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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Are supervised physical-therapy and fitness services taxable as New York City gymnasium/health-salon services, or exempt because a licensed physiotherapist is involved?
Taxable in NYC unless the service is actually performed by a licensed professional. The facility's supervised training is a taxable New York City gymnasium/health-salon service; only services actually…
Are a financial data company's broker referral premiums and its charges to participate in a computerized research directory subject to New York sales tax?
Referral premiums brokers pay for customer leads are not taxable, because customer referral is not an enumerated service. Listing research for providers is exempt advertising, but the fees receivers p…
Are a company's charges for supplying temporary environmental field technicians to prime contractors subject to New York sales tax?
It depends on the work. A temp-staffing company must collect tax on personnel who perform taxable services, but the charges are exempt when the prime contractor buys the services for resale or for a c…
Are a company's data-processing services (statements, claims, billing reports) and its microfiche-conversion service subject to New York sales tax?
It splits. Processing that produces personalized statements, claims, and account reports is an exempt personal-or-individual information service; but merely converting data to written form or printing…
Our partnership sponsor holds 26 unsold condominium units and wants to liquidate, distributing the units to its eight partners in proportion to their ownership percentages. Because unit values don't divide evenly (especially for four partners with just 1.5% interests each), we may need side payments of cash or property to equalize the distributions, or have small partners take fractional tenant-in-common interests. Does any of this trigger New York's Real Property Transfer Gains Tax, and how would later individual sales by the partners be aggregated?
Distributing the unsold condominium units to the partners in proportion to their ownership interests is exempt from the gains tax -- but ONLY if any cash or other property used to equalize the distrib…
In computing the eligible business facility credit, can wages of employees at a separate, non-qualified branch be counted as eligible wages?
No. For the eligible business facility credit under Tax Law section 210.11, only the wages of employees serving in jobs created or retained at the certified eligible business facility count as eligibl…
Our state agency is developing a new headquarters building for several commodity exchanges. Private lenders will finance construction, with us named as mortgagee even though we have no beneficial interest in the loans. Is recording those mortgages -- and any later increases in the secured debt while we remain mortgagee -- exempt from mortgage recording tax?
Exempt, including later increases in secured debt while UDC remains the named mortgagee -- this is UDC's own foundational mortgage recording tax immunity ruling, later cited directly by both its Queen…
Is a vehicle lessor's flat fee for handling registration paperwork and getting license plates subject to New York sales tax?
Not taxable, with conditions. A vehicle lessor's flat fee for preparing registration paperwork and obtaining plates is not a taxable service — as long as the charge is separately stated on the lease o…
Does a foreign manufacturer's in-state technical advice exceed the protection of Public Law 86-272 and subject it to Article 9-A?
It depends on timing. A foreign (out-of-state) manufacturer that ships tangible personal property into New York is protected from the Article 9-A franchise tax by Public Law 86-272 if its New York act…
Is software licensed while it was only partly built taxable — the portion finished before the license as prewritten software, and the portion built afterward to the licensee's specs as custom software?
It splits. The roughly 60% of the software already built before the license is taxable prewritten software; the portion developed afterward to the licensee's own specifications is exempt custom softwa…
Are charges for temporary engineering-design and technical staff subject to New York sales tax?
It depends on the work, and the Department declined to rule finally. A temp-staffing charge is taxable only if the personnel perform a service New York specifically taxes; if they do, it is taxable un…
Is developing and maintaining a client's confidential membership database an exempt 'personal or individual' information service, or a taxable sale?
It depends on whether each product is data conversion or a true information service, and the Department declined to classify them without more facts. Merely reformatting a client's own data is a taxab…
Are a laboratory's materials-testing and R&D reports on unique client samples subject to New York sales tax as an information service?
Not taxable. Although the reports are an information service, each one analyzes a unique client sample and is not incorporated into reports for others, so it is personal or individual in nature and ex…
Before September 1, 1991, did a software marketer owe use tax on the base bank-software it bought from its parent to customize and sub-license to end users?
