality-control inspections -- change its status as a fulfillment-services provider, and do out-of-state customers get New York nexus by using it?
The added steps do not change the result. Distribution Unlimited's public-warehousing activities -- including the new contract-negotiation, site-evaluation, and periodic inventory and quality-control …
After a mail-order retailer closes its New York stores, does holding over the now-vacant leased store space until the leases can be terminated keep it taxable, or is that property de minimis under Public Law 86-272?
Exempt, with a final return required. After Egghead closed all its New York retail stores, its remaining New York activity is mail-order solicitation (catalogs and a web page, orders approved and ship…
If a foreign bank employee is repeatedly transferred to New York for training and then assigned there open-endedly, in which years does he become a New York statutory resident?
He was not a New York statutory resident for 1993, 1994, or 1997, because although his New York City apartment became a 'permanent place of abode' once he leased it on October 1, 1997 (his assignment …
Does an open-ended, year-to-year-renewable program that temporarily transfers a multinational bank's foreign employees to its New York City branch make those employees New York State statutory residents under Tax Law § 605(b)?
It depends on the tax year. Because the transfer program has no fixed end date and the assignment's goal - enlarging an employee's knowledge of multinational banking - is a general purpose rather than…
Are a contractor's purchases of construction materials for a town-owned recreation facility exempt from New York sales tax, even though the contractor pays for construction and later gets a license fee to operate the facility?
Yes. Because the Town of Tonawanda will own and hold title to the recreation facility throughout construction and afterward, the contractor's purchases of materials that become an integral part of the…
If a mail-order retailer closes all its physical New York stores but keeps selling by catalog and internet, does it still need to collect New York sales tax?
No, once its physical presence ends. A mail-order retailer that closes all its New York retail stores and no longer employs in-state salespeople loses its New York sales tax nexus, even if it continue…
Is a moisture-survey company's roof inspection service subject to New York sales tax?
Generally yes. A roof moisture-inspection service is taxable as maintaining or servicing real property, but it's not taxed if it's performed solely for mandatory government code compliance, or if the …
Can a tire retailer buy tire-disposal service tax-free for resale when it charges customers a separate disposal fee for their old tires?
No. A tire retailer's charge to customers for disposing of old tires isn't itself an enumerated taxable service, so the retailer cannot treat its purchase of trash-removal service from a scrap tire pr…
Are fees for commercial security alarm monitoring, the sale/installation of the alarm system, and maintenance/repair charges subject to New York sales tax?
Yes, largely. A commercial security alarm system generally isn't a capital improvement (except separately stated wiring and cables sold to a property owner), so its sale, installation, monitoring fees…
Are fees for residential security alarm monitoring, the equipment used to provide it, and related installation/repair charges subject to New York sales tax?
Yes, largely. Fees for residential security alarm monitoring services, installation and repair of the equipment, and patrol car services are all taxable protective and detective services or installati…
Is buying and installing custom wood athletic lockers at a private golf club a capital improvement exempt from New York sales tax?
Yes. Custom wood athletic lockers built to a golf club's specific dimensions and installed like kitchen cabinets, with matching spacers, fillers, and moldings, qualify as a capital improvement because…
Are floating docks and their connecting ramps a capital improvement, so their sale and installation are exempt from New York sales tax?
No. Floating docks and their connecting ramps are not capital improvements because they aren't affixed to the shore or bottom with any real permanency -- they must move minimally with the tide, are de…
Is a bank trade-processing software license taxable as prewritten software even when the vendor must customize hundreds of settings before delivery, and are later custom modifications and support separately taxed?
Yes, mostly. The base trade-processing software license is taxable prewritten software even though the vendor must configure over 900 system settings for each customer before delivery, because the sof…
Is a telephone answering service subject to the section 186-e excise tax on telecommunication services, and is it taxed as a telephone business under sections 183 and 184?
No to both telephone-tax treatments. Viewed from the customer's perspective, an answering service is a general business -- the receptionist takes calls, distills messages, and relays them -- so it is …
Are foreign Importer Notes that PEFCO holds -- notes fully guaranteed and controlled by the Export-Import Bank -- investment capital under section 208.5, or are they loans made in the business of lending funds?
