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 utility's fee for operating a building's heating, air conditioning, and electric generating equipment on the owner's behalf subject to sales tax?
Yes -- when a company operates and monitors a building's boilers, air conditioning units, and electric generators on the building owner's behalf (turning them on and off, adjusting them, and logging t…
Does a New York social/athletic club have to collect sales tax on dues paid by members who live outside New York?
Yes -- a social or athletic club based in New York must collect sales tax on membership dues from every member over $10/year, regardless of whether the member lives in New York or another state, becau…
Once a homeowners association acquires a swimming pool and tennis courts for its members, does any part of its monthly association fee become subject to the club dues sales tax?
No -- because this is a homeowners association whose membership is limited to owners and residents of homes in a defined development, its monthly association fee stays entirely outside the club dues s…
Does a graphics design firm have to collect sales tax on the brochures, logos, and marketing materials it designs and delivers to clients on a computer disk?
It depends on what's actually being sold: if the invoice and agreement clearly state the client is buying only reproduction rights (not ownership) and the computer disk is transferred solely so the cl…
Does a videographer have to charge sales tax on video tape copies sold to a town board, a church, or a wedding couple?
A videographer who tapes town board meetings, church services, and weddings, then sells a copy to the purchaser, doesn't owe sales tax on copies sold to a town or other government entity (with a purch…
When a commercial landlord charges tenants for 'condenser water' used to run their air conditioning, is that a taxable utility sale or an untaxed part of the rental?
No -- a commercial building owner's charge to tenants for 'condenser water' (the water circulated through a building's central air conditioning system) is not a taxable sale of water or a refrigeratio…
How are an out-of-state natural-gas marketer's sales to New York end-users taxed under the Article 9 utility taxes, Article 9-A, and the sales tax, when title passes outside New York and the marketer arranges transportation as the customer's agent?
A natural-gas marketer deriving more than 50% of its receipts from gas sales is classified under Article 9: it is subject to the section 186 gross-earnings tax (so not Article 9-A, per section 209.4) …
Which parts of a 'turn-key' trade-show company's design, fabrication, rental, shipping, storage, and project-management charges are subject to New York sales tax?
A New York-based 'turn-key' trade show company's rentals and occasional sales of exhibits and displays (bundled with design, fabrication, and shipping charges) are taxable when delivered in New York a…
Does an out-of-state manufacturer have to register and collect New York sales tax if its only New York contact is an occasional trade show demo and orders shipped by mail or common carrier?
No -- a Rhode Island manufacturer with no New York place of business or property, no New York sales staff or agents, only an occasional (once-every-other-year) New York trade show appearance where pro…
Is a wedge-shaped foam bed pillow marketed to control acid reflux exempt from sales tax as medical equipment?
A specialized wedge-shaped foam 'Bed Pillow' recommended by physicians to control acid reflux, if not generally useful absent illness or injury, qualifies as exempt medical equipment when sold directl…
Which of a cargo airline's ground support equipment items -- forklifts, tugs, jacks, carts, and dozens more -- qualify for New York's commercial aircraft exemption from sales tax?
Federal Express's ground support equipment is exempt from New York sales tax under Section 1115(a)(21) only when it's installed on the aircraft or genuinely used for aircraft maintenance and repair (l…
Can a Connecticut resident who works for Citicorp in New York City allocate to Connecticut, and exclude from New York income, the four days per week he works from a home office that Citicorp itself set up as part of a corporate office-space-cutting telecommuting program?
No. Because reviewing environmental reports is ordinary desk work that could be performed at Citicorp's New York City office, and Citicorp's telecommuting program existed to cut office-rental costs ra…
When a New York decedent's estate distributes her mixed retirement benefits - a pension-linked IRA rollover, a Voluntary Employee Contribution Account, and a Flexible Premium Annuity - to nonresident beneficiaries, is that income subject to New York personal income tax under Article 22?
Yes, but only in part. Each nonresident beneficiary has New York-source income, though the taxable amount depends on three separate pieces: the Flexible Premium Annuity is fully taxable because the de…
If someone sells stock short and then moves out of New York State while the short sale is still open, must they accrue the potential gain and pay New York personal income tax on it on their final resident-period return?
