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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When a cellular phone retailer sells or gives away phones at a reduced price (or free) bundled with a carrier service contract, is its original purchase of those phones still tax-exempt as a purchase for resale -- and what about the retailer's commissions, installation fees, and activation fees?
The retailer's phone purchases stay exempt as purchases for resale even when bundled free or discounted with a service contract; its carrier commissions aren't taxed either, but it must collect sales …
Does a voluntarily dissolved corporation that, by oversight, still held record title to real property but was completely inactive owe Article 9-A franchise tax for the years after dissolution?
No. Holver Realty Corporation was voluntarily dissolved on January 25, 1980, with the Tax Department's consent, and has been completely inactive since -- conducting no business. By oversight, a deed t…
Is television programming delivered through an 18-inch satellite receiving antenna treated as tax-exempt cable television service, or as taxable telephony/telegraphy?
It's treated as exempt cable television service -- basic, premium, pay-per-view, and most administrative fees all escape sales tax, but the installation charge for hooking up the service remains taxab…
For the section 1505(b) test of whether more than 95% of an insurer's premiums are for annuity contracts, does premiums include reinsurance premiums and all direct premiums received both inside and outside New York?
Yes to both. For the section 1505(b) test of whether more than 95% of an insurer's premiums are received as consideration for annuity contracts, the term premiums means premiums as used in the first s…
If a nonresident's former-New-York-employer pension is paid out on a declining-balance schedule, a mortgage-style amortization schedule, or with interest that varies with the Consumer Price Index, does it still qualify as a non-taxable 'annuity' rather than taxable New York-source compensation?
Yes, in all four scenarios examined. New York taxes a nonresident's former-New-York-employment pension only if it fails to meet the regulatory definition of an 'annuity' under 20 NYCRR § 132.4(d)(2) -…
Does a nursing home operator owe sales tax on the disposable diapers it buys for use on its resident patients, or does the medical-supplies exemption cover them?
The nursing home operator owes sales tax on the diapers -- because it's buying them at retail to use while performing medical/nursing services for compensation, which is a specific exception to the me…
Is the sales tax on club initiation fees due when a golf club sells founding memberships before the golf course and clubhouse are even built?
Yes. A membership payment counts as a taxable initiation fee as soon as it's required as a condition of joining the club, regardless of whether the club's facilities physically exist yet.
If a residential community requires every homebuyer to join a separately-run country club as a social member -- even though the same club also sells memberships to the general public on a first-come, first-served basis without any restrictions -- are the required social-membership dues and fees taxable as social/athletic club dues?
Yes. The mandatory requirement that every homeowner join is itself an exclusivity restriction that makes the club a taxable social or athletic club, even though the club sells other memberships to the…
I'm planning a three-step real estate deal: (1) sell a small 5% stake in my two buildings to an outside investor for under $1 million, (2) contribute my and the investor's interests into a new limited partnership, and (3) later sell a 44% limited partnership stake for over $1 million. Does New York's Real Property Transfer Gains Tax apply to any of these three steps?
None of the three steps triggered the tax. A real estate developer owned two commercial buildings individually and planned a three-step restructuring: first, sell a 5% undivided interest in each build…
My family's 71-acre estate has multiple houses on it -- my house, my brother's house, my sister's occasional-use cottage, and a caretaker's house -- plus outbuildings including a horse barn some neighbors use. If we sell the whole estate for over $1 million, is any of it exempt from New York's Real Property Transfer Gains Tax as our residence?
Yes -- the entire 71-acre transfer was exempt. The McIntyre family's estate in Dix Hills, New York -- a 71-acre parcel with four residences and nine outbuildings, including a horse barn -- had been in…
Is a Delaware business trust that is classified as a partnership for federal income tax purposes treated as a partnership, and not as a corporation, for New York Article 9-A franchise tax?
Yes -- it is treated as a partnership. Diversified Futures Trust I is a Delaware business trust that trades commodity futures, with a managing owner and public limited interestholders, and it qualifie…
Is a fee charged for a home grocery-shopping service -- where the shopper uses their own money to buy the customer's groceries, then delivers them and gets reimbursed plus a service fee -- subject to New York sales tax?
No. Home grocery shopping and delivery isn't one of the specific services New York taxes, so neither the service fee nor the reimbursement is subject to sales or use tax.
Can a social and athletic club buy lockers tax-free as a purchase for resale, since it charges members a fee to use them?
