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 membership dues and an initiation fee paid to a recreational boating club subject to New York's club dues tax?
No -- the boating club's $350 initiation fee and $300 annual dues are not subject to sales tax, because the club's material purpose is purely recreational boating and fishing (with no tournaments, con…
Does a company that transports disabled people and developmentally-delayed preschoolers qualify as an omnibus carrier 'in local transit service' eligible for New York's motor fuel, petroleum business, and sales tax refunds?
Partly. The company is an 'omnibus carrier' for the Article 12-A motor fuel tax, Article 13-A petroleum business tax, and Article 28 sales tax, but only some of its fleet is 'in local transit service.…
Our bank, as trustee, manages a tax-exempt commingled pension trust fund that pools real estate investments for qualified pension and governmental plans. Some of the fund's real estate investments have matured from 'unstabilized' start-up properties to 'stabilized' performing ones, and we want to split the fund in two -- spinning off the unstabilized properties into a brand-new, identical trust fund -- with every participant getting units in the new fund exactly proportional to what they hold in the original fund. Some of these properties are held through New York corporations and a partnership interest. Does this pro-rata spin-off trigger New York's Real Estate Transfer Tax on the controlling interests being transferred to the new fund?
Exempt -- the pro-rata spin-off doesn't change anyone's beneficial ownership. Morgan Guaranty Trust Company of New York, as trustee of a tax-exempt Commingled Pension Trust Fund pooling real estate in…
Can a wholesale supplier accept a resale certificate from a contractor buying materials for capital improvement or repair jobs?
No -- a wholesale supplier cannot accept a resale certificate (Form ST-120) from a contractor buying materials and supplies to use in performing capital improvement work or repairs on real property, b…
Are the film and processing supplies used in coin-operated photo booths exempt from New York sales tax as production supplies?
Yes -- because the amusement park's photo booths develop the customer's own negatives and print the photographs from raw film and chemicals, the whole process counts as manufacturing tangible personal…
Is a soy-based sports-nutrition supplement sold through a multi-level marketing network exempt from New York sales tax as a dietary food?
Yes -- Reliv's "ProVantage" soy-protein sports-nutrition product is exempt from sales tax as a dietary food and health supplement, because its label describes special dietary properties (boosting ener…
Does a car importer owe sales or use tax on vehicles used in a free, six-month test-drive program before they're sold?
XYZ can import and register the vehicles tax-free for resale, but once it lets outside "evaluators" and its own employees drive them under the test-drive program, the vehicles become taxable "mixed-us…
Is equipment used to make both soft-serve and prepackaged ice cream exempt from New York sales tax as production machinery?
It depends on which product the equipment makes -- machinery used more than half the time to produce prepackaged ice cream for sale (like Petitioner's hardening cabinet) can qualify for the production…
Which of a mail house's printing, sorting, inserting, and mailing services for financial-institution statements are subject to New York sales tax?
It splits by service and by destination -- sorting, inserting, sealing, postage/metering, and mailing charges (and reimbursed postal charges) all escape sales tax if separately stated, but the actual …
Can the distortion requirement for filing a combined report be satisfied by substantial intercorporate transactions among two or more corporations, and does one member's lack of federal income preclude a distortion finding?
Yes. The distortion requirement for a combined report (20 NYCRR 6-2.3) is presumed met when there are substantial intercorporate transactions -- which can exist among two or more corporations, and may…
Is a corporation that holds bare record title to real property as nominee, and was later dissolved by proclamation, subject to Article 9-A -- for the years it was incorporated, after dissolution, or both?
Two periods, two answers. A corporation that was incorporated and held record title to New York real property in a corporate capacity is subject to the Article 9-A franchise tax under section 209.1 fo…
Is a federal S corporation that is a corporate member of an LLC doing business in New York subject to the Article 9-A franchise tax, and is it taxed as a C corporation?
Yes, with the tax computed as a C corporation. An LLC treated as a partnership for federal income tax is a partnership for New York; its corporate members are corporate partners. If the S corporation'…
Can an Industrial Development Agency's leasing subsidiary buy and lease equipment and resell services tax-free through resale certificates on the agency's behalf?
Yes -- Donaldson, Lufkin & Jenrette's Leasing Corp. subsidiary can purchase IDA-Equipment directly as the IDA's agent, lease other equipment and buy installation/maintenance services from third partie…
Can a mechanical contractor buy or rent temporary boilers tax-free for resale when installing them at a customer's building during a boiler replacement job?
