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 personal matchmaking and dating service subject to New York sales tax?
No -- a dating service that matches clients based on interviews and profiles, or lets clients browse an album of prospective dates, is not subject to New York sales tax, because bringing people togeth…
Is the electricity a paper mill uses to run dedicated air conditioning for rooms housing its production equipment's electrical controls exempt from New York sales tax?
Yes -- a paper mill's electricity used exclusively to run dedicated air conditioning systems that keep separate, restricted-access control rooms cool enough to prevent the electrical components (switc…
Is a temporary staffing agency's key-entry data-entry work, performed at a client's own facility using the client's own computer system, subject to New York sales tax?
No -- charges from a temporary staffing agency for its temps' key-entry of manual records (time cards, C.O.D. stubs, package pick-up records) into a client's own computer system, at the client's own l…
Does a wholly owned aircraft-transportation subsidiary that flies employees and customers of related companies for a cost-based fee qualify for New York's commercial aircraft sales tax exemption?
Yes, conditionally -- a wholly owned subsidiary whose sole activity is flying employees, customers, and potential customers of its related companies for a cost-based fee qualifies for New York's comme…
On a combined bank franchise tax return, how are a banking group's allocation factors and loan receipts sourced, and does an intercorporate transfer of a loan change its location?
On a combined Article 32 return the banking group is treated as one corporation. The combined activities of all members are used to compute the entire-net-income, alternative-entire-net-income, and as…
Is a single-member New York LLC subject to New York tax, and does owning it make a foreign corporate sole member taxable in New York?
New York follows the LLC's federal classification. A single-member LLC that is disregarded for federal income tax (the default under the check-the-box rules) is treated as a branch or division of its …
Are industrial development agency bonds investment capital, is their interest investment income, and are they governmental securities for the investment allocation percentage?
Yes. Bonds issued by the New York City Industrial Development Agency -- a governmental instrumentality (public benefit corporation) under Article 18-A of the General Municipal Law -- are investment ca…
Does a foreign corporation that enters New York only to meet with a prospective accountant, banker, lawyer, or underwriter become subject to the Article 9-A franchise tax?
No. A foreign corporation (XYZ) that enters New York for the limited purpose of meeting with an accountant, banker, lawyer, or securities underwriter it might engage -- and does nothing else in the St…
Is a matchmaking service that arranges social lunch meetings between clients subject to New York sales tax?
No -- a service that interviews clients, matches them with other clients by phone, and arranges a luncheon meeting between them is not subject to New York sales tax, because the primary function of en…
Does an aircraft leased to a commuter air-charter operator qualify as an exempt "commercial aircraft" under New York sales tax law, even though the lessor also uses it for its own company business?
Yes -- an aircraft the owner leases to a commuter air-charter operator qualifies as an exempt "commercial aircraft" under Tax Law § 1115(a)(21), exempting the lease payments and related maintenance/re…
If a fuel distributor blends cheap marine diesel or off-spec No. 2 heating oil with enhanced diesel motor fuel to make standard No. 2 heating oil, is the result taxable 'enhanced' diesel motor fuel?
No — the resulting product is unenhanced diesel motor fuel, so previously-untaxed inter-distributor sales of it stay free of the Article 12-A excise tax, the Article 13-A petroleum business tax, and t…
New York Advisory Opinion TSB-A-96(45)S: If a three-year car lease is extended by three months (because the lessee's replacement vehicle isn't ready), are the extension's rental payments hit with the extra 5% passenger car rental tax on top of ordinary sales tax -- and does it matter whether the extension is agreed to before or after the original lease expires?
It depends entirely on WHEN the extension is agreed to. If the lessor and lessee agree to extend a long-term (one-year-plus) passenger vehicle lease BEFORE the original lease expires, the extension is…
New York Advisory Opinion TSB-A-96(44)S: Is a database data-cleaning/matching service taxable, and are the related software license fees a company charges its clients subject to New York sales tax?