No. Locker-use fees are taxed as club dues (not as a rental or storage charge), and since the club-dues tax has no resale exception, the club must pay sales tax on the lockers it buys, regardless of b…
Are massage services provided by a New York-licensed massage therapist subject to New York City's local sales tax, and are they also subject to New York State sales tax?
New York City sales tax DOES apply to a licensed massage therapist's services, because massage isn't treated as a 'similar' medical service to the licensed professions the local tax exempts -- but the…
Is installing easily-relocatable, floor-to-ceiling moveable walls a tax-exempt capital improvement, and can the installer accept a Certificate of Capital Improvement on the sale?
No, moveable walls that can be relocated without damaging the building fail two of the three required capital-improvement tests, so their installation is a taxable service, not an exempt capital impro…
Are the services of recruiting temporary employees, drafting training-program manuscripts, and rewriting technical process sheets to a simpler reading level subject to New York sales tax?
No to all three. Recruiting/referral services aren't an enumerated taxable service, and writing manuscripts or editing material for a client -- whether training materials or technical documents -- isn…
Can the Department substitute a credit toward a taxpayer's future sales tax bill instead of issuing a cash refund, when the taxpayer specifically requested a refund on Form AU-11 for overpaid sales tax on manufacturing electricity?
No. Once a taxpayer checks the 'Refund Claimed' box on Form AU-11 and is found entitled to it, the Department cannot substitute a credit toward future tax payments instead, without the taxpayer's cons…
When a trucking company temporarily stores goods 'in transit' while waiting for delivery instructions, does that storage make its transportation charges taxable, and when does the storage itself become taxable?
Transportation charges stay untaxed either way, but in-transit storage over 30 days becomes taxable on its own -- and if that taxable storage charge isn't separately stated from the untaxed transporta…
When a business-forms company acts as a single 'facilitator' ordering supplies from third-party vendors and drop-shipping them to its own customers, who collects sales tax -- and is the fee for its ordering software and invoicing service itself taxable?
The facilitator buys tax-free for resale from third-party suppliers (using a resale certificate) but must itself separately state and collect the actual sales tax from its customer -- a bundled 'vendo…
Is a yacht club condominium a taxable social/athletic club, is the sale of a boat-slip condo unit itself taxable, and can the condo buy maintenance services tax-free for resale when it bills unit owners for maintenance?
The condo IS a social/athletic club, so its Common Expense assessments to unit owners are taxable dues -- but a slip unit's sale is an untaxed real property sale. Maintenance work billed for one owner…
When a county raises its local sales tax rate, do equipment lease payments made AFTER the rate increase get taxed at the new higher rate, even though the lease agreement itself was signed before the increase took effect?
Yes. Each rental payment is taxed at the rate in effect when that specific payment is made, not the rate in effect when the lease was originally signed -- so payments made after a local rate increase …
Does a National Park Service concessioner owe sales tax on materials and services it buys to repair, maintain, and improve government-owned facilities under its concession contract and city license agreement?
Materials that become an integral, permanent part of government-owned property (federal or City) can be bought tax-free, and services genuinely resold to the government are exempt too -- but any mater…
In a combined Article 9-A report, must the parent still add back interest on debt used to acquire a subsidiary that is itself included in the combined group?
It is handled at two levels. When parent P and subsidiary S file a combined Article 9-A report, each must also file its own separate report. On P's separate report, P must make the section 208.9(b)(6)…
New York Advisory Opinion TSB-A-95(34)S: Is the charge for a 24/7 personal emergency response ("medical alert") system -- a wearable pendant and sending unit that lets customers summon help -- exempt from New York sales tax?
Exempt. MSS Electronics Inc. provides "LifeFone," a 24-hour, 7-day-a-week personal emergency response system that lets customers summon help at any time. Customers give Petitioner information about th…
Can New York State withhold a wife's share of a joint personal income tax refund and apply it against a sales tax assessment owed individually by her husband alone?
No. Under Tax Law § 686(a), the Commissioner may only credit an overpayment against a liability owed by 'the person who made the overpayment.' Although Tax Law § 651(b)(2) makes joint filers' income t…
After moving away from New York and building a life in New Jersey for 14 years, does building a family home back in New York (where the taxpayer's spouse and children now live) mean the taxpayer has become domiciled in New York again for income tax purposes?