Yes, on its own purchases. Under the pre-September-1991 rule, the base software the marketer bought before tailoring it to any customer was taxable tangible personal property, so its payments to the d…
Does transferring a division's assets to a subsidiary in a Section 351/368 reorganization trigger investment tax credit recapture or forfeit the credit carryover?
No recapture, and the carryover survives. Transferring all of a division's assets to a wholly owned subsidiary in a tax-free transaction under IRC sections 351, 368, and 381(a) -- where the property s…
One month after getting a ruling on our IDA condo conveyance-leaseback structure for our tenant's financing benefits, we realized the initial condominium units will actually be conveyed to the IDA in phases over time as construction is completed, and we want the ruling to also cover our affiliates, nominees, successors, and assigns. Does this refined, phased structure change the tax-exempt conclusions?
Still exempt -- the phasing doesn't change the answer. This opinion refines TSB-A-93(1)R (issued a month earlier on the same petition) to reflect that the condominium units at One New York Plaza occup…
If I permanently move out of New York but keep my old New York home and still spend 45 to 90 days a year there, has my domicile changed to my new state?
The Department did not decide. Whether Kenneth Springer changed his domicile from New York to Florida is a question of fact, and an Advisory Opinion can only apply the law to given facts, not resolve …
Does a machine used to rebuild torque converters qualify for the sales tax production exemption and the Article 9-A investment tax credit?
Yes, both. Rebuilding worn torque converters -- cutting open the old unit, replacing worn parts, and reassembling and testing a finished converter -- is the production of goods by manufacturing or pro…
Does machinery used to cut, tie, and close meat casings for meat companies qualify for the Article 9-A investment tax credit?
Yes, if the use tests are met. A company that takes reel stock of cellulose or fibrous casings, cuts it to length, drills holes, and clips, ties, and closes the casings for meat companies is engaged i…
Is the sale and installation of custom interior window shutters a tax-exempt capital improvement to real property, or a taxable sale?
Taxable. The Department ruled that custom interior window shutters are like blinds and draperies, not a capital improvement, so their sale and installation stays subject to sales tax.
Which pieces of a salt mine's equipment — conveyors, elevators, screening, mining machinery, roof bolts, and power-distribution gear — qualify for New York's production-machinery sales tax exemption?
Conveyors, elevators, screening systems, and salt-mining machinery qualify for the § 1115(a)(12) production exemption. Roof bolts and general power-distribution equipment (substations, transformers, c…
How does New York sales tax apply to an outsourced facilities-management provider's mailroom, printing, copying, fax, filing, delivery, and related services, and to its supplies and equipment?
It varies by service. Printing, copying, imprinting, mailing-list maintenance, fax, and sales of copies or supplies are taxable; pure clerical, mailing, shipping, delivery, filing, and messenger servi…
As first mortgagee, I'm set to receive a commercial building free and clear under a Chapter 11 reorganization plan, in full satisfaction of my $90 million loan. The plan also wipes out an unrelated second mortgage on the same building with no payment to that lender. Does the discharged second mortgage debt count as part of MY consideration for New York's Real Property Transfer Gains Tax, even though I'm not paying it and get no benefit from its discharge?
No -- the discharged second mortgage debt is NOT part of the first mortgagee's consideration; consideration is only the amount of the recipient's OWN debt that gets extinguished. Prudential Insurance …
Is a health maintenance organization licensed under Article 44 of the Public Health Law an insurance corporation taxable under Article 33?
No. A health maintenance organization licensed under Article 44 of the Public Health Law is not an insurance corporation for franchise tax purposes and is not taxable under Article 33. As long as the …
Our building's fee owner needs to convert floors of a Manhattan office tower into condominium units and convey the units occupied by a major tenant to the NYC Industrial Development Agency, so the tenant can get IDA financing benefits, then lease those units back. Do the conveyance to the IDA, the IDA leaseback, the eventual reversion, and a restated/consolidated lease with the tenant trigger New York's Real Estate Transfer Tax or Real Property Transfer Gains Tax?