Split ruling: the data service is exempt, but the software license fees are taxable. Company ABC organizes and updates client marketing databases (standardizing names/addresses, matching households, v…
New York Advisory Opinion TSB-A-96(43)S: Are a manufacturer's sales of corrugated cardboard and box-forming machinery to companies that turn the material into shipping boxes for their own products exempt from New York sales and use tax?
Yes, both are exempt -- but only if the customer gives a timely exemption certificate. Petitioner's client sells corrugated material (which customers form into their own non-returnable shipping boxes)…
New York Advisory Opinion TSB-A-96(42)S: Is a specific method of waterproofing leaking basement wall cracks -- installing a permanent interior drainage system rather than patching the cracks -- a tax-exempt capital improvement or a taxable repair service?
It's a capital improvement, exempt from sales tax to the customer. Sta Dry Systems Inc. doesn't patch or inject cracked basement walls -- instead it permanently reroutes leaking water into the floor d…
New York Advisory Opinion TSB-A-96(41)S: Does an environmental contractor's installation of soil and groundwater treatment systems at contaminated gas station sites qualify as a tax-exempt "capital improvement" to real property?
It depends on the facts of each installation -- the Department can't decide that question in the abstract, but it laid out the test. Envirotrac Ltd. installs soil and/or groundwater treatment systems …
New York Advisory Opinion TSB-A-96(40)S: When a printer's invoice for coupons bundles the printing cost with overhead, can the buyer exclude the overhead portion from the sales-tax base?
No -- the whole purchase price is the taxable receipt, with no deduction for overhead. E.C.E. Enterprises buys printed coupons at $123 per 10,000 or $194 per 20,000 and believed part of that price was…
New York Advisory Opinion TSB-A-96(39)S: Is the fee a private child-support collection agency charges clients to secure a payment arrangement from delinquent parents subject to sales tax as a "detective service," given that the agency sometimes has to locate the delinquent parent first?
No -- the collection fee itself is not taxable, but a subcontracted locator charge would be. Child Support Services of NY, Inc. charges clients 28% of the delinquent child support it collects, mainly …
How are a utility's tolling fees for burning marketers' gas to produce the marketers' electricity, and the marketers' imported gas, taxed under sections 186, 186-a, 189 and the sales tax?
Marketers that import out-of-state gas into Con Edison's system to be burned into their own electricity are section 189 gas importers, and Con Edison -- the public utility delivering the gas -- must c…
New York Advisory Opinion TSB-A-96(37)S: A contractor who hires a plumber and mason as subcontractors on a pool job asks whether he has to pay sales tax to those subcontractors, or whether he can instead give them a Contractor Exempt Purchase Certificate (Form ST-120.1).
It depends on what kind of job the contractor is doing for the property owner. If the contractor's own work for the customer is a TAXABLE service (an installation that doesn't become part of real prop…
New York Advisory Opinion TSB-A-96(36)S: When Viacom finances office build-outs, equipment, and maintenance contracts through the New York City Industrial Development Agency's bond program to stay headquartered in the city, are those purchases, the resulting lease (debt-service) payments, intercompany reimbursements, the $1 buyout option, and an early-removal penalty all exempt from sales and use tax?
Yes, with one open factual question and one hard carve-out. Because title to the improvements and equipment runs through the New York City Industrial Development Agency (IDA) under General Municipal L…
I'm buying a building and gutting it down to the four exterior walls to add a story and a half. Does that rehab count as a fresh 'qualifying capital improvement' under New York's builders' exemption from the Real Property Transfer Gains Tax, even though the building already existed before I bought it?
Yes -- the gut rehabilitation qualified. Dashal 67, LLC planned to buy a five-story building for about $2.5 million and immediately gut-rehabilitate it down to its four exterior walls while adding a s…
My family's real estate partnership is splitting up: I'm taking two of our five properties into a new entity with my spouse, and my siblings are taking the other three into their own entity. Does New York's Real Property Transfer Gains Tax apply, and does the value of the ownership interest I keep for myself get taxed as part of the deal?
