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 environmental engineering and consulting firm buy supplies, equipment, and services tax-free for a project performed for a tax-exempt government agency, by acting as the agency's purchasing agent?
Yes, if the government agency (a New York State or federal government body) confers agency status on the firm through contract language and the firm's purchase orders show it's buying as the agency's …
Does an out-of-state supplier owe New York sales tax on materials it sells to New York dental laboratories that use them to make dentures and crowns?
It depends on what the material becomes. Items that end up as a physical part of the finished denture or crown (teeth, porcelain, certain acrylics, certain metals) can be sold tax-free as a resale, as…
Is installing a new private cable television system for an apartment/condo complex an exempt capital improvement, or a taxable installation of tangible personal property?
Both, split by component. Burying the trunk cable, wiring buildings from the wall outlet to the cable pedestal, building the cable pedestal, and splicing/activating the cable lines are capital improve…
Is a graphic-arts firm's charge for a custom 'multi media' computer disk (a client-specific graphical presentation) an exempt sale of custom software, or a taxable sale of tangible personal property?
Taxable. Even though the firm is developing custom software written to each client's specifications, the firm isn't selling the software itself -- it's selling a physical disk containing data, along w…
Is a rate-regulated carrier of handicapped passengers in wheelchair vans classed as a 'taxicab' or an 'omnibus' for sections 183 and 184, and is it therefore taxed under Article 9-A?
It is an omnibus, and is taxed under Article 9-A. We Care carries handicapped passengers in wheelchair vans under a DOT certificate of public convenience and necessity, at rates set with the Departmen…
An industrial development agency's tax-exempt construction mortgage on our shopping mall is being converted to permanent financing -- we're terminating our installment sale agreement, taking title ourselves, having the lenders assigned to new permanent lenders, and consolidating and amending the mortgage. Does converting from construction to permanent financing this way stay exempt from mortgage recording tax?
Exempt, as a tax-free supplemental mortgage. The Westchester County Industrial Development Agency financed construction of a White Plains regional shopping mall (Fashion Mall Partners) with a $160 mil…
Does a business owe sales tax on what it pays a service like Telecredit for guaranteeing the funds on its customers' checks?
It depends on exactly what's being purchased. A pure check-guarantee service (the guarantor replaces funds on a bad check) is NOT a taxable service and isn't subject to sales tax. But if the service a…
Is a New York corporation licensed only as an independent insurance adjuster (not as a private investigator) subject to sales tax on its trial-preparation work for insurers -- interviewing witnesses, taking statements, photographing accident scenes, serving subpoenas, and evaluating and negotiating claims?
No. Because the client is licensed exclusively as an independent insurance adjuster and does not perform private investigation services, its charges for investigating and adjusting insurance claims (i…
A firm is licensed as both a private investigator and an independent insurance adjuster -- are its fees for insurance-adjusting work taxed as 'detective services,' the same as its private-investigator fees?
No. Fees for activities that require an independent-adjuster license under Insurance Law Article 21 are NOT subject to the detective/protective-services sales tax, even though some of the underlying w…
Are camera-ready mechanical drawings sold to garment and textile manufacturers -- used to make the silkscreens that print designs onto fabric -- exempt production equipment, or taxable tangible personal property?
Exempt production equipment, as long as the customer buying them uses the mechanical drawings directly and predominantly (over 50% of the time) to produce printed fabric or other tangible goods for sa…
I'm the fee owner and ground tenant of an office building. To help a tenant (Donaldson, Lufkin & Jenrette) get NYC Industrial Development Agency economic-development benefits, I'm converting the building to condominium units and conveying title to the IDA-benefited units to the IDA for nominal consideration, then leasing them back from the IDA under a 22-year 'Overlease.' I'll keep all the rent, insurance and condemnation proceeds, income-tax ownership treatment, and the right to sell, mortgage, or transfer the units; title reverts to me automatically in 2016 or whenever the tenant's IDA benefits end. Are the conveyance to the IDA, the eventual reversion, and the various leases subject to New York's Real Estate Transfer Tax or Real Property Transfer Gains Tax?
Exempt at every step -- Stanley Stahl, doing business as Stahl Park Avenue Co., kept all the real economic benefits and burdens of ownership throughout. Stahl, the fee owner and ground tenant of 277 P…
Is a certified sonographer's fee for a veterinary ultrasound exam -- including the written report, video tape, and thermal prints she gives the client -- subject to New York sales tax?