Exempt at every step. Resnick Water St. Development Co., fee owner of One Seaport Plaza, needed to convey condominium units occupied by tenant Prudential Securities, Inc. (PSI) to the New York City In…
Is a foreign sales corporation organized in a U.S. possession subject to New York franchise tax, and is its exempt foreign trade income excluded for New York?
A foreign sales corporation (FSC) organized in a U.S. possession (here, the Northern Mariana Islands) is a foreign -- but not an alien -- corporation for Article 9-A, because a U.S. possession is not …
Is a company whose only district activity beyond solicitation is maintaining an office subject to the metropolitan transportation business tax surcharge?
Yes. A company that maintains an office in the metropolitan commuter transportation district (MCTD) is subject to the metropolitan transportation business tax surcharge under Tax Law section 209-B, ev…
In the modified opinion, are an asbestos contractor's plastic bags and poly taxable, and what changes when the removal is part of a capital improvement?
Same core result as the original opinion — disposal bags are 'actually transferred' (not taxable) and plastic poly is consumed by the contractor (taxable) — but this modified opinion adds that when th…
Is a contractor's operation and maintenance of cogeneration plants built with industrial-development-agency financing exempt from sales tax as government activity?
Operating the plant isn't exempt government activity, and because the contractor bills one lump-sum operation-and-maintenance fee without separating taxable from nontaxable charges, it must collect ta…
When a retailer sells discounted cellphones to customers who also sign a carrier service contract, are the phones taxable 'promotional items' the retailer can't buy for resale?
The phones are purchased for resale, not promotional items. Because the retailer sells the phones (bundled with service) at a profit rather than giving them away or selling below cost, it buys them ta…
As fee owner of our Manhattan office tower, we need to convey the condo units occupied by a major tenant to the NYC Industrial Development Agency so the tenant can get IDA financing benefits, then lease those units back from the IDA and sublease to the tenant -- with the IDA's title later reverting to us, possibly repeatedly as the deal is restructured. Does any of this trigger Real Estate Transfer Tax, Real Property Transfer Gains Tax, or Mortgage Recording Tax?
Exempt across the board. The Chase Manhattan Bank, N.A., fee owner of One New York Plaza, needed to convey condominium units occupied by tenant Prudential Securities Incorporated (PSI) to the New York…
Must a private homeowner collect sales tax on the rent when a guest pays to stay in the home during a special event like the 1993 World University Games?
No. A private home not regularly used for lodging guests isn't a 'hotel,' so short-term paid stays during the event aren't subject to New York's hotel occupancy sales tax.
In an outsourced copy-service arrangement, who owes sales tax on the copies, on the toner and paper, on outsourced repairs, and on copier lease payments?
Charging by the copy is a taxable sale of tangible personal property. The provider buys toner and paper for resale (ST-120), and can pass through outsourced repairs tax-free only if separately stated;…
Are a county fire district officers association's purchases of goods and services exempt from New York sales and use tax as a state instrumentality?
Exempt. The Department held the association is an instrumentality of New York State under Tax Law § 1116(a)(1), so its purchases of tangible personal property and services are exempt from state and lo…
Are a fire district officers association's purchases of goods and services exempt from New York sales and use tax as a state instrumentality?
Exempt. The Department held the association is an instrumentality of New York State under Tax Law § 1116(a)(1), so its purchases of tangible personal property and services are exempt from state and lo…
May a New York parent file a combined Article 9-A report with its wholly owned foreign sales corporation subsidiary organized in a U.S. possession?
Possibly -- it is up to the Commissioner. A foreign sales corporation organized in the U.S. Virgin Islands is a foreign but not an alien corporation, because a U.S. possession is not a foreign country…
Are wheelchair lifts, stairway lifts, pool lifts, and disability-operated power door openers exempt from New York sales tax as artificial devices, and is their installation taxable?
