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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My brother and I are partners in a family realty partnership that, on paper, owns two unrelated New York properties -- but our partnership agreement has always allocated Property A entirely to me and Property B entirely to him (separate income, separate capital accounts, separate distribution on dissolution), even though title to both properties has always been recorded in our individual names as tenants-in-common (not the partnership's name), for accounting/administrative reasons. We're proposing to liquidate the partnership and simultaneously correct the recorded title so each of us becomes sole owner of 'our' respective property. Does liquidating the partnership and correcting title this way trigger New York's Real Estate Transfer Tax or Real Property Transfer Gains Tax?
Exempt -- each partner already beneficially owned 'his' property under the partnership agreement, so liquidation didn't change anything real. Heinrich Realty Company was a two-partner realty partnersh…
Is a New York resident trust exempt from New York State and New York City personal income tax when its sole trustee, its corpus, and all of its income are all located outside New York?
Yes. Even though the Charles B. Moss Trust is a New York 'resident trust' under Tax Law § 605(b)(3)(C) because its grantor was domiciled in New York when the trust became irrevocable, Reg. § 105.23(c)…
Are storage fees paid at a public warehouse, charged per carton per day with no formal lease, gross rents that must be capitalized at eight times and included in the Article 9-A property factor?
Yes. Corporation A stores inventory in public warehouses, paying on a per-carton, per-day basis with no formal lease. Under 20 NYCRR 4-3.2, real property rented to a taxpayer is included in the proper…
Is a customer-satisfaction survey consulting business's fee for developing surveys, analyzing data, and delivering findings reports subject to New York sales tax as an information service?
It's an information service, but it escapes tax under the personal-information exclusion -- as long as each client's report stays unique to that client's own facility and isn't substantially folded in…
Is a monthly fee paid for an out-of-state computer disaster recovery/backup facility subject to New York sales or use tax, when the backup equipment never comes to New York and no repair work is performed here?
No -- New York sales tax is a 'destination tax' keyed to where delivery or possession actually happens, and since the backup computer facility is located in Philadelphia (with no equipment delivered t…
Is a sale-leaseback transaction, structured as a financing arrangement even though it's booked as a sale for financial-accounting purposes, subject to New York sales or use tax on the 'sale' and 'lease' payments?
No -- applying the traditional multi-factor test for whether a 'lease' is really a security device, the customer keeps effective ownership (risk of loss, insurance proceeds, maintenance duty, upside/d…
My four-partner partnership has owned a mixed residential/commercial building for 20 years, with each partner exclusively occupying one residential floor. We want to convert it into a two-unit condominium, with the residential floors becoming a cooperative corporation that issues each partner shares for the same floor they already live in. Does any of this trigger New York's Real Property Transfer Gains Tax?
No gains tax at any step, because every partner ended up with exactly what they already had. 115 Spring Street Company was a four-partner (25% each) partnership that had owned a five-story New York Ci…
Are membership dues paid to a golf and country club subject to New York sales tax as dues to a 'social or athletic club,' when the club's stockholders (not its members) actually control the organization and membership is open to the public?
No -- because members have no ownership stake or say in management (only the separate group of stockholders elects the board and controls decisions), and membership is unrestricted and open to the pub…
Does a weekly industry newsletter qualify as an exempt 'periodical' under New York sales tax law, and does it matter whether the publisher writes every article personally?
Yes -- a weekly fur-industry newsletter qualifies as an exempt periodical because it's published at least four times a year, has consistent title and content, is available to the public, doesn't amoun…
For privacy reasons, we bought a Manhattan townhouse and adjacent lot through a nominee trust -- a bank trustee held bare legal title, but under a separate nominee agreement, I (the settlor) kept all the equitable ownership, all benefits and burdens, and the right to revoke the arrangement at any time. Privacy is no longer a concern, so I want to revoke the trust and nominee agreement and put legal title back in my own name. Does unwinding this nominee structure trigger New York's Real Estate Transfer Tax or Real Property Transfer Gains Tax?
Exempt -- the beneficial owner never actually changed. H. Christopher Whittle had purchased a Manhattan townhouse (4 East 79th Street) and an adjacent empty lot for $11.5 million through a nominee str…
When an employee claims more than 10 withholding allowances on a federal Form W-4 (submitted to the IRS as required) and does not file a separate New York Form IT-2104 because they want the same allowances for both federal and state withholding, must the employer send a copy of Form IT-2104 to the New York State Department of Taxation and Finance?