They are investment capital. Although PEFCO advances the funds, the Export-Import Bank controls the Importer Notes -- it selects the obligors, sets the interest rate by its formula, and drafts the cre…
If a family sets up a tiered limited partnership and LLC structure, run by New York-based employees out of a New York office, purely to trade securities for the family's own account, do the nonresident family members owe New York State income tax or the New York City nonresident earnings tax on their share of the trading income?
No to both. Because the petitioner, Portfolio LP, and the Series G and Series J LLCs only buy, hold, and sell securities and financial instruments for their own account - with no broker/dealer activit…
How does an interstate trucker that switches from Article 9 (sections 183/184) to Article 9-A as a New York S corporation compute its short-period entire net income, and how does that flow through to nonresident shareholders?
The trucking company computes entire net income as if it were a New York C corporation for its full federal taxable year, then prorates that income under section 208.9(h)(1) for the six-month short pe…
If a taxpayer claims to have changed their domicile from New York to Florida, will the Department confirm that change in an Advisory Opinion, and who has to prove it happened?
The Department would not decide whether, or when, the Coopers' domicile changed from New York to Florida — that is a factual question that depends on individualized circumstances and cannot be resolve…
When a landlord buys electricity and its transportation separately and resells both to submetered tenants, is the entire charge taxable even if the components are separately stated?
Yes. A landlord who purchases electricity from one supplier and arranges transportation from the utility, then resells both to submetered tenants as electric service, must charge sales tax on the enti…
Are data-processing, remote-access, and information-storage billing services subject to New York sales tax when the resulting data isn't shared with other customers?
No. Billing and customer-care data processing, remote access, management reports, and information storage aren't taxable information services when the processed data belongs to and is reported back on…
Can an aviation-services company avoid charging sales tax on airport flowage fees and its own fuel surcharge that it passes through to customers?
No, generally. Airport-imposed flowage and concession fees, and the company's own 'into plane' fuel surcharge, are business expenses that become part of taxable receipts when passed on to non-airline …
Do specialized trade and legal newsletters qualify for New York's periodical sales tax exemption, including in electronic formats?
Yes. Twenty-three specialized print newsletters covering law, business, and industry news qualify as exempt periodicals under Tax Law § 1115(a)(5) even though they aren't general-interest 'newspapers'…
Does transferring a vehicle's DMV registration to a commonly owned company, without transferring title, trigger New York sales tax?
It can. Transferring a vehicle's registration to another company, even one commonly owned by the same person and even without transferring legal title, is a transfer of possession that counts as a tax…
Are dialysis machines, artificial kidneys, and their disposable blood-line tubing exempt from sales tax when a manufacturer sells them to New York hospitals and clinics?
Yes. Dialysis machines, artificial kidneys, and the connected disposable tubing/connectors used in hemodialysis all qualify as exempt prosthetic devices under Tax Law § 1115(a)(4), because together th…
For the section 1505(b) test of whether more than 95% of an insurer's premiums are annuity consideration, does 'premiums' include reinsurance premiums and all direct premiums (in and out of New York)?
Yes to both. For purposes of the section 1505(b) test -- whether more than 95% of an insurance corporation's premiums are received as consideration for annuity contracts (or for the section 1510(c)(2)…
Is the admission fee to a children's indoor play center with climbing equipment subject to New York sales tax?
Yes. A single admission fee that lets children enter and use non-moving recreational equipment like climbing apparatus at an indoor play center is a taxable admission charge to a 'place of amusement,'…
Are dialysis machines and a dialyzer reprocessing system purchased by a dialysis clinic exempt from New York sales tax?
Dialysis machines are exempt as prosthetic devices under Tax Law § 1115(a)(4), regardless of who buys them or why -- but a dialyzer reprocessing system, which only cleans and readies the artificial ki…
Is installing a new solid epoxy floor over an existing concrete floor a taxable service or an exempt capital improvement?
It's an exempt capital improvement, not a taxable service. A new solid epoxy floor built up in place over an existing concrete floor is 'flooring,' not 'floor covering,' so it isn't subject to New Yor…
Are the printing services and production equipment a stamp retailer buys to create 'first day cover' envelopes for resale exempt from sales tax?