No, as long as she's selling a personal written report (impression) that isn't and can't be reused in reports to other clients -- that's an exempt 'personal or individual' information sale. But if she…
Does a free bi-weekly arts-and-entertainment magazine qualify as an exempt 'periodical,' and are the typesetting/layout charges for its pre-press camera-ready mechanicals taxable?
The publication itself qualifies as an exempt periodical. But because it's given away free rather than sold, its purchases of typesetting and camera-ready mechanicals -- which would otherwise be exemp…
When an independent auto dealer is the actual lessor on a vehicle lease and accepts a trade-in, but then immediately sells (assigns) the lease and vehicle to a finance company, can the trade-in still be excluded from the taxable lease receipts?
Yes. Because the dealer itself -- not the finance company -- is the lessor who negotiates and accepts the trade-in with intent to resell it, the trade-in value can be excluded from the taxable lease r…
Is a software-duplication company's disc-copying machinery exempt production equipment, and is the electricity powering it exempt production electricity?
Yes to both, but with different thresholds. The duplicating machinery is exempt if used more than 50% of the time ('predominantly') to copy master discs onto blank discs for resale. The electricity po…
Is a technical-manual developer's computer equipment, software, and supplies exempt production machinery under Tax Law Section 1115(a)(12)?
Yes, to the extent the equipment is used more than 50% of the time to produce camera-ready mechanicals or print-ready computer disks that are delivered to the customer as tangible personal property fo…
Can 14 related commercial property owners consolidate their on-site maintenance and janitorial staff's payroll processing into a single payroll corporation without triggering New York sales tax on the wages funneled through it?
Yes. As long as each property owner keeps the real controls that make the maintenance staff its own employees -- hiring/firing authority, setting salary and benefits, and reimbursing the payroll compa…
When a cigarette manufacturer packages a free promotional item -- like a lighter or playing cards -- together with a pack of cigarettes as a marketing premium, is buying that item a tax-free purchase for resale?
No. Promotional items given away for free with a product (rather than genuinely sold to the end customer) don't qualify for the resale exclusion -- the manufacturer's purchase of the premiums is a tax…
On a utility's sale-leaseback of business equipment, is only the gain (not the entire proceeds) taxed under section 186, and how is the gain/profit computed for sections 186 and 186-a?
Only the gain, and it is computed from original cost. On a sale-leaseback of equipment used in (not held for sale in) its business, only the gain -- not the entire proceeds -- is a 'receipt from the e…
Is a vehicle's DMV registration by the lessee proof that sales tax was paid on a pre-June-1990 lease, and separately, does a lessor keep its exemption-certificate protection when it accepts a farmer's exemption certificate for leasing an ultrasound machine to a veterinarian for use on farm livestock?
No, DMV registration alone doesn't prove sales tax was paid -- for leases before June 1, 1990, the lessor owed sales tax on each lease payment separately (not all at once as under the current law), an…
I own a one-third tenant-in-common interest in a commercial building (subject to a tenant's purchase option worth over $3 million for the whole property). I want to transfer my one-third interest, for no payment, into my own revocable trust -- I'm the grantor and sole trustee, I'll keep receiving all the income during my life, and I can amend or revoke the trust at any time. Does moving my interest into my own revocable trust trigger New York's Real Estate Transfer Tax or Real Property Transfer Gains Tax?
Exempt -- moving property into your own revocable trust doesn't change who beneficially owns it. Betty G. Reader owned a one-third interest, as tenant-in-common, in a commercial building at 391-401 Si…
Is a bank-account verification service -- where subscribers call in or log on to check whether an applicant's prior checking account was closed for cause -- a taxable information service, even though each answer is about one specific applicant?
Yes, taxable. Even though each inquiry is 'tailored' to one specific applicant, the answer is pulled from the same shared database used to answer every subscriber's inquiries -- so it isn't 'personal …
Is a company that operates school buses under contract with a school district providing a taxable rental of the buses, or an exempt transportation service?
An exempt transportation service. Even though the school district's contract dictates the bus routes, stops, timing, equipment specs, and even the pool of drivers to hire from, the bus company itself …
I sold two parcels of land on the same road to the same buyer on the same day, but they're separated by a third parcel owned by a completely unrelated party. Do I have to add the two sale prices together to test New York's $1 million Real Property Transfer Gains Tax threshold, since they're roughly in the same area?