Exempt. Wheelchair lifts, stairway lifts, pool lifts, and power door openers operated only by disability controls are artificial devices exempt under § 1115(a)(4), and their installation and repair ar…
A partnership is transferring 100% of its partnership interests to a bank, in exchange for the bank cancelling debt and releasing guarantees -- but the partnership's underlying real estate is worth $10 million while the debt being cancelled is $15 million. For New York's Real Property Transfer Gains Tax, is the taxable 'consideration' the $15 million in cancelled debt, or the $10 million fair market value of the real estate?
The taxable consideration is the $10 million fair market value of the underlying real estate -- NOT the $15 million in debt actually cancelled to acquire the ownership interest. A partnership held a l…
Is a risk retention group made up of governmental housing authorities exempt from the Article 33 franchise taxes on insurance corporations as a state instrumentality?
Yes. A risk retention group whose members are governmental housing authorities is an 'instrumentality' of government and is exempt from the Article 33 franchise taxes on insurance corporations under T…
Is a bank holding company subsidiary a banking corporation taxable under Article 32, or is it taxed under Article 9-A?
Not necessarily a banking corporation. A corporation 65 percent or more owned or controlled by a bank holding company is a 'banking corporation' subject to Article 32 only if it is also principally en…
Is the Agent Orange Settlement Fund subject to New York franchise tax under Article 9-A or personal income tax under Article 22?
No. The Agent Orange Settlement Fund is not subject to New York franchise tax under Article 9-A or personal income tax under Article 22. The IRS ruled that the Fund -- established before the effective…
Gerard Dowling, a NYC Transit Police sergeant, received full salary while out on sick leave in 1990 for two service-connected injuries. Can that sick pay be excluded from his federal and New York taxable income as "workmen's compensation" under IRC section 104(a)(1), given that his union's collective bargaining agreement (not a formal statute) is what actually spells out the sick-pay entitlement?
Yes, but only from a specific cutoff date. Because Public Authorities Law § 1204-c incorporates the Sergeants' Benevolent Association's collective bargaining agreement by reference and makes the resul…
Is removing an old lighting system and installing a new hardwired energy-efficient one a capital improvement, so the contractor doesn't charge the customer sales tax?
Yes. Installing a new, permanently hardwired energy-efficient lighting system is a capital improvement, so the contractor doesn't charge the customer sales tax (with Form ST-124) — but the contractor …
For a maid service, are apartment cleaning, laundry, laundry-cost reimbursement, and travel charges each subject to New York sales tax?
Apartment cleaning is taxable real-property maintenance; separate laundry charges and laundry-cost reimbursements are not taxable; but travel charges are fully taxable because they can't be split betw…
Are homeowners association dues subject to sales tax when the HOA has recreational facilities, no facilities, or spins the facilities into a separate corporation?
If the HOA owns recreational facilities, its whole mandatory assessment is taxable club dues — you can't carve out the small recreation share. An HOA with no recreational facilities isn't taxed. Split…
Does a tennis club collect sales tax on a required purchase of the landholding company's stock, and can members get that tax refunded when the stock is redeemed?
Taxable. A share purchase required as a condition of membership is both taxable dues and an initiation fee under § 1105(f)(2), so the club collects tax on it. Redeeming the stock later gives no refund…
Does a grocery's larger 'Advantage Shelf Tag' adequately disclose a manufacturer's coupon reimbursement in an electronic (paperless) coupon system?
Yes. The larger, differently-colored 'Advantage Shelf Tag' substantially as described meets the manufacturer-reimbursement disclosure requirement, even in a paperless coupon system — but a plain shelf…
We closed a commercial mortgage loan where our borrower is a tax-exempt nonprofit. Our commitment letter said the borrower would reimburse us for all closing costs, including mortgage recording tax. We paid the special additional mortgage recording tax at closing -- can we now collect it back from the borrower under that contract clause, given the borrower's exempt status?
No -- the statute's allocation of who pays overrides any private reimbursement agreement. A mortgage lender's client made a commercial mortgage loan to a tax-exempt nonprofit borrower (exempt under IR…
Is a bio-absorbable dental tissue-regeneration device sold to dentists exempt from New York sales tax as a prosthetic aid or a medical supply?