The Department would not say. It explained New York's full legal test for domicile and for changing domicile, but concluded that whether this taxpayer's 1986 New York house revived his New York domici…
Is a not-for-profit workers'-compensation and risk-management association, formed by a statewide association of municipalities exclusively for its member cities and villages, exempt from New York sales and use tax on its own purchases as an 'instrumentality of the State'?
Yes. Because the association performs a governmental function for its municipal members, is controlled by them, has no private ownership interest, was created under specific statutory authority, and i…
If a utility bills a homeowner's backyard hot tub at a commercial 'general secondary' rate (because it's on a separate meter), does that override the tax-law rule that residential recreational equipment gets the reduced or exempt residential energy sales tax rate?
No. A utility's own billing-rate classification doesn't control the sales tax outcome -- personal, non-commercial residential recreational equipment like a backyard hot tub still qualifies for the res…
For a long-distance telephone reseller offering switched service, private lines, 1-800 numbers, calling cards, debit cards, and billing services, which specific charges are taxable New York intrastate telephone service and which are exempt (interstate calls, or purchases the company resells to its own customers)?
Whether a call is taxable turns only on where it originates and terminates (intrastate = taxed, interstate = exempt), never on the customer's billing address; almost everything the company itself buys…
Do specialized air-support-therapy hospital beds, mattresses, and mattress overlays -- prescribed by physicians to prevent and treat bedsore-related skin ulceration -- qualify for New York's medical equipment sales tax exemption?
Yes. Because these products are used exclusively on a physician's prescription to treat or prevent a specific medical condition and aren't generally useful absent illness or injury, they (and their re…
Is a construction contractor's purchase of required progress and special construction photographs -- submitted to New York City as a condition of getting paid -- exempt as a resale or as part of a tax-exempt capital improvement?
No to both. The photographs are taxable tangible personal property that the contractor itself consumes to satisfy its contract and get paid (not a resale to the City), and since the photos never becom…
Is a freight forwarder subject to the Article 9 sections 183 and 184 transportation-corporation taxes or to Article 9-A, and how are its gross earnings allocated to New York?
It is taxed under Article 9, sections 183 and 184. S&S Westchester arranges overseas shipment of vendors' merchandise; in over two-thirds of its activities it acts as a principal -- it assumes the ris…
Can an exempt organization's employees still make tax-free purchases using an Exempt Organization Certification (Form ST-119.1) when their corporate credit cards show only the employee's name plus an abbreviation of the organization's name, rather than its full name?
Yes. As long as the exempt organization and the employee are both identified on the bill/invoice and the organization is shown as the direct payer of record, an abbreviated organization name on the cr…
My business partner and I each own a 50% share (as tenants-in-common) in five properties held through a partnership, and we each want to put our share into a Grantor Retained Annuity Trust for estate planning, then divide the actual properties between our two families instead of continuing to co-own everything. Does that division trigger New York's Real Property Transfer Gains Tax?
Partly exempt, partly taxable -- split by how much each family's beneficial share actually changed. Two families, the Moskelands and the Tobiassens, each held a 50% interest (via tenants-in-common tit…
After retiring from a New York job and moving out of state, is the investment income earned inside my IRA or employee savings plan still taxable by New York once I start taking distributions as a nonresident?
Yes, to the extent your original contributions trace back to New York employment. New York taxes IRA distributions (including the earnings inside the account) based on where the underlying job was per…
We're developing a title insurance endorsement for reverse mortgages that lets accrued interest compound (either added to principal or tracked as additional interest owed). Does compounding interest on a reverse mortgage disqualify it from New York's mortgage recording tax exemption for reverse mortgages?
No, compound interest doesn't disqualify the exemption. Title Insurance Rate Service Association, Inc. asked the Department to confirm that recording a reverse mortgage containing a compound-interest …
When a private company operates a county-owned golf course and restaurant under a long-term concession agreement and must fund capital improvements that become the county's property, are its construction materials, equipment, and architectural fees exempt from sales tax?
Materials that become an integral, permanent part of the county-owned course/clubhouse (fairway reclamation, irrigation, building renovations, etc.) are exempt, and licensed-architect design services …
Are retyping resumes, printing reprint copies of resumes, and printing personalized stationery on a laser printer subject to New York sales tax?
Retyping a resume from an existing copy is exempt (treated as original typing), and up to three copies provided free at the time of service stay exempt too -- but separate reprint copies of resumes an…
If a couple moves their domicile from New York to Connecticut partway through the year but their old, furnished New York City apartment doesn't sell and they still spend more than 183 days in New York that year, are they taxed as full-year New York residents?