No. Under Reg. § 171.4(d)(1), an employer may accept a properly completed federal Form W-4 in place of Form IT-2104 when the employee wants the same number of allowances for both federal and New York …
We're a state public authority, exempt from the Supplemental Petroleum Business Tax. Our electric utility shows a separate line item on our bill for the Supplemental Petroleum Business Tax it paid on the fuel it used to generate our electricity. Since we're tax-exempt, can we get a refund of that amount?
No refund. The Suffolk County Water Authority, a New York State public authority exempt from the Supplemental Petroleum Business Tax under Tax Law § 13-a, purchased electricity from Long Island Lighti…
If New York's Department of Taxation and Finance has a tax warrant filed against a debtor and is properly notified of a sheriff's sale of that debtor's real estate under CPLR § 5236(c), does the Department's tax lien survive the sale if it never delivers its own execution to the sheriff beforehand?
No. Under CPLR § 5236(e), a judgment creditor - including the Department with a docketed tax warrant - who was duly notified of the sheriff's sale but did not deliver its own execution to the sheriff …
If Walk In Medical Care, Inc. classifies a part-time physician as an independent contractor for federal income tax purposes under the Section 530 safe harbor, does New York State recognize that safe harbor, and what are Petitioner's New York reporting and withholding obligations if the worker would otherwise be an employee for New York personal income tax purposes?
It depends on whether Petitioner actually qualifies for the federal Section 530 safe harbor, a factual question the Department did not decide in this opinion. But as a legal matter, New York does not …
Does machinery and equipment used to remediate groundwater already contaminated by decades-old waste disposal qualify for the manufacturing waste-treatment exemption from sales and use tax?
No -- the waste-treatment exemption only covers equipment that treats waste materials AS PART OF an ongoing manufacturing process to prevent pollution in the first place; equipment built to pump and p…
Is a warehouse discount-club membership fee (like Sam's Club) subject to sales tax, and if so, at which county's tax rate, and to which county should the tax be remitted -- the county where the membership was purchased, or the county where the club warehouse is located?
Yes, the membership fee is taxable as a prepayment for merchandise -- and the applicable rate and destination county are determined by where the discount club's own warehouse is located (or the specif…
Are annual membership fees for a public pistol range, and separate fees for its firearm safety course, subject to New York sales and use tax?
No -- because membership is open to the public, members have no ownership stake or management control, and the range hosts no social activities, it isn't a taxable 'social or athletic club,' and a fir…
For Article 9-A, can a corporation's loan to a partnership be classified as investment capital, with the interest treated as investment income?
No. Friendly Home Parties, a New York S corporation, made a $3.5 million demand loan to a partnership (owned by individuals who hold 70% of the corporation) and receives 7% interest, taking back an in…
Are a mandatory condominium association's dues, which fund both a swimming pool/tennis courts and ordinary building maintenance, fully subject to sales tax as social/athletic club dues?
Yes, as originally issued -- because membership is mandatory, sold as a single non-optional unit, and the association provides a swimming pool and tennis courts, the ENTIRE assessment paid by unit own…
Is the sale and installation of a residential direct-broadcast satellite receiving system a tax-exempt capital improvement, or is it a taxable sale of tangible personal property?
It's split -- the underground wiring and the concrete-based support pole ARE tax-exempt capital improvements, but the microwave antenna/dish itself keeps its identity as tangible personal property (it…
Are shampooing, dry cleaning, and hand-weaving repair services for oriental carpets and other rugs subject to New York sales tax, whether performed at the customer's location or at a plant?
No -- shampooing, dry cleaning, and hand-weaving repair of oriental carpets and other rugs all fall within the tax law's specific dry-cleaning/weaving exclusion, so none of these services are subject …
Does a tax-exempt public benefit corporation's blanket sales-tax exemption extend to purchases made by the private contractor it hires to operate and maintain its facility?
No -- the agency's own broad tax exemption applies only when the agency itself is the actual purchaser and payor of record, not to purchases its private operating contractor makes in its own name; the…
Is an agricultural cooperative that breeds cattle and sells semen, whose earnings benefit its members, subject to New York's unrelated business income tax?
No. Select Sires is an agricultural cooperative that artificially breeds members' cattle and sells semen and supplies. New York's unrelated business income tax (Article 13, section 290) applies only t…
Are a fleet-management company's personal-mileage and vehicle-expense reports, prepared for individual corporate clients from their own data, subject to New York sales tax as an information service?
No -- because each report is built entirely from a single client's own vehicle/mileage data and covers only that client's own fleet, it counts as personal and individual information excluded from the …
Is a toxic-waste cleanup company's cleanup service taxable, and are the supplies (absorbents, drums, protective gear) it uses during a cleanup subject to sales tax?