Yes -- because Dierks' temporary boilers are installed and operated solely to provide heat and hot water for a building's tenants (not to serve Dierks' own construction work), and Dierks itself never …
Are installation-services payments and computer software acquisitions made through an Industrial Development Agency's disclosed agents exempt from New York sales tax?
Yes, with conditions -- payments by Travelers' disclosed agents for installing IDA-owned equipment, and for acquiring or maintaining computer software (including software delivered electronically or u…
Are a disaster-recovery service's monthly subscription fees and usage fees subject to New York sales tax?
It's split -- Petitioner's monthly subscription fee, which merely grants customers a contingent right to access backup computer equipment if a disaster ever strikes, is a nontaxable sale of an intangi…
If an out-of-state mother rents or buys a New York City apartment so her minor son can attend a NYC high school, and both spend more than 183 days a year in the city, does she become a New York statutory resident?
No. Because the apartment was maintained only for the fixed, four-year period until the son's high school graduation and only for the particular purpose of his religious high school education (and, fo…
Is a law firm's floor-by-floor office reconstruction (including asbestos removal and re-fireproofing) an exempt capital improvement or a taxable repair service?
Mostly exempt -- the wall, HVAC, plumbing, millwork, and fireproofing work on Petitioner's headquarters build-out (including redoing failed fireproofing) qualifies as an exempt capital improvement bec…
When must an equipment finance company remit sales or use tax on its healthcare-equipment fair market value leases versus its conditional sales agreements?
It depends on which type of transaction it is -- under a genuine fair market value (true) lease, DVI must collect sales tax on each monthly rental payment as it's received, but under a conditional sal…
Must a funeral livery service collect New York's 5% special passenger car rental tax, in addition to ordinary sales tax, on its car-and-driver charges to funeral homes?
Yes -- Petitioner is correctly collecting both ordinary New York sales tax and the additional 5% special short-term passenger car rental tax on the fees he charges funeral homes for cars and drivers, …
Is a dual-licensed insurance adjuster and private investigator's fee income taxable as a 'detective service,' or does it depend on which license the work required?
It depends entirely on which hat Petitioner is wearing for a given assignment -- fees for work requiring his independent adjuster's license (investigating and adjusting insurance claims on an insurer'…
When an employer's bankruptcy forces a nonresident's exempt SERP annuity payments to be settled as a one-time lump sum, does the lump sum keep its New York tax-exempt character?
Yes. Assuming the nonresidents' pre-bankruptcy SERP payments qualified as exempt annuities under 20 NYCRR 132.4(d)(1)-(2), and assuming the arrangement would have met the federal 'retirement income' d…
Are dues paid to a homeowners association's community center exempt from New York's club dues tax?
Yes -- Community Center of Smallwood qualifies as a homeowners association because its membership is limited to owners of homes within the defined Smallwood community and its social/athletic facilitie…
How is a Public Service Commission-regulated reseller of telephone service taxed under Article 9 before and after the 1995 telecommunications tax changes?
A Public Service Commission-regulated reseller principally engaged in telephone service is taxed under section 183 of Article 9 (so it is outside Article 9-A under section 209.4). Before January 1, 19…
Are a software vendor's "system utility" data-entry and EDI products taxable as prewritten software, even though each customer's installation must be uniquely programmed to work?
Taxable -- Petitioner's KEY/MASTER and Trading Partner software products are "prewritten computer software" (and therefore taxable tangible personal property) regardless of how heavily each installati…
Is an unincorporated residential condominium association whose only revenue is common-charge assessments subject to the New York Article 9-A franchise tax?
Yes. An unincorporated residential condominium association -- owning no property, issuing no stock, with no profit motive and only common-charge assessment revenue -- is generally an association taxab…
Is a workplace drug-and-alcohol-testing program administrator's consulting, sample collection, and reporting services subject to New York sales tax?
No -- none of Safe Systems' services (consulting and training on an internal drug/alcohol testing program, writing testing policies, collecting samples via certified technicians, delivering lab report…
Are a pharmacy's printers, toner, and paper used to produce prescription labels and medical information pamphlets exempt from sales tax?
Yes -- because Petitioner's prescription drug labels and accompanying medical information pamphlets are critical elements of the medication product it sells (not just packaging overhead), the toner an…
Is admission to a children's indoor play center exempt from sales tax as a participant sporting activity?
No -- Playspace's admission charge for its indoor children's play center is taxable, because its games, toys, playground equipment, and structured activities like sing-alongs and story times are amuse…
Are a consulting firm's visual-impact studies and reports for environmental-review (NYSEQRA) applications subject to New York sales tax?