Yes. Even assuming their domicile changed to Connecticut on July 7, 1989, the Rogaths were New York 'statutory residents' for the entire 1989 taxable year under Tax Law § 605(b)(1)(B), because they ma…
If I had to repay disability income after a retroactive Social Security disability award pushed it into 'claim of right' territory, and I took the federal standard deduction rather than itemizing, can I get any New York income tax relief for the repayment?
No. New York only provides claim-of-right relief for a repayment through the New York itemized deduction under Tax Law § 615, which is available only if the taxpayer's federal taxable income is also d…
Do rebate checks a fulfillment company prints and issues on behalf of its clients count as taxable 'promotional materials,' making its charge for issuing them subject to sales tax?
No -- rebate checks are closely related to ordinary bookkeeping items like invoices and statements (which the promotional-materials definition specifically excludes), so the fulfillment company's char…
Are sales of specialized engineering/environmental illustrations by a freelance illustrator subject to New York sales tax, including when the client is ultimately the New York State Department of Transportation?
Yes -- an illustrator's drawings, sketches, and photographs are tangible personal property, so charges for them are taxable unless the client gives a proper exemption certificate, EXCEPT that no certi…
We leased out our property in 1968 for 21 years with a 21-year renewal option. That option lapsed, and we've since extended the lease twice more -- a 5-year extension in 1989, then a 23-year extension in 1994. The lease includes a right of first refusal (not a purchase option) and lets the tenant make substantial capital improvements, covering essentially the whole property. The new tenant (who took an assignment of the lease) now wants to extend the current term from 23 years to 30 years. Does stacking these lease extensions eventually push the lease term over New York's 49-year threshold and trigger the Real Property Transfer Gains Tax?
Not taxable -- because each lease modification creates a fresh lease for gains-tax purposes, and the newly aggregated term stayed under 49 years. Strausman-Mayfair Associates, L.P. leased New York rea…
Is a stock purchase followed by a corporate merger, where the acquired company's tangible personal property ends up owned by the acquirer, subject to New York State and local sales or use tax?
No -- buying 100% of a company's stock is buying an intangible (stock), not the company's tangible personal property, and the follow-on merger of the acquired company into the acquirer, done solely in…
Is a section 4(c)(7) investment subsidiary, owned by a bank holding company but whose sole business is investing in securities for its own account, a banking corporation subject to Article 32?
No -- it is not a banking corporation, so it is taxed under Article 9-A, not Article 32. BT Investment Partners (BTIP) is indirectly wholly owned by Bankers Trust New York Corporation (a registered ba…
Are ticket sales to a movie-based motion-simulator ride subject to New York State sales tax as an admission charge?
No -- a movie-based flight-simulator ride is a ride, not a 'place of amusement,' so ticket sales to it are not taxable admission charges under Section 1105(f)(1) of the Tax Law.
Are offshore investors that buy and sell U.S. securities through a New York investment adviser and custodian doing business in New York for Article 9-A, when the discretionary trading decisions are made outside the state?
No, they are not doing business in New York. Under the structure, a foreign subsidiary and a foreign unit trust would invest in U.S. stocks and bonds. The only New York activities are a custodian hold…
When goods originate in New Jersey, are sent to New York contractors for processing, and are returned to New Jersey, where are they located for the Article 9-A property factor?
They are located where they physically sit, with in-transit goods deemed at their destination. McNaughton's piece goods are cut in New Jersey, sent to sewing contractors in and out of New York, then r…
Does a bank subsidiary that elected to keep Article 9-A treatment lose that election when the FDIC sells the parent bank's stock in a transaction treated as a deemed asset sale?
No -- the election survives. Corporation X is a subsidiary of an Article 32 bank that made a proper one-time election under 20 NYCRR 16-2.5(j)(3) to continue being taxed under Article 9-A. When the FD…
Our client died leaving five tenancy-in-common interests in New York real property to her charitable foundation under her will. Rather than deed the properties to the foundation first and then have the foundation deed each one again to five separate title-holding corporations it just formed (one per property), the estate's executors want to deed each property directly from the estate to the matching title-holding corporation, skipping the foundation as an intermediate step. Does conveying directly to the title-holding corporations -- instead of first to the foundation itself -- still count as an exempt bequest, or does the extra corporate layer make it a taxable conveyance subject to the Real Estate Transfer Tax or Real Property Transfer Gains Tax?