No. Under Treas. Reg. § 1.1233-1(a), a short sale isn't consummated until the seller delivers stock to close it out, so the amount of gain, if any, cannot be determined with reasonable accuracy until …
Are multi-year installment payments from a nonqualified deferred compensation plan, paid to a former New York employee who has become a nonresident or nondomiciliary, exempt from New York personal income tax under the federal source-tax law at 4 U.S.C. § 114?
Yes, if the installments are paid annually over a period of 10 or more years using a 'declining balance of years' formula - each year's payment equals the remaining account balance divided by the numb…
If a former New York State employee moves to Florida and later takes a lump-sum withdrawal from the NYS Deferred Compensation Plan (a section 457 plan), can New York still tax that payment as a nonresident's income?
No. Because federal law (4 U.S.C. § 114, added by Public Law 104-95) defines income from an IRC § 457 eligible deferred compensation plan as 'retirement income,' and bars any state from taxing the ret…
Does a tax-free restructuring of a partnership's corporate partners (a section 351 transfer plus section 368(a)(1)(A) mergers) trigger recapture of the investment tax credit?
No. Investment tax credit is recaptured under Tax Law section 210.12(g) only if qualified property is disposed of or ceases to be in qualified use. A tax-free section 351 contribution and tax-free sec…
Do track-mounted or portable moveable partitions qualify as an exempt capital improvement, or are they taxable tangible personal property?
No -- operable, accordion, and portable moveable partitions don't qualify as a capital improvement even though the tracks are bolted into the ceiling structure, because merely mounting panels on rolle…
When is a Metro-North rail employee's pay exempt from New York income tax under the federal rule for employees 'regularly assigned' to duties in more than one state?
It depends on the job description of each specific work assignment, not on how much an employee happens to travel or which roster the employee is eligible for. A Connecticut-based employee sent to fla…
Are a licensed engineering firm's photocopying charges for its final reports, billed as a reimbursable expense, subject to sales tax?
No -- when a licensed professional engineering firm bills a client a fixed photocopy charge (here, 15 cents per page) as a reimbursable expense incidental to its professional engineering services, tha…
Is an insured armored courier's daily bank-delivery service subject to New York sales tax?
Yes -- an insured courier's service of making daily armored-vehicle trips to banks for customers is a taxable protective and detective service under Tax Law § 1105(c)(8) (armored car and bonded courie…
Is a print-and-mail company's service of printing financial statements, confirmations, and invoices and mailing them to customers subject to New York sales tax?
Printing monthly statements, confirmations, or invoices for financial institutions and businesses is a taxable printing service under Tax Law § 1105(c)(2) when the client furnishes the paper, but only…
Does a Florida training company create New York nexus by sending independent contractors to run free in-state workshops, requiring it to collect use tax on its mail-order home-study program sales to New York students?
Yes -- a Florida-based factoring-training company that hires independent contractors to conduct regular free informational workshops in New York (aimed at enrolling students and promoting its programs…
Is a nonprofit aircraft co-ownership club, formed to make light-plane ownership affordable, a taxable 'social or athletic club' under New York's dues tax?
No -- under its current bylaws, a nonprofit club formed so members can jointly own and use light aircraft affordably is not a 'social or athletic club' within the meaning of Tax Law § 1101(d)(13), bec…
Is a litigation-support videographer's entire fee for producing and delivering accident-reconstruction video/audio media to attorneys subject to sales tax?
Yes -- a planned business that produces, edits, duplicates, and delivers audio/video media (such as accident reconstructions) to attorneys or parties in litigation is making a taxable retail sale of t…
Is selling grocery-discount 'coupon certificate' books, redeemable by mail for manufacturer coupons, subject to sales tax?
No -- selling 'Coupons on Demand' coupon certificate books, which entitle the book owner to request manufacturer-issued grocery coupons by mail, is not subject to New York sales and compensating use t…
Is selling a discount-coupon directory of health and fitness vendors subject to sales tax?
No -- the 'Healthy Step Directory,' a compilation of coupon-style discount advertisements for health, fitness, and wellness vendors, is not subject to sales and use tax when sold (whether through cons…
Does a free-brochure publisher, whose revenue comes only from selling ads printed in the brochures, owe sales tax on its own printing costs even though it gives the brochures to the State for free?