No aggregation required. Gick Road Development Corp. owned two parcels on the same side of Old Gick Road in Suffolk County: a narrow 1.24-acre former railroad-bed strip used for a mobile home park, an…
Is the fee a firm pays a third-party mainframe host to store and let it access its own previously-purchased databases -- with no hardware transferred -- a taxable information service or a taxable computer-timeshare rental?
Neither -- the flat monthly fee is untaxed. There's no transfer of possession of the host's computer (so it's not a taxable rental), and since the host is just storing and serving back the customer's …
Does a factory-manufactured home dealer owe sales tax on homes it buys and resells already-installed, and is the installation work of a related but separately-owned installation company subject to sales tax?
Homes sold and installed as permanent capital improvements (not mobile homes, not display models) escape sales tax on both the dealer's purchase and its resale, with the manufacturer owing the use tax…
When an out-of-state gas marketer sells gas delivered through a utility's pipeline to a New York consumer, who owes sections 186, 186-a and 189 -- the utility or the marketer -- and how is the situs of the sale determined?
Split by role. The utility (Niagara Mohawk) never owns the gas; it only transports it, so its contract-carriage delivery fee is its section 186 gross earnings and section 186-a gross income (as a firs…
Is a custom-fitted canvas awning, installed at a homeowner's residence to block sun from entering the living and dining rooms, an exempt capital improvement, or taxable?
Taxable. Canvas awnings are categorically NOT treated as a capital improvement under the Department's own published guidance and prior precedent, regardless of how custom-fitted or substantial the ins…
After further review, does a mandatory condominium association's entire assessment count as taxable club dues, or only the portion actually funding the pool and tennis courts?
Only a reasonable portion is taxable -- this modified opinion corrects the Department's own earlier answer (TSB-A-94(6)S) on the identical facts: rather than taxing the association's ENTIRE mandatory …
Is a hair-replacement system for male pattern baldness -- a custom mesh grid woven with human hair, fused into the client's existing hairline and serviced every 6-8 weeks -- exempt from sales tax as a prosthetic device?
Only if it's shown to be used for a genuine medical problem, not cosmetic purposes -- and even then, fitting/fusing the hairpiece into the client's own hair is itself a taxable installation service. T…
I buy diesel fuel only for off-road equipment (hi-lift tractors and a crane) that never touches a public highway. Is that fuel exempt from New York's diesel motor fuel excise taxes?
No exemption at purchase, but a refund is available. New York's diesel motor fuel excise taxes (Tax Law §§ 282-a, 282-b, 282-c) apply to all diesel fuel sold or used in the state unless the buyer is a…
We're trustees of two charitable lead annuity trusts, created under the same family trust instrument with currently identical beneficiaries, that co-own New York real property as tenants-in-common. We're proposing to combine them into one 'Surviving Trust' because declining income no longer covers required annual charitable payments. To protect the separate remainder beneficiaries' interests, we're setting up a detailed 'Pro Forma Account' formula (tracking what each set of beneficiaries would have received had the trusts stayed separate, adjusted annually for investment gains/losses and a liquidity test comparing available assets against the discounted present value of future charitable obligations). Will combining the trusts trigger New York's Real Estate Transfer Tax or Real Property Transfer Gains Tax?
Exempt -- this is the first (earliest) of three related advisory opinions the Department issued to the same trustees about the same proposed trust combination, as the underlying facts evolved. Lew R. …
Will the reorganization of a mutual savings bank into a stock savings bank held by a mutual holding company, tax-free federally under IRC sections 368(a)(1)(F) and 351, also be tax-free for Article 32 (bank) and Article 22 (personal income) purposes?
Yes. Oswego City Savings Bank plans to reorganize from a mutual savings bank into a stock savings bank controlled by a mutual holding company, in a transaction intended to be tax-free federally under …
For sections 186 and 186-a, are a utility's taxable gross earnings/gross income the reduced amounts actually billed to customers under a PSC-approved rate-reduction plan, or the higher pre-reduction figures shown in its accounting true-up entries?
The amounts actually billed. Under a RICO-settlement Rate Reduction Plan, LILCO reduced customer bills via PSC-approved tariffs. For sections 186 and 186-a, the 'receipts' includable in gross earnings…
Does a New York sales office that only signs up new clients generate receipts from services performed in New York for the Article 9-A receipts factor, when all the investment consulting is performed elsewhere?