It's a medical supply under § 1115(a)(3), not a prosthetic aid. That means it's taxable when bought by a dentist for use in providing dental services for compensation, but exempt when sold to a § 1116…
Does an elevator company owe use tax on materials it uses in taxable maintenance and repair jobs, and can it recover that tax?
Elevator maintenance and repair is taxable on the full invoice price (unless it's a capital improvement). The company can claim a refund or credit for tax paid on materials that become part of the ser…
My clients, a married couple both now in bankruptcy and heading toward divorce, jointly own a 37-acre residential property. My client moved out several months ago due to marital discord, but her husband still lives there. If their bankruptcy trustees sell the property (including to a tax-exempt buyer) for $1.5 million, does the personal residence exemption from New York's Real Property Transfer Gains Tax still apply, given my client's recent absence?
The residence exemption still applies -- a spouse's few-month absence due to marital discord, with the other spouse continuing to live there, doesn't break the exemption, and neither does the property…
I want to transfer my three New York properties -- including my personal residence -- into a revocable living trust to avoid probate, keeping full control and the right to revoke at any time. Will funding the trust trigger Real Estate Transfer Tax or Real Property Transfer Gains Tax? And will my residence be exempt from gains tax when the trustee eventually sells it after I die?
Both exempt. Hilles Timpson planned to transfer her Southampton personal residence, a New York City residence used by relatives rent-free, and a New York City rental property (each worth over $1 milli…
Does an aircraft-rental company pay sales tax on fuel it pumps into planes for 'wet' rentals, and can it recover that tax?
The lessor must pay sales tax on fuel at the pump even though it's bought for resale, but can then claim a credit (on the FF schedule, Form ST-100.10) against the tax it collects on the wet rental. Fu…
Are a country club's membership fees and dues taxable when membership is by invitation only and restricted to a defined group?
Yes. Because the club restricts membership by invitation only — an attempt at exclusivity beyond mere facility size — it's a taxable 'social or athletic club,' so its fees and dues are subject to sale…
For a multi-tier chain of controlled foreign corporations, does a company's share of a lower-tier CFC's Subpart F income keep the character (subsidiary capital vs. investment income) of the company's OWNERSHIP IN THAT LOWER-TIER CFC, or does it instead take on the character of the company's ownership in the FIRST-TIER CFC through which the income is deemed distributed?
The company's pro-rata share of Subpart F income from ANY tier of controlled foreign corporation -- first-tier or lower -- is deemed a dividend paid up the chain and takes on the character of the taxp…
Can a trash-removal company buy portable compactors tax-free for resale when it supplies them to customers as part of its trash-removal service?
No. Because the hauler and its customer both use the compactors as part of one bundled trash-removal service, the compactors aren't purchased for resale — so the hauler owes sales tax on buying them, …
Are golf country club membership dues and initiation fees taxable when members have no control, no proprietary interest, and membership is limited only by the size of the facility?
No. Because members won't control the club, won't hold a proprietary interest, and membership is limited only by the physical size of the facility (not exclusivity), the club isn't a taxable 'social o…
A nonresident who was a longtime key employee of a family-owned New York publishing business received a $1.2 million payment for agreeing not to compete, made as part of the family's sale of the business to an outside buyer. Is that non-compete payment New York-source income subject to New York State personal income tax, and if so, how much of it is taxable?
Yes, at least in part. The Department ruled that a payment for an agreement not to compete, made in connection with the sale of a business, is New York-source income to the extent it derives its value…
Is a subcontractor's charge to erect tubular scaffolding or pipe framing for a building renovation subject to New York sales tax?
Yes. A subcontractor's charge to erect tubular scaffolding or pipe framing is subject to New York State and local sales tax. Scaffolding is not a tax-exempt 'temporary facility' — and it's taxable whe…
Are a company's labor and material charges to close its portion of a town-owned landfill subject to New York sales and use tax?
No. Closing the landfill is a capital improvement, so the labor charges aren't taxable; and because the materials become an integral part of the exempt Town of Wilna's land, the materials aren't taxab…
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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.