Yes, the cleanup service itself is taxable as processing/real-property-maintenance work -- and the company's own equipment (booms, vacuums, earth movers) and protective gear (uniforms, protective item…
Is routine office cleaning that a commercial landlord bundles into a tenant's lease payment subject to New York sales tax as a maintenance/repair service?
No -- routine cleaning baked into the negotiated lease rate is incidental to the rental of the space, not a separate taxable cleaning service, so those payments aren't subject to sales tax; but any cl…
Is a matchmaking/dating service, where a customer pays for an interview and is then mailed a match's name and phone number based on comparison with other interviewees' records, subject to New York sales tax?
Yes -- collecting and analyzing interviewees' information and furnishing customers with a match's name and phone number is a taxable 'information service,' so the fee charged for this dating service i…
If a Nebraska-domiciled executive takes a fixed 4-year New York work assignment, using a company apartment and spending more than 183 days a year in New York, is he a New York resident or a nonresident for personal income tax purposes?
He remains a nonresident. Because Petitioner Charles M. Harper's New York assignment is for a fixed and limited four-year term (or less, if performance goals are met sooner), after which he will retir…
Are SEC insider-trading disgorgement funds -- like the Boesky, Siegal, and Kidder Peabody funds -- subject to New York corporate franchise tax under Article 9-A or personal income tax under Article 22, and are the individual claimants or original defendants separately taxed on the funds' earnings?
No entity-level New York tax applies to the Disgorgement Funds themselves. Because the receiver merely holds court-restricted investments and distributes them under an SEC-approved plan with no discre…
In 1984, a state energy authority issued pollution-control bonds for our nuclear plant, backed by our first mortgage bonds. Now we want to refinance those bonds at today's lower interest rates, which requires amending and restating our mortgage bonds and recording a new supplemental mortgage indenture. Is that refinancing exempt from mortgage recording tax, and does restating the bonds count as new debt?
Exempt, and restating the bonds isn't treated as new debt for MRT purposes. This is the origin ruling establishing mortgage recording tax exemption for Niagara Mohawk Power Corporation's financing arr…
New York Advisory Opinion TSB-A-94(1)I: Are distributions from the federal Thrift Savings Plan (TSP) that petitioner Joseph T. DiGianni receives exempt from New York State income tax; if not, is the first $20,000 tax-free whether taken as a monthly annuity or a lump sum; and if the distributions are taxable, is the portion of earnings from the TSP's 'G Fund' (invested in U.S. government bonds) tax-free as tax-exempt interest?
It depends on which federal retirement system covers the employee. For a FERS employee, TSP distributions are treated as part of the employee's pension itself, so they qualify for New York's full pens…
How does a cooperative housing corporation value the real property it owns for purposes of the Article 9-A capital base?
At fair market value -- but the actual value is a factual question. For the Article 9-A capital base, a cooperative housing corporation (defined in IRC section 216) is taxed under section 210.1(b) at …
How does a cooperative housing corporation determine the fair market value of its real property for the Article 9-A capital base when only the assessed valuation is known?
By fair market value -- which is a factual determination, not simply the assessed value. For the Article 9-A capital base, a cooperative housing corporation (IRC section 216) is taxed under section 21…
Is the New York net operating loss deduction limited to the amount of the federal net operating loss deduction, and does that limitation require adjustments when assets are later disposed of?
Yes -- the New York net operating loss deduction is capped at the federal amount. Under section 208.9(f), the New York NOL for a loss year is computed under section 208.9(f)(1), but the deduction actu…
Is a process-serving business's court-record research, photocopying, faxing, and delivery of legal documents subject to New York sales tax?
Process serving itself is not taxable, and neither are pickup, filing, and delivery of receipted copies or affidavits performed as part of process serving. But faxing copies of court documents to clie…
Five families own six semi-attached condominium homes and want to convert to plain fee-simple ownership instead. That means briefly passing through a moment of joint tenants-in-common title before each family gets its own home back. Does converting out of the condominium form trigger New York's Real Property Transfer Gains Tax, and do we have to add all our home values together to test the $1 million threshold?
The conversion itself was exempt -- no gains tax was owed, and no aggregation mattered, because there was no real change in who owned what. Five families owned six semi-attached condominium units in t…
When an engineering/design/consulting firm also installs and sells the equipment it designs for, is its consulting fee taxable, or does bundling it with installation and equipment make the whole charge taxable?