Yes, mostly. Printing services a retailer buys to produce envelopes it resells to customers are exempt as purchases for resale (with a resale certificate), and the film negatives, color separations, a…
Does a licensed architect and engineer's litigation-support research, reports, and expert-witness testimony for attorneys get taxed as a service or as a sale of the drawings and reports it produces?
No, generally. Professional architectural and engineering services -- research, analysis, written reports, presentation drawings, and expert-witness testimony -- aren't among New York's enumerated tax…
Does a manufacturer of CV-joint grinding machines have to collect sales tax when it sells them to auto parts remanufacturers and repair shops?
It depends on how the buyer uses the machine. Sales to remanufacturers and parts distributors who use the grinder to produce CV joints for sale are exempt if over half the machine's use is in producti…
Is a yacht charter company's cruise fee taxable as an equipment rental, and are its liquor and catering charges taxable too?
The bare cruise fee is an exempt transportation service, not a taxable rental, because the company keeps full dominion and control of the yacht -- but once the company sells liquor or arranges caterin…
Does a nonprofit news cooperative owe sales tax on the information services it buys for its members, or on production equipment and utilities it provides at member newspapers?
No, mostly. Because a nonprofit news cooperative's information-service purchases (like stock quotes and weather data) are used by its member newspapers and broadcasters in the collection and dissemina…
How do the real estate transfer tax, sections 186 and 186-a, the petroleum business tax, the subsidiary capital tax, and the stock transfer tax apply to a utility's PSC-mandated restructuring into a holding-company structure?
Across five taxes, the PSC-mandated restructuring is largely tax-neutral. Real estate transfer tax: the share exchange, subsidiary spin-offs, and generation-asset transfers within the affiliated group…
When a PSC-mandated restructuring forces a utility to transfer its generating assets to a subsidiary and auction them, are the proceeds and distributions taxable under sections 186 and 186-a?
Largely not taxable under section 186. Because the New York Public Service Commission's Competitive Opportunities order forced NYSEG to restructure and auction its generating assets, the asset transfe…
Does a corporation's section 1452(d) election to stay taxable under Article 9-A survive its purchase by a bank holding company and later mergers and business transfers into it?
Yes. A corporation (B) that made the section 1452(d) grandfather election to remain under Article 9-A keeps that election after a bank holding company buys all its stock and after the three proposed s…
May a subsidiary's unused investment tax credit carryover survive after its parent is bought by an unrelated corporation and the subsidiary is later merged into the acquirer?
Yes. When Miles bought all the stock of Diagnostics, the 'target corporation' under section 208.15 was Diagnostics, not its subsidiary Instruments -- so Instruments' unused investment tax credit carry…
Can a construction contractor buy materials tax-free using a customer's Direct Payment Permit?
No. A contractor must still pay sales tax on all materials it buys for repair or capital-improvement work, even when the customer holds a Direct Payment Permit -- the permit only excuses the contracto…
Does New York sales tax apply when an artist sells or licenses a design rendering to an architect, interior designer, fashion house, or manufacturer?
It depends on what's actually transferred: selling an original rendering, or letting a client alter or keep it, is a taxable sale of tangible personal property, but temporarily loaning a rendering sol…
Are health club membership and initiation fees subject to New York State and City sales tax?
No. A fitness chain's membership and initiation fees are exempt from New York State and City sales tax because its members don't control the club's activities or management (so it isn't a taxable "ath…
Does sales tax apply to a mobile-MRI company's tractor-trailers and to its imaging-equipment leases to hospitals?
The heavy tractor-trailer combinations that haul a company's mobile MRI units are exempt from sales tax under Tax Law § 1115(a)(26), but the MRI equipment installed on the trailer is not covered by th…
Is a college-operated teaching hotel's room rent exempt from New York sales tax?
Yes. Room rent at a hotel operated by a tax-exempt college as part of its educational program is exempt from New York sales tax under Tax Law § 1116(c) as long as the hotel offers fewer than 100 rooms…
Does the exemption for promotional materials cover a grocery chain's blank membership/discount cards?
No. Blank plastic membership cards a grocery chain buys and then personalizes with a customer's name and magnetic ID strip don't qualify for the promotional-materials exemption, because they're used t…
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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.