The full fair market value of each parcel counted as taxable consideration, but each partner's own retained percentage ownership was exempt under the 'mere change of identity or form' rule. Under New …
I subdivided a parcel of land into five residential lots and I'm now selling two more of them to a builder who will build houses on them. Do I have to add up the sale prices of all the lots I've sold from this subdivision to see if I hit New York's $1 million Real Property Transfer Gains Tax threshold, or is each lot sale tested separately?
No aggregation needed -- each lot sale is tested separately. New York's now-repealed Real Property Transfer Gains Tax exempted transfers with consideration under $1 million, but ordinarily required ag…
For privacy, my spouse and I are having a corporation (not us personally) take title to the house we're going to live in as our home. Can that house still qualify for New York's personal-residence exemption from the Real Property Transfer Gains Tax when it's later sold?
Yes, potentially -- if the facts support it at the time of the later transfer. A married couple formed a corporation, RAI (NY), Inc., solely to hold title to a residential property for confidentiality…
As part of a bankruptcy reorganization, we (NBC and GE) will end up as the 'owners for tax purposes' of the office condominium units we already occupy at Rockefeller Center (the GE Building and adjacent Studio/West Buildings), even though a specially formed financing trust will hold nominal legal title and lease the units back to us under 'Trust Leases' with purchase options. We'll pay all taxes, insurance, and maintenance, keep all appreciation, bear all depreciation risk, and be treated as owners for all tax purposes (though not for our own balance sheets). The financing trust's notes and mortgages that back this deal won't be recorded unless our guarantor's (GE's) credit rating drops. Does this transaction trigger the Real Estate Transfer Tax, the Real Property Transfer Gains Tax, or the Mortgage Recording Tax at any step -- the initial bankruptcy-plan transfer to the trust, the trust's lease-with-purchase-option back to us, or the unrecorded financing documents?
Exempt at every step described -- National Broadcasting Company (NBC) and General Electric Company (GE) structured a synthetic-lease financing of their Rockefeller Center office condominium interests …
New York Advisory Opinion TSB-A-96(35)S: When a group of securities-clearing companies finances new equipment through the New York City Industrial Development Agency's bond program, are the equipment purchases/leases, the companies' lease payments to the IDA, the $1 buyout price, and the early-removal penalty all exempt from New York sales and use tax?
Yes to all four -- as long as the IDA stays the on-paper purchaser, lessor, or lessee. Because title to the equipment runs through the New York City Industrial Development Agency (IDA) under General M…
New York Advisory Opinion TSB-A-96(33)S: Are the fees a farmer charges to board and care for horses kept on his farm for breeding purposes subject to New York sales tax?
Yes, exempt -- but only if the boarded horses are used predominantly to breed horses for sale, and the owner provides a Farmer's Exemption Certificate. A farmer boards horses belonging to other owners…
New York Advisory Opinion TSB-A-96(32)S: Is installing custom-cut, permanently anchored closet shelving a tax-exempt capital improvement, and does it matter whether it's going into a brand-new building or an existing one?
It depends on whether the building is new or existing. Home Insulation & Supply Inc. installs closet shelving cut to the exact size of each closet, permanently anchored with screws, nails, or similar …
My elderly mother's house is held in an irrevocable trust, with her as trustee's grantor keeping a life estate. She wants a HUD-approved reverse mortgage. Is recording that mortgage exempt from New York's mortgage recording tax, even though the borrower is technically the trust rather than my mother individually?
Exempt, as long as the reverse mortgage genuinely conforms to the HUD/HECM federal program. A 77-year-old grantor had conveyed her Greenburgh home to an irrevocable trust in 1988, reserving a life est…
New York Advisory Opinion TSB-A-96(34)S: When a nonprofit cooperative housing corporation generates its own electricity and submeters it to residential and commercial tenants at cost, are those electric charges taxable utility sales, do residential tenants get a reduced rate, and can the co-op get a refund on the sales tax it paid for the fuel oil used to generate that electricity?