No, if it only signs up clients. Insight Management's income comes from performing its investment consulting (and related financial transactions), not from the mere signing up of clients. So if its Ne…
If a passive-investment limited liability company keeps its office, books and records, and securities depository in New York, is the interest income it distributes to nonresident members subject to New York personal income tax?
No, for a nonresident member with no other New York-source income. Under Tax Law § 601(f), the LLC (taxed as a partnership) isn't itself subject to Article 22 tax - only its members are, in their indi…
We're a public authority helping relocate a major commodities exchange to our development site. Depending on how the construction loan is structured, we might be the named mortgagee, or we might sublease the property back from the tenant and co-sign the mortgage as co-mortgagor on just our leasehold interest. Is recording that mortgage -- however it's structured -- exempt from mortgage recording tax?
Exempt either way. This is the origin ruling establishing the Battery Park City Authority's now-familiar 'sublease-back' mortgage recording tax exemption mechanic, arising from the New York Mercantile…
Does an inactive corporation that was dissolved by proclamation, but still holds bare legal title to New York real property as a nominee, owe Article 9-A franchise tax?
It depends on the period. W.R.H.R.E. Corp. was formed in 1973 only to hold bare legal title to a Port Washington property so a lender could take a mortgage; it never did business, kept no books, had n…
Is a qualifying cogeneration facility exempt from the section 189 gas-importer tax on the natural gas it imports to make electricity and steam for its thermal energy host?
Yes, in part. Buffalo Power Corporation -- a wholly owned subsidiary of, and located on the same premises as, its thermal energy host Buffalo Paperboard -- would be a qualifying cogeneration facility …
Are a New York shortline railroad's gross earnings from hauling freight wholly within New York, as a connecting carrier on a trip that begins or ends outside the state, included in section 184 gross earnings?
No. A New York shortline railroad that carries freight only within New York as a connecting carrier -- but on a through trip that originates or terminates outside New York via another railroad -- earn…
Is an electronic bulletin-board service that lets banks and warehouse lenders transmit loan data and files to each other's private mailboxes taxed as telephony/telegraphy, and are its interstate messages exempt?
Yes, the whole service -- licensing fees plus usage/file-transfer charges -- is taxable as a telephony/telegraphy service, since it functions as a message-switching network transmitting signals betwee…
If my spouse rents a New York City apartment in her own name, pays for it herself, and I never use it or have a key to it, does that apartment make me a New York City statutory resident even though I also work in NYC and spend more than 183 days a year there?
No. New York City statutory residency under NYC Administrative Code § 11-1705(b)(1)(B) requires that the individual himself maintain a permanent place of abode in NYC. Where the wife alone rents the a…
If a nonresident donates valuable objects and volunteers uncompensated time to help build and equip a charitable museum located in New York, can those donations and activities be used as evidence that he is domiciled in New York?
No. Tax Law § 605(c), enacted in 1994, provides that charitable contributions, gifts, donations, loans, or uncompensated volunteer time given to a tax-exempt § 501(c)(3) organization cannot be used in…
Is 'guniting' an existing in-ground concrete swimming pool -- coating it with marble dust to extend its life 10-15 years -- an exempt capital improvement, or a taxable repair?
Taxable repair, not a capital improvement -- even though the coating substantially prolongs the pool's useful life, it's treated the same as a similar protective coating applied to storage tanks in a …
Across six different electronic-forms-business transactions -- paper-to-digital conversion, resold software, a licensed forms-development system, maintenance contracts, management contracts, and consulting -- which charges does a business forms company owe New York sales tax on?
Conversion services (scanning a form to a disc, or designing one) are taxable as tangible personal property when the company supplies the disc, but a taxable fabrication SERVICE instead when the custo…
Is a real-estate document-archiving firm's fee for retrieving, scanning, cataloging, storing, and reproducing building-permit and related documents subject to sales tax, and are its computers exempt production equipment?
Reproduced documents (scanning, maintenance fees, and reproductions delivered back to the subscriber) are taxable as a sale of tangible personal property -- it's data CONVERSION (paper to digital), no…
Is a paper recycler that grades, separates, fluffs, bales, and packs scrap paper for the repulping industry a manufacturer or processor whose equipment qualifies for the Article 9-A investment tax credit?
Yes. Empire Recycling's paper division grades, separates, fluffs, bales, and packs scrap paper into fifteen graded products meeting exacting mill specifications for the repulping industry. That proces…
Is an optical scanning device called 'An Open Book,' sold exclusively to visually impaired individuals to scan and read aloud printed items like bills and recipes, exempt from sales tax as a prosthetic aid?