Yes -- a publisher that produces brochures and maps promoting State campgrounds and parks, gives them to New York State free of charge, and earns its revenue solely from selling advertising space prin…
My corporation is merging with a subsidiary of another company: shareholders will automatically have their shares converted into a set ratio of the acquirer's newly issued shares (with cash instead of any leftover fractional share), and separately, the merger subsidiary's own shares will convert into 1,000 shares apiece of the surviving company. Is any of this share conversion activity subject to New York's Stock Transfer Tax?
No. NYNEX Corporation ('Old NYNEX') merged with a wholly-owned merger subsidiary of Bell Atlantic Corporation, with Old NYNEX surviving as 'New NYNEX,' a Bell Atlantic subsidiary. Under the merger agr…
Does a New Jersey document-storage company owe New York tax on its various service charges (storage, retrieval, filing, faxing, photocopying) to New York customers?
A New Jersey document-storage company's storage, retrieval, filing, disposal, and similar labor services -- all physically performed in New Jersey -- are not subject to New York sales or use tax even …
Does a bank subsidiary's section 1452(d) election to be taxed under Article 9-A survive the merger of another bank subsidiary into it, with the electing company as the survivor?
Yes. Barclays Business Credit made the one-time section 1452(d) election to keep being taxed under Article 9-A rather than the Article 32 bank tax. Merging another bank subsidiary (BZWSI) into it, wit…
On a combined report, are a securities dealer's sales sourced to New York based on the selling activity of an affiliate in the same combined group?
Yes. On a combined report under Article 9-A the receipts factor is computed as though the corporations in the group were one corporation, with intercorporate receipts eliminated (20 NYCRR 4-1.2, 4-4.7…
Can a commercial landlord avoid sales tax on trash removal, painting, maintenance, and water-leak repair charges just by billing them to the tenant as 'additional rent'?
It depends on the specific charge -- a landlord's overtime freight elevator service, overtime heating, and overtime air conditioning tower cleaning charges are treated as untaxed real property rent be…
If the person who created a trust was a New York domiciliary when the trust became irrevocable, but every trustee later becomes domiciled outside New York and the trust's assets and income have no New York connection, does the trust still owe New York income tax?
The trust is still technically a New York 'resident trust' under Tax Law § 605(b)(3)(C), because that status is fixed permanently by the grantor's domicile at the time the property was transferred and…
I'm buying vacant land for $550,000 and, on the same day, separately contracting with the same builder to construct a $1,000,000 custom home on that land -- together the deal is worth $1.55 million, well over the mansion tax's $1 million threshold. But the land purchase contract and the building contract are expressly written as separate, divisible agreements with no cross-default provisions, and only the vacant land (not a finished or partially-built house) will actually be conveyed to me. Do I owe the 1% mansion tax on this land purchase?
No mansion tax -- only unimproved vacant land was actually conveyed. Petitioner, Mitchel H. Engel, entered into two separate contracts with Thomas Wright Development Corp. on the same day: a $550,000 …
New York State condemned part of my land for a highway project and paid me an advance payment, with more expected after settlement or trial. Part of that money compensates me for damage to the LAND I'M KEEPING, not the part that was taken. Does that severance-damage portion count as taxable consideration under New York's Real Property Transfer Gains Tax?
No -- severance damages don't count as taxable consideration, to the extent the property owner can prove that's what the payment represents. Stefco Realty Corp. owned about 70,567 square feet of land …
Does a sale-and-leaseback of office equipment escape New York sales tax if it's really a disguised financing arrangement rather than a true sale?
No -- a proposed sale of office and computer equipment by a securities firm to an unrelated commercial lender, followed by a 'leaseback' with renewal/purchase/return options structured so the firm is …
Are elevator consulting firms' inspection, evaluation, design, and expert-witness services subject to New York sales tax?
No -- a group of elevator consulting firms' inspections, performance evaluations, code-compliance reviews, modernization studies, traffic-capacity studies, design/specification work, bid analysis, pos…
How does New York sales and use tax apply to a kitchen cabinet and countertop manufacturer that sells its products both installed and uninstalled?