Design, engineering, consulting, and advisory services standing alone are NOT taxable -- they aren't on the state's list of taxable services. But if a contract bundles those services together with ins…
Is a financial newsletter publisher's on-line news service subject to New York sales tax, and does its separately billed telephone consulting service escape tax as personal information?
Yes for the on-line news service -- it's a taxable information service because its content isn't personal or individual to any one subscriber, though it escapes the additional 5% telephone/telegraph s…
Does a preschool play-group and party business owe sales tax on its charges, and does it matter whether the event includes food, drink, or entertainment?
Charges for preschool play groups (classes with social and educational activities) are NOT subject to sales tax, since that kind of class isn't an enumerated taxable service -- unless it's sold togeth…
Is an unincorporated condominium association that only collects common charges and bank interest, owns no property, and is not engaged in business subject to the Article 9-A franchise tax?
Yes. The 440 East 6 Condominium is an unincorporated condominium association formed under Article 9-B of the Real Property Law to manage the common elements; its income is only common charges from its…
Does a not-for-profit 'call before you dig' organization owe sales tax on its member dues, which fund both its damage-prevention education/seminars and its call center that locates underground utility lines?
Yes -- the call center that fields calls from contractors and relays them to utility members is itself a taxable telephone answering service, and because members can't buy the education, seminar, trai…
Are a Morgan Stanley financing affiliate's purchases, leases, and maintenance contracts for a New York City office building -- entered as the disclosed agent of the New York City Industrial Development Agency (IDA) -- exempt from sales and use tax?
Yes, generally -- purchases, leases, and maintenance/repair/service contracts entered by the financing affiliate as the IDA's disclosed agent are exempt from sales and use tax, and so are the lease pa…
I'm structuring a turnkey deal where I sell my client a vacant lot, buy it back at the same price, build a building on it as construction financing, then sell (or lease) the finished building back to the client. Will New York's Real Property Transfer Gains Tax apply when I transfer the finished building back?
The Department wouldn't give a yes-or-no answer -- it depends on facts an Advisory Opinion can't resolve. Deegan Development Group, Inc. owned a parcel of land and proposed a turnkey arrangement for i…
Is thin capitalization tested on a book or fair market value basis, and is interest on a loan used to fund a distribution exceeding shareholder equity deductible for Article 9-A?
Thin capitalization is tested on a fair market value basis, not a book basis. Indopco borrowed $700 million from a brother/sister corporation to pay a dividend to its parent when its book capital was …
Is installing a patented lawn-fertilization control device as part of a new or existing underground sprinkler system a tax-exempt capital improvement, and does that change if it's just replacing an existing pump?
Yes -- installing the device as part of a new underground sprinkler system, or adding it to an existing one, is a capital improvement and not subject to sales tax, because it permanently increases the…
Is a real-time financial-data terminal service (stock tickers, quotes, market news) delivered over leased telephone lines to desk-top display units subject to the additional 5% telephone/telegraph tax on top of the regular information-service tax?
No -- the service is a taxable information service under Tax Law Section 1105(c)(1) because it isn't personal or individual to any one subscriber, but it escapes the additional 5% tax under Section 11…
Can a mail-order company use an average industry shipping rate to calculate its exempt, separately stated shipping charges for periods before September 1, 1991, and does the shipping exemption still apply after that date?
No -- an Advisory Opinion can't resolve a factual question like whether $1.04 per package matches an industry-prevailing shipping rate, and there was never any rule letting an average rate substitute …
Our hotel financing, structured through an industrial development agency, needs a workout: we're restoring previously-waived loan proceeds (increasing the secured debt back up), adding a brand-new loan the IDA won't be a party to, and then consolidating everything into one lien after the IDA exits the deal entirely. Which of these steps trigger new mortgage recording tax, and which don't?
It depends on which step and whether the IDA remains a party -- a genuinely mixed outcome. Coliseum Hotel Associates financed and built a Marriott hotel at Mitchel Field, Nassau County through the Tow…
Does a tax-exempt nonprofit's sheltered workshop, where disabled clients perform auto detailing for paying customers, have to collect sales tax on those charges?
No -- the nonprofit's auto detailing (washing, window cleaning, vacuuming, waxing) is a sale of a SERVICE, not tangible personal property, and it doesn't fall into any of the specific carve-outs (reta…
Is an airline's purchase of on-line computer systems -- flight control, crew management, reservations, baggage tracing, and similar tools -- exempt from sales tax as personal or individual information when each system is built around the airline's own confidential operating data?