Exempt -- conveyances made under a will are excluded from the definition of a taxable 'conveyance' or 'transfer' in the first place, even when the deed runs directly to an alter-ego entity rather than…
Our development is a subdivision run by a homeowners association -- each homeowner holds a deed to their own individual lot, and everyone is automatically a member of the association, which separately owns the common areas (athletic facilities, community center). We're proposing to convert the whole thing to a condominium structure: homeowners who opt in would deed their lot to the condominium (through an escrow agent) in exchange for a condominium unit deed covering that exact same lot, plus a proportional interest in the condo's common elements. The homeowners association would keep existing and keep owning the shared common areas as before. Does converting from lot-deed/HOA ownership to condominium ownership trigger New York's Real Estate Transfer Tax or Real Property Transfer Gains Tax?
Exempt -- each homeowner keeps exactly the same beneficial interest in exactly the same lot, just under a different ownership label. Vacation Village Homeowners Association, Inc., a homeowners associa…
We're a 1771-chartered not-for-profit hospital. We formed a separate not-for-profit affiliate solely to acquire, hold, and manage real property for our benefit -- all of the affiliate's members are, by its bylaws, automatically our own Governors, and our bylaws ensure we control the affiliate's business and affairs. We're proposing to transfer one of our psychiatric care facilities to this affiliate, which will then lease it back to us for 99 years at nominal rent so we keep operating exactly as before, subject to an existing $154 million mortgage. Does this transfer-and-leaseback to our own controlled not-for-profit affiliate trigger New York's Real Estate Transfer Tax or Real Property Transfer Gains Tax?
Exempt from both taxes -- The Society of the New York Hospital ('Petitioner'), a not-for-profit membership corporation originally chartered by King George III in 1771, proposed transferring a psychiat…
Is a new telephone-service provider a first- or second-class utility under section 186-a, and is it taxed under Article 9 (sections 183/184) or Article 9-A?
It starts under Article 9-A and may shift to Article 9. RCN of New York, a new provider of local and long-distance telephone service over leased cable lines, is subject to Article 9-A franchise tax fr…
Does a cellular-phone retailer owe sales tax on phones it buys for resale, even when it later gives those phones away free or at a reduced price to customers who sign up for phone service?
No -- the retailer's original purchase of the phones stays a tax-free resale purchase even when it later sells or gives the phones to customers at no charge or a reduced price bundled with a phone-ser…
Are a yacht club's charges for boat mooring and sailing-instruction tuition subject to sales tax, and does it matter whether the person paying is a club member or a member of the public?
It depends who's paying -- mooring fees and sailing tuition charged to non-members are not taxable (mooring charges and sport/educational tuition are both exempt on their own terms), but the SAME char…
Must a public benefit corporation (or its private parking-management agent) collect and remit sales tax on parking fees it charges the public at an airport it owns, even though the authority itself is generally tax-exempt?
Yes -- even though the transportation authority is exempt from paying sales tax as a purchaser, once it acts as a vendor selling parking services of a kind ordinarily sold by private businesses, it (o…
Do a cheese plant's motor control centers, motor starters, and frequency inverters qualify for the manufacturing-equipment sales tax exemption?
Yes -- because these components are wired specifically to individual pieces of production equipment and directly control functions like dicing-blade speed that determine whether the cheese meets custo…
Are fees for zebra mussel monitoring services -- sampling a customer's water system and providing a written analysis report -- subject to New York sales tax, even though the reports are personal to each customer and not shared with others?
Yes -- even though the monitoring reports are personal and individual to each customer (which would normally exempt a pure information service), the monitoring itself is treated as a taxable diagnosti…
Is a telemessaging company's purchase of voice mail equipment, used to interface with the telephone network and provide voice recording/storage to its customers, exempt from sales tax as telephone central office equipment?
Yes -- because the company's voice mail service is itself subject to sales tax, the equipment it buys to interface with the telephone switching network and provide that voice-record and storage servic…
Are fees charged to advertisers for typesetting, printing, packing, and hanging their door-to-door flyers subject to sales tax as an information service, or excluded as an advertising service?
The fees charged to clients are excluded from tax as an advertising service, not a taxable sale of tangible personal property or information service -- but because the business is providing a service …
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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.