No, for the core service -- Company A's reports and digitized photo presentations helping clients meet environmental-review visual impact requirements aren't taxable, regardless of where the site is l…
Is a hotel's separately billed 'booking agent' fee part of the taxable hotel room rent, even when a foreign travel agent pays the room charge and fee separately?
Yes -- the 20-25% fee a hotel's own booking-agent entity charges a foreign travel agent for negotiating discounted room rates is part of the taxable rent for hotel occupancy, because the traveler can'…
Is a rental car company's separately billed 'booking agent' fee part of the taxable rental charge (and subject to the 5% special tax), even when a foreign travel agent pays the fee separately?
Yes -- the roughly 20-25% fee a rental car company's own booking-agent entity charges a foreign travel agent for negotiating discounted weekly rates is part of the taxable passenger car rental charge,…
Is an internet lead-generation company's sale of custom prospect reports to its clients subject to New York sales tax?
No -- "X"'s custom monthly reports of website-generated sales leads, delivered electronically or by mail to each client and billed per lead, aren't subject to sales tax, because each report is persona…
Are the initiation fees, dues, listing fees, and office assessments that local real estate boards charge for operating a multiple listing service subject to New York sales tax?
No, for most of it -- the one-time initiation fees, periodic dues/participation fees, listing fees, and office assessments that a multiple listing service charges participating brokers all escape New …
Does a foreign life insurer with no New York certificate of authority owe New York tax if it makes mortgage loans on New York commercial real property?
It is doing business under Article 33 but, in practice, owes no tax. A life insurer that makes mortgage loans on New York commercial real property (sending employees in to find borrowers, do due dilig…
We're a nonprofit local development corporation that helps finance small-business construction projects through the SBA 504 loan program, using sale/leaseback, installment sale, or lease/leaseback structures where we briefly hold title or a leasehold interest. Are our purchases (or the contractor's purchases as our agent) exempt from sales tax, and is a mortgage where we're named as mortgagee exempt from mortgage recording tax?
Both exemptions are available, but with conditions. Greater Syracuse Business Development Corporation, a Not-For-Profit Local Development Corporation reincorporated under N-PCL § 1411, helps finance s…
Are a medical cost-containment company's case management, utilization review, bill audit, and other services subject to New York sales tax?
Mostly not taxable -- Petitioner's client's field/telephonic case management, first-report filing, utilization management, independent medical exams, peer reviews, hospital bill audits, and Social Sec…
Are a family-run sailboat charter operator's day-cruise fees (including a boxed lunch) subject to New York sales tax?
No -- Petitioner's day-charter sailing excursions on Lake Champlain (including the boxed lunch) are a nontaxable transportation service, not a taxable boat rental, because Petitioner personally retain…
Are a product-testing lab's testing fees, sales of test-swatches, and lab equipment purchases subject to New York sales tax?
It's split by category -- Petitioner's product-testing fees and confidential result reports aren't subject to sales tax at all, but its sales of dust-sebum swatches, soiled fabric, and testing soils t…
Is a chartered ocean-liner business conference held in international waters subject to New York sales tax?
No -- because Richmond Events' entire business-conference program (meetings, meals, accommodations, and use of the ship's facilities) takes place after the chartered ocean liner has left New York Stat…
On a New York combined report, are a securities dealer's sales sourced to New York if they are made through a New York office of an affiliate in the same combined group?
Yes. On a combined report the receipts factor is computed as though the combined group were one corporation, with intercorporate receipts eliminated (20 NYCRR 4-4.7, 4-1.2). So a securities dealer's (…
If a New York real estate partnership contributes each of its properties to its own single-member LLC, does the partnership still file one combined NY partnership return, or must each LLC file its own return and pay the LLC filing fee?
One combined return. Because none of the LLCs elect corporate ('association') tax status, each single-member LLC is disregarded as an entity separate from the Partnership under the federal check-the-b…
If a divorce separation agreement directs part of a partner's accrued partnership income to be paid directly to his ex-wife, does he still have to report that amount as his own income for New York tax purposes?
Yes. Because the payments to the ex-wife represented income the taxpayer himself earned as a partner (not a transfer of property), the assignment-of-income doctrine applies and he must include the ful…
Is a 21-unit residential condominium whose only revenues are common charges and interest subject to the Article 9-A franchise tax for tax years 1991 through 1995?
Yes. A residential condominium -- even a small one with only common-charge and interest income and no commercial or recreational facilities -- is generally an association taxable as a corporation unde…
Is a residential condominium association that files federal Form 1120-H subject to the New York Article 9-A franchise tax for tax years 1991 through 1995?