Yes, all three questions get detailed yes answers. Mutual Redevelopment Houses, Inc., a nonprofit cooperative, generates its own electricity and bills residential and commercial tenants separately fro…
New York Advisory Opinion TSB-A-96(31)S: When an interior design firm buys furnishings for a client at its own discretion and bills the client a marked-up price (cost plus a design fee percentage), is the entire charge taxed as a sale of goods, or can the design fee be taxed at a lower rate as a separate service?
The entire marked-up charge is taxable as a sale of goods, at New York City's full combined rate, unless the design fee is separately contracted for and separately billed. J.P. Molyneux Studio Ltd., a…
If I generate a federal net operating loss while I'm a New York nonresident, can I carry that loss back to reduce my New York tax from an earlier year when I was a New York resident?
Yes, potentially. New York has no independent NOL carryback rule of its own - the deduction rides entirely on Tax Law § 612, which starts New York taxable income from federal adjusted gross income. Un…
New York Advisory Opinion TSB-A-96(30)S: Is applying a slip-resistant chemical treatment to tile, terrazzo, or concrete floors -- often done for ADA compliance -- subject to sales tax, and does it matter whether the floor is brand new or already existing?
It depends on whether the floor is new or existing. FST Services applies a permanent chemical treatment to hard mineral floors (ceramic, quarry tile, concrete, terrazzo) that boosts slip resistance fo…
Are payments to a Bermuda captive insurance company for New York risks subject to the section 1510 additional franchise tax on insurance corporations?
No. The section 1510 additional franchise tax reaches an alien insurance corporation only if it is authorized to transact business in New York under a certificate of authority from the Superintendent …
A private company operating an airport cogeneration plant under a Port Authority lease needs to refinance with new bonds. The Port Authority will assign its lease rents to the trustee (exempt, since it's a government instrumentality), and then our company will separately grant a leasehold mortgage and a security interest in our equipment to the same trustee as additional security. Is that additional security exempt too, riding on the Port Authority's exemption?
Exempt, as a supplemental mortgage riding on the Port Authority's own exemption. KIAC Partners operated an integrated cogeneration and central heating/refrigeration plant at JFK Airport, financed with…
Is a sewage-works corporation taxed under Article 9 (sections 183/184, 186, or 186-a) or under Article 9-A?
Under Article 9-A. A sewage-works corporation organized under the Transportation Corporations Law and not regulated by the Public Service Commission is not principally engaged in a transportation or t…
When a gas marketer sells natural gas to New York end-users with title passing outside New York, are its receipts taxed under sections 186, 186-a, 189, or the sales/use tax?
It turns on where the sale occurs, which depends on where title, possession, and risk of loss pass -- a factual question. Under this agreement, title, risk of loss, and transportation responsibility p…
New York Advisory Opinion TSB-A-96(28)S: Is a 1,000-capacity concert hall a taxable "cabaret" because it also sells drinks at a bar during shows, or is admission exempt as a musical performance because the drink sales are merely incidental to the concerts?
It's not a taxable "cabaret," so admission is exempt. The Water Street Music Hall is a 1,000-capacity concert venue with no seating, no tables, and no food, that hosts touring musicians and runs a cas…
New York Advisory Opinion TSB-A-96(27)S: Does a banking-software license and maintenance contract signed in 1988 -- before a 1991 New York law change made pre-written software taxable -- still get the OLD exempt treatment for its ongoing annual maintenance fees, or does the new tax apply going forward regardless of when the contract was signed?
The new tax applies to charges from September 1, 1991 forward, even under a contract signed years earlier -- there's no grandfathering here. ALLTEL Financial Information Services, Inc. (formerly Syste…
New York Advisory Opinion TSB-A-96(26)S: When a commercial landlord bills a tenant "additional rent" for building services beyond the basic lease package -- overtime elevator/porter/heat, plus separate categories like extra cleaning, mechanical maintenance, and rubbish removal -- which of those charges are subject to sales tax?