Yes -- it's exempt as a prosthetic aid, since it's functionally similar to an already-recognized exempt device (an Optical Tactile Converter) and, per the seller's own supplier contract, is sold only …
Is propane used to heat a homeowner's pool -- prescribed by her doctor as medically necessary water therapy after knee surgery -- exempt from sales tax as a medical supply, and if not, is there any other exemption available?
The medical-supplies exemption doesn't apply, since it only reaches items taxed under a different section of the Tax Law than the one that covers propane gas service. But the propane still escapes Sta…
Is a marketing consulting firm's fee -- covering sales-data analysis, purchased-data analysis, written marketing plans, and specific written recommendations for a client -- subject to New York sales tax?
No. The written reports are exempt personal/individual information since each report relates specifically to one client and isn't derived from a shared database or reused in other clients' reports, an…
Is a vehicle-leasing company's separately-stated, optional fleet-management service (cost analysis, registration/inspection/maintenance oversight, vehicle-acquisition consulting) subject to New York sales tax?
No. Fleet management isn't one of the specific services the Tax Law taxes, so as long as it's purchased independently of vehicle leasing and billed as a separate line item, the charge escapes sales an…
If an out-of-state law firm partner signs a fixed 4-year agreement to serve as managing partner of the firm's New York office, keeps offices in both locations, spends over 183 days a year in New York, and uses a firm-paid New York City apartment, is he a New York resident for tax purposes during those four years?
No. Mr. A. remains domiciled in State X throughout the assignment, and because his four-year New York managing-partner role has a fixed and limited term after which he returns to State X to practice l…
If someone domiciled and living in Florida for 15 years buys a New York City co-op that they personally use only from June through September and leave vacant the rest of the year, will they become subject to New York State personal income tax?
It depends on the year, and the opinion doesn't decide it either way. Once purchased, the co-op will count as a 'permanent place of abode' in New York under 20 NYCRR § 105.20(e) even though it sits va…
Are dues paid to a homeowners association subject to New York sales tax as a social or athletic club when the association has no pool, tennis courts, or other recreational facilities?
No. Without any recreational facilities like a pool or tennis courts, the association isn't a taxable social or athletic club, so none of its dues -- even the portion funding a clubhouse used only for…
Are the annual dues paid to a lakeside property owners association subject to New York sales tax as social or athletic club dues, when the association has no pool, clubhouse, tennis courts, or docking/swimming facilities and spends its dues on common-area upkeep?
No. Without a pool, clubhouse, tennis courts, or docking facilities, and with dues spent entirely on non-recreational common-area upkeep like snow removal and road paving, the association isn't a taxa…
When the buyer controls the shipment and picks the goods up at the seller's New York factory, are those sales New York receipts, and can factory roof, window, and shipping-dock repairs qualify for the investment tax credit?
Yes to New York receipts. Flexovit's customer contracts its own common carrier, controls it, arranges pickup at Flexovit's New York factory, sets the out-of-state destination, and pays the freight -- …
Is a trucking company's fee for hauling recyclable raw material from a supplier's site to a recycler's facility taxable as trash/garbage removal (a real-property maintenance service), or exempt as transportation?
It's exempt transportation, not taxable trash removal -- because the recycler or its broker (not the supplier whose property the materials are picked up from) hires and pays the trucking company, and …
Is a federally chartered Farm Credit System leasing corporation, an instrumentality of the United States, exempt from New York franchise tax under Articles 9-A and 32?
Yes. Farm Credit Leasing Services Corporation is a federally chartered body corporate and instrumentality of the United States, organized by Farm Credit System banks under 12 USC 2211 to provide leasi…
Does a nonprofit that's incorporated under New York law but operates entirely out of Massachusetts have enough nexus with New York to be required to collect New York sales tax on mail-order merchandise shipped to New York customers?
Yes. Because it's a domestic New York corporation -- even though its offices, staff, and operations are entirely in Massachusetts -- and its bylaws require a volunteer secretary who is a New York resi…
Can a brewery buy kegs and pallets tax-free for resale, even when customers outside its normal delivery territory keep them instead of returning them because return shipping costs too much?
Yes. As long as the kegs and pallets are actually transferred to the customer to keep or dispose of as they wish -- with the deposit price raised to reflect their real cost -- they qualify as exempt p…
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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.