It depends on whether the sale is installed or uninstalled -- a kitchen cabinet and countertop manufacturer must collect sales tax when selling cabinets uninstalled, but when it installs cabinets or c…
Is a 7-Eleven franchisee personally liable for sales tax on store sales even though the franchisor prepares, signs, and files the sales tax returns?
Yes -- a 7-Eleven franchisee who makes taxable retail sales is a "vendor" personally liable for the sales tax collected at the store, even though the franchise agreement has the franchisor (Southland)…
Is the cost of soft patterns and prototype materials an apparel manufacturer uses to develop new clothing designs exempt from New York sales and use tax as research and development?
Yes, but only conditionally -- an apparel manufacturer's soft patterns and prototype materials qualify for New York's research-and-development sales/use tax exemption to the extent they are used direc…
Is a corporation dissolved by proclamation that held title to New York real estate subject to franchise tax, and for what period?
It depends on whether it kept doing business. A corporation dissolved by proclamation is subject to Article 9-A franchise tax only while it actually conducts business; one that merely holds record tit…
Are the transportation fees and landfill tipping fees an auto-shredding company pays to dispose of shredder waste subject to New York sales tax as a trash removal service?
Split result -- the tipping fee an auto-shredding company pays a landfill to accept its shredder waste (even waste with reuse value as landfill daily cover) is NOT subject to sales tax because it's a …
Does an out-of-state manufacturer that only occasionally demos at a New York trade show and ships to New York customers by mail or common carrier have to collect New York sales tax?
No -- a Rhode Island manufacturer with no New York place of business or property, no employees or agents soliciting business in New York, and only an occasional (no more than once-a-year, two-or-three…
When a retailer's private-label credit card program (run by an independent, non-owned finance company) writes off a customer's debt as uncollectible, can either the retailer or the finance company get a refund or credit for the New York sales tax already paid on that sale?
Neither one -- when an independent (non-captive) company issuing a retailer's private-label credit card writes off a cardholder's debt as uncollectible, the finance company can't claim a sales-tax ref…
Is an unincorporated residential condominium association subject to Article 9-A franchise tax, and how does electing federal homeowners-association status affect its income?
Yes. An unincorporated residential condominium association whose only revenue is common charges and interest income is an 'association' taxable as a corporation under IRC section 7701(a)(3) and Tax La…
Are a moving company's charges for packing/unpacking and its sales of packing materials part of a transportation business under Article 9, sections 183 and 184?
It depends on whether the activity is tied to transporting the goods. A moving company is taxed under Article 9 (sections 183/184) instead of Article 9-A only if more than 50% of its receipts come fro…
Is a company's charge for testing water samples and issuing a results report subject to New York sales tax?
No -- charges for performing water testing (for potability, contaminants, or regulatory compliance) and providing a written results report are not subject to New York sales tax, regardless of which te…
Is a bank's purchase of office furniture and equipment from the FDIC, acting as receiver for a failed savings bank, exempt from New York sales and use tax as a purchase from a federal agency?
No -- a bank's purchase of office furniture, equipment, and other tangible personal property from the FDIC, acting as receiver for a failed savings bank, is not exempt from New York sales and compensa…
Does the annual charge homeowners pay for use of a community's pool, bathrooms, and lake rights qualify for New York's homeowners-association exclusion from the club dues tax?
Yes -- the annual charge a community corporation levies on homeowners for use of a shared swimming pool, bathrooms, and lake rights qualifies for New York's homeowners-association exclusion from the c…
Does New York sales tax apply to the full charge for an integrated pickup-and-disposal trash removal service even when the waste is hauled out of state and simply dumped, with no processing?
Yes -- picking up, hauling, and dumping a New York customer's waste is a single, integrated taxable trash-removal service under Tax Law § 1105(c)(5), and New York sales tax applies to the entire charg…
Is a manufacturer's purchase of source artwork (paintings, antique fabric swatches, or similar images) used to design a computer-generated textile pattern exempt from New York sales and use tax as production equipment?
Yes -- an upholstery fabric manufacturer's purchase of source "artwork" (a painting, antique fabric swatch, carved molding, or polished stone slab) that is scanned and used to design the computer-gene…
Is a marketing/business analysis consulting firm's fee subject to New York sales tax, including when it also provides presentation artwork?