It splits by service type, regardless of the "additional rent" label. Midtown Realty Company's lease bundles basic cleaning, elevator, porter, and heat/AC service into base rent during normal business…
New York Advisory Opinion TSB-A-96(25)S: A driving school that switches from renting road-test cars to buying its own vehicles asks whether it now owes sales tax on those purchases (and on repair parts), and whether it can get a credit for the 25% of its student fee that's allocated to "providing the car."
Yes, both are taxable, and no, there's no credit. Model Auto Driving School, Inc. charges students a fee split 75%/25% between driving instruction and providing a car for the practical road test -- th…
After a corporation claims the investment tax credit and spins the property off to an LLC in a tax-free section 721 exchange, who keeps the credit and is it recaptured?
The corporate taxpayer that claimed the credit keeps it, with no recapture. A film company bought qualifying ITC equipment, claimed the credit in the first qualified-use year, then contributed the vid…
New York Advisory Opinion TSB-A-96(24)S: Is a company that supplies custom decorative table linens for one-time special events (weddings, parties) performing an exempt "laundering" service, or is it making a taxable rental of tangible personal property?
It's a taxable rental of tangible personal property, not an exempt laundering service. Table Wraps, Ltd. supplies custom-made decorative table linens for one-time events like weddings and parties unde…
New York Advisory Opinion TSB-A-96(23)S: When an out-of-state industrial auctioneer sells equipment at a New York auction site "as is, where is" to a buyer who arranges common-carrier shipment to an out-of-state destination, is the sale taxable in New York, and what records must the auctioneer keep to prove it isn't?
Not taxable in New York -- as long as the buyer never takes physical possession within the state. Norman Levy Associates, a Michigan-based industrial auctioneer and appraiser, conducts public auction …
New York Advisory Opinion TSB-A-96(22)S: Are a merchant-services company's charges for its "check guarantee" service -- where it agrees, for a fee, to buy a dishonored check from a subscribing merchant at face value -- subject to New York sales tax?
No, not taxable. TeleCheck Services offers retail merchants a check "guarantee" service: before accepting a customer's check, a subscribing merchant contacts TeleCheck electronically (via a point-of-s…
Is an LLC taxed as a partnership a 'portfolio investment partnership,' and is a foreign corporate member subject to Article 9-A by reason of its membership?
New York follows the LLC's federal classification, so an LLC taxed as a partnership is a partnership for New York tax. An LLC that meets the IRC section 851(b)(2) gross-income requirement and is not a…
Is a testamentary trust a New York resident trust under Tax Law section 605(b)(3)(C), and subject to New York personal income tax under Article 22, when all of its trustees live in New York but the person who created it in her will died domiciled in Florida?
No. A trust created by will is a New York resident trust only if the decedent was domiciled in New York at death. Because Genevieve G. Harper died domiciled in Florida, the Harper Family Trust is a no…
May a transportation corporation include its independent operators' revenue miles in the section 184 mileage allocation fraction?
No. Section 184.4(a) allocates a transportation corporation's gross earnings by a fraction of 'the taxpayer's mileage' within New York over the taxpayer's mileage everywhere, using actual revenue mile…
Is a natural-gas broker LLC that never takes title to the gas subject to the section 186 or 186-a gas/utility taxes?
No. A natural-gas broker that never takes title, possession, control, or risk of loss of the gas -- it only matches producers with end-users, states in its agreements that it is a broker, reports only…
Does a bank subsidiary's section 1452(d) election to stay under Article 9-A survive (1) the acquisition of its parent bank by another bank, and (2) an expansion of the subsidiary's line of business?
No. ESB (later renamed Associates) timely made the one-time section 1452(d) election to keep being taxed under Article 9-A instead of the Article 32 bank franchise tax. The 1986 acquisition of its par…
Are the corporate partners of a natural-gas storage partnership taxed under Article 9 or Article 9-A, and is the partnership subject to section 186-a on its storage and incidental gas-sale receipts?