Mostly yes -- the Flight Control, Crew Management, AFTN, Flight Plan, ACTS, Baggage Claims Central File, and Sub-Host Reservations systems are all exempt, because each is based only on the airline's o…
Does a plant and equipment used to convert liquid cryogens into compressed gas qualify for the Article 9-A investment tax credit?
Yes, if the other tests are met. A company that buys liquid cryogens, converts them into vapor with pumps, vaporizers, and compressors, and bottles the gas in high-pressure cylinders for sale is engag…
Price Waterhouse asked New York, on behalf of a Nebraska-domiciled employee called Mr. A, whether Mr. A remains a nonresident of New York for personal income tax purposes when a fixed 4-year employment contract requires him to work in New York City and use a company apartment there for more than 183 days a year.
Yes, Mr. A remains a New York nonresident throughout the four-year contract. Because his New York City company apartment is kept only for a fixed and limited assignment - not indefinitely - it is not …
As trustee of an estate, I'm selling a farmhouse where two disabled beneficiaries lived, plus two adjacent vacant farm parcels, to the same buyer. Is the house sale exempt from New York's Real Property Transfer Gains Tax as a residence, and do I have to add its sale price to the two land parcels' prices to test the $1 million threshold?
Split answer: the house sale was exempt on its own terms, but still had to be combined with the land sales to test the $1 million threshold. Mary and Seely Ward's ~100-acre Orange County farm, with a …
Is a shopping mall's lease-based charge to tenants for redistributed electricity (plus an administrative fee) a taxable resale of a utility service, or is it untaxed rent?
It's untaxed rent, not a taxable utility resale -- because the electricity and administrative-fee charges are billed under the terms of the mall's leases as 'additional rent,' following the Court of A…
I own a nine-acre beachfront parcel that I've treated as my principal residence, with a main house, a separate beach house, and an old barn, none of which I've ever rented out or depreciated. If I subdivide and sell just the beach house and barn (on six of the nine acres) to a buyer, does New York's Real Property Transfer Gains Tax apply?
No gains tax, because the beach house and barn were part of the owner's tax-exempt residence, not separate business or investment property. Burton Brous bought a nine-acre Long Island beachfront parce…
We're the fee owner of an office building. To help a prospective tenant (Newsweek) get NYC Industrial Development Agency economic-development benefits and a real estate tax abatement, we're converting our building to a condominium and conveying title to the tenant's units to the IDA for nominal consideration, then leasing those units back from the IDA at nominal net rent under an 'Overlease' lasting about 15 years and 8 months. We'll keep all the economic benefits and burdens (condemnation/insurance proceeds, income-tax ownership treatment, the right to sell/mortgage/transfer), and the IDA's title will end automatically on a set date or earlier if certain events happen (like the Prime Lease terminating), with title reverting to us. Are the conveyance to the IDA, the eventual title reversion, the Overlease, the Prime Lease with our tenant, and the related financing all exempt from New York's Real Estate Transfer Tax, Real Property Transfer Gains Tax, and Mortgage Recording Tax?
Exempt at every step -- Midtown Realty Company kept all the real economic benefits and burdens of ownership throughout. Midtown Realty, the fee owner of the office building at 1775 Broadway in Manhatt…
Metro-North Commuter Railroad Company asked whether two categories of employees who work in both New York and Connecticut - (1) employees paid collectively-bargained travel time to reach a temporary out-of-state work assignment, and (2) employees who work a set schedule of days in New York and are 'on call' at home in Connecticut - qualify for the federal Amtrak Reauthorization and Improvement Act's exemption from New York income tax on compensation paid to interstate rail employees who perform 'regularly assigned duties' in more than one state.
It depends on the category. Employees paid travel time to reach a single, temporary out-of-state assignment (like a conductor sent to flag a specific New York construction site) are NOT exempt - they …
Are a golf course's membership initiation fees, annual dues, and driving-range fees subject to New York's tax on social or athletic club dues, even though it markets memberships and calls itself a 'country club'?
No -- because members have no proprietary interest, no control over activities or management, membership is open to the general public on a first-come, first-served basis limited only by the facility'…
Must a customer that resells purchased business forms only to tax-exempt New York municipalities still register as a sales tax vendor and give its supplier a resale certificate?
Yes -- a manufacturer selling business forms to a customer must collect sales tax on those sales unless the customer furnishes a properly completed Form ST-120, Resale Certificate. The fact that the c…
How is income from servicing extended warranty contracts allocated to New York for the Article 9-A receipts factor?
Receipts from servicing extended warranty contracts are 'other business receipts' under 20 NYCRR 4-4.1(b)(5), and they are allocated to New York when they are earned in New York -- that is, where the …
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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.