Generally no -- a firm's business analysis and marketing-strategy consulting service is not subject to New York sales tax because it isn't one of the enumerated taxable services, but if the firm sells…
We're the fee owner of an office building. To help a corporate tenant get economic-development tax benefits through the NYC Industrial Development Agency (IDA), we're converting our building to a condominium and conveying legal title to the tenant's units to the IDA for a nominal price, then leasing those units back from the IDA for nominal rent under an 'Overlease.' We (not the IDA) will keep all the rent, insurance and condemnation proceeds, income-tax ownership treatment, and the right to sell, mortgage, or alter the units; title reverts to us automatically when the IDA benefits end (no later than 2016). The tenant separately subleases from us and its rent obligations flow through additional financing leases to fund the IDA bonds. Are the conveyance to the IDA, the eventual reversion back to us, and the various leases and lease amendments subject to New York's Real Estate Transfer Tax or the (now-repealed) Real Property Transfer Gains Tax?
Exempt at every step -- Metropolitan Life Insurance Company kept all the real economic benefits and burdens of ownership throughout. Metropolitan Life, the fee owner of 11 Madison Avenue in Manhattan,…
Is an environmental consulting firm's installation of a petroleum-leak remediation system, its water/soil sampling, and its reports subject to New York sales tax?
It depends entirely on the capital-improvement test -- if an environmental consulting firm's installation of a petroleum-leak remediation system (and any related tank removal/replacement) satisfies al…
Is a group self-insurance workers' compensation trust taxed as an insurance company under Article 33, or under another article of the Tax Law?
Under Article 9-A, not Article 33 or the personal income tax. Because the trust is not licensed by the Superintendent of Insurance and is not regulated under the Insurance Law, it is not 'doing an ins…
Are funds a bank receives from a subsidiary's issuance of commercial paper 'deposits' includible in the bank's deposits allocation factor?
No. The deposits factor of a bank's Article 32 allocation percentage uses 'deposits' as defined in 20 NYCRR 19-7.2, which is modeled on the federal FDIC definition (12 USC 1813). Money a wholly owned …
We're buying a 127-acre parcel for commercial redevelopment. The land has one large structure that used to be a house but has been converted to office space (leased to an architecture firm and a law firm), plus five smaller ancillary structures (a couple of small houses, a vacant house, a stable/loft, and a caretaker's apartment over a garage). The main building will be demolished before or shortly after closing; some ancillary structures will also be demolished, and the rest converted to a day care center. Total consideration is over $1 million, but no single structure is worth anywhere near that. Does New York's 'mansion tax' -- the additional 1% Real Estate Transfer Tax on residential property sales of $1 million or more -- apply to this purchase?
No -- the additional ("mansion") transfer tax doesn't apply. Swiss Re America Holding Corporation was considering buying, for commercial development, a 127-acre New York parcel containing a large form…
Two charitable lead annuity trusts, created under the same family trust instrument with identical remainder beneficiaries, are being combined into one 'Surviving Trust' by court order because their income no longer covers their required annual charitable payments. The trusts jointly own New York real property as tenants-in-common. To protect the separate remainder beneficiaries' interests despite the combination, we're setting up a bookkeeping 'Pro Forma Account' that tracks what each set of beneficiaries would have received had the trusts stayed separate, plus a 'Loan-Back Agreement' so that if a 2003 distribution from that account requires deeding out New York real property, the recipient beneficiaries can immediately loan the property interests back to the Surviving Trust instead of the trust having to sell real estate to raise cash. Does combining the trusts -- or the later Pro-Forma-driven deed-and-loan-back mechanism -- trigger New York's Real Estate Transfer Tax or Real Property Transfer Gains Tax?
Exempt -- combining the two trusts didn't change who beneficially owned the underlying New York real estate. Lew R. Wasserman, Jean Stein, Gerald H. Oppenheimer, and Andrew Shiva, as trustees of two c…
Are the annual membership fees, supplier commissions, and consulting charges earned by an operator of computer-equipment buying groups subject to New York sales tax?
Mixed result -- a computer buying group operator's annual membership fees (not club dues) and supplier commissions (agency fees) are not subject to New York sales tax, and its software training or net…
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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.