The corporate partners are taxed under Article 9-A, and the partnership's storage receipts are not section 186-a gross operating income (but its incidental gas sales are). A gas-storage partnership th…
New York Advisory Opinion TSB-A-96(21)S: If a company buys and registers vehicles as dump trucks, uses them as dump trucks, and only later modifies them (removing the dump body, adding a fifth-wheel hookup) and re-registers them as tractors, can it get a refund of the sales tax paid at purchase under the tractor/trailer exemption?
No refund. R.J. Valente Gravel purchased vehicles, registered them with the DMV as trucks, and used them as dump trucks, paying sales tax on the purchases. It later modified some of these vehicles -- …
New York Advisory Opinion TSB-A-96(20)S: Does an industrial gas company's cryogenic converter, which turns refrigerated liquid gas into gaseous form for sale to customers, qualify for the sales tax exemption for production machinery used directly and predominantly in manufacturing/processing?
Yes, exempt. Empire Airgas manufactures and sells industrial and medical gases (oxygen, argon, helium, carbon dioxide, hydrogen, nitrogen), storing them in refrigerated liquid form in bulk tanks, but …
New York Advisory Opinion TSB-A-96(19)S: On a long-term Mercedes-Benz auto lease originated by a dealer and then assigned to a leasing company, who owes the sales tax -- the dealer or the leasing company -- and is a customer's trade-in equity credited against the lease taxable?
The dealer -- not Mercedes-Benz Credit Corporation, the leasing company the lease is later assigned to -- is the "original lessor" and the one responsible for collecting and remitting New York sales t…
New York Advisory Opinion TSB-A-96(18)S: Is a hotel's purchase of a PBX telephone-switching device -- which routes incoming outside calls to the hotel's internal phone system -- exempt from sales tax as production equipment used to provide a taxable telephone service for sale?
It depends on how the hotel bills its guests for phone calls -- the exemption is available only if certain conditions are met, not automatically. Kasden Complete Services' hotels charge guests for cal…
We (an unaffiliated seller) are transferring a commercial property to a newly formed LLC owned by a REIT and its operating partnership, in exchange for a 40% ownership stake in that LLC plus cash and mortgage-related consideration. We signed the sale agreement on December 1, 1995, but the REIT's shares were first issued in its IPO on June 2, 1995, and our closing may slip past the six-month anniversary of that IPO. Does our sale qualify for the reduced 'REIT transfer' tax rates under New York's Real Estate Transfer Tax and Real Property Transfer Gains Tax if the closing happens within a reasonable time after we signed but after the strict six-month window? And if we (the selling partnership) later distribute the sale proceeds to our individual partners, does each partner need to separately satisfy the requirement of retaining at least 40% of their share's value in the new LLC for two years?
Yes, largely favorable to the taxpayer -- signing the sale contract counts as the operative 'transfer' for timing purposes, and a later closing can still qualify for the REIT transfer's reduced tax ra…
New York Advisory Opinion TSB-A-96(17)S: In a New York City Industrial Development Agency bond financing designed to keep an insurance company headquartered in the city, are the company's equipment purchases, leasehold improvements, maintenance contracts, and lease/rent payments to the Agency exempt from New York State and City sales and use tax?
Yes, exempt -- with detailed conditions attached. To keep Equitable Life Assurance Society headquartered in New York City, the company and its subsidiary (the "Lessees") will enter a bond-financed sal…
New York Advisory Opinion TSB-A-96(11)S: When the Javits Convention Center becomes the sole employer of display and freight-handling workers and sells their labor to contractors at trade shows, is that a taxable sale of a service, and does it matter that the contractors resell the labor's output to exhibitors?
Yes, generally taxable -- the Javits Center is acting as a "temporary service contractor," and its labor sales are taxable unless the purchasing contractor provides a timely exemption certificate. The…
Are a transmission company's microwave/satellite signal-delivery services, sold to cable TV operators and public TV stations, excluded from the section 186-e telecommunications excise tax as 'cable television service' or as a 'sale for resale'?
No -- the services are taxable. EMI uses microwave and satellite facilities to deliver TV signals to cable operators and public TV stations, which is a 'telecommunication service' and makes EMI a 'pro…
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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.