Yes. A residential condominium association is generally classified as an association taxable as a corporation under IRC section 7701(a)(3), so it meets the New York definition of corporation in Tax La…
Are companies that provide enhanced fax services (formatting, merging, and broadcasting documents) taxed as telephone/transmission companies, telecommunications providers, or utilities, or under Article 9-A?
They are taxed under Article 9-A, not as a telephone or transmission business. Enhanced fax services -- merging and formatting a customer's data, broadcasting it to many recipients at once, and report…
Is the sale of flat-rate Internet access subscription services to New York customers subject to New York sales and use tax or the section 186-e telecommunications excise tax?
No. Under the Department's Internet policy effective February 1, 1997, Internet access charges are an unenumerated service that is not subject to New York State and local sales and use taxes (Articles…
Are a patent draftsman's formal drawings sold to patent attorneys subject to New York sales tax?
Yes -- Peter Cotsis's formal patent drawings, sold to patent attorneys for submission with patent applications, are tangible personal property subject to sales tax, because his drafting service isn't …
Is a special assessment that a country club charges members to build a safety tunnel subject to New York's club dues tax?
Yes -- even though the tunnel Mount Kisco Country Club built under a state highway is a genuine capital improvement built for members' safety, the special assessment the club charged members to fund i…
Which items a plumbing supplier sells to contractors working for tax-exempt organizations are exempt from New York sales tax as building materials, and which stay taxable as contractor supplies?
It splits item by item -- materials that physically become part of the exempt organization's building, like flux, solder, pipe joint compounds, Teflon tape, PVC cement and primer, oakum, and lead used…
Is custom bank-interface software still taxable as "prewritten" if the developer reuses some prewritten subroutines, like a standard print routine, inside an otherwise custom program?
It depends on how the prewritten pieces are used: if the developer's prewritten subroutines (like a standard print routine) are merely incidental to writing an otherwise custom, start-to-finish progra…
Does New York sales tax apply to a public relations firm's satellite media tour coordination fees, its purchases of studio time and crew, and its website maintenance service?
Mostly not taxable, but it splits by item: coordinating satellite media tours and speaking tours, consulting, scripting, and website maintenance are all nontaxable services, but studio and camera rent…
Are a Web design agency's web-site development, media placement/advertising, ad-network, and site-tracking consulting services subject to New York sales tax?
No -- an "Interactive Advertising Agency"'s from-scratch web-site development (design plus programming), traditional advertising and web-site-network media placement services (as long as no tangible p…
Are a business-cycle forecasting firm's monthly research publications exempt from New York sales tax as periodicals, and is its related consulting service taxable?
Yes -- the firm's two monthly newsletters qualify as exempt periodicals because they're published at regular intervals, don't amount to a book, are open to public subscription, and carry ongoing artic…
Is designing customized web pages and placing them on the Internet subject to New York sales tax?
No -- designing customized web pages and placing them on the Internet isn't one of New York's enumerated taxable services, so the charge is untaxed as long as no tangible personal property is sold alo…
Is a can/bottle recycler's pickup service taxable as real-property maintenance, and do its can-sorting machines and electrical transformer qualify for the production-equipment sales tax exemption?
All three ways: the recycler's container-pickup and recycling service isn't taxable real-property maintenance, its can-sorting machines qualify for the production-equipment exemption because they hand…
If a college professor accepts a 'buyout' paying 50% of salary for three years, and separately draws periodic payments from his TIAA defined-contribution pension plan, do either of those payments qualify for New York's $20,000 pension and annuity income exclusion once he turns 59 1/2?
No for the buyout, yes (conditionally) for the TIAA pension. The buyout payments are wage/severance compensation reported on the professor's W-2, so they do not qualify for the Tax Law § 612(c)(3-a) e…
Is a newly formed LLC that buys the assets of a former Article 9-A taxpayer a new business eligible for the refundable economic development zone investment tax credit?
Yes, on the assumed facts. An LLC treated as a corporation federally is a corporation for New York and is a new business under Tax Law section 210.12(j) -- and so eligible for the refundable economic …
When a hotel leases both the building and its furniture from its landlord, is the portion of the rent allocated to the furniture subject to New York sales tax?
Yes -- when a hotel leases a building together with beds, dressers, tables, and chairs, the portion of the lease payments reasonably allocable to that furniture is subject to New York sales and use ta…
How are affiliated companies providing telephone answering services, paging airtime, and equipment rentals taxed under the franchise, telecommunications excise, and sales taxes?
A telephone answering service company is a general business taxed under Article 9-A, not as a telephone business. A paging common carrier is principally engaged in a telephone business taxed under sec…
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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.