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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If an out-of-state trade-show promoter's only New York activity is renting a convention center for a single three-day franchise expo, does that one event make it subject to New York corporate franchise tax?
Yes. Blenheim Franchise Shows, Inc., a Florida-based producer of small franchise expos with its only office in Winter Park, Florida, produced 43 shows nationwide in 1990 -- only one of them in New Yor…
If an out-of-state manufacturer's only New York presence is a handful of employee-days per year repairing products it sold, is that enough activity to make it subject to New York's corporate franchise tax?
Yes. The American Crane Corporation, a North Carolina crane manufacturer with all operations based in Wilmington, sent a small service department into New York for a maximum of about two weeks a year …
If a company has no office in New York but its employees occasionally spend a small amount of time there, does any of their compensation count in the numerator of the Article 9-A payroll factor?
No -- the payroll factor numerator is zero. Himont USA, Inc., a Delaware company with no office or place of business in New York and no New York-resident employees, had a small property factor (about …
Can a customer give a contractor a capital-improvement certificate after the contract is signed and the first tax invoice is paid, and who then owes tax?
Yes, the customer can furnish the certificate later, with limits. Once Action Scale receives a properly completed Certificate of Capital Improvement, it must stop collecting sales tax on future invoic…
Is the sale of advertising space in a free discount-shopper directory subject to New York sales tax?
No. A client that publishes a discount shoppers directory and earns income only from selling advertising space in it is providing an exempt advertising service, not a taxable information service. Tax …
Is an optional 'loss protection' charge on leased pagers taxable, and does it need to be separately stated?
Not taxable, if it's broken out in the contract. Pro Net leases pagers and offers optional 'loss protection' (about $1-$1.50 per pager monthly) that spares a customer from paying the full value of a l…
Our limited partnership and a sister partnership are contributing all our real estate joint-venture assets to a newly formed REIT in exchange for 98% of its stock, then liquidating and distributing that stock directly to our limited partners. Does the initial contribution to the REIT, or the follow-on liquidating distribution of REIT stock to our partners, trigger New York Real Estate Transfer Tax?
Partially taxable on the contribution; the liquidation is exempt. Krupp Cash Plus IV Limited Partnership held a 50.10% interest in a joint venture that owned a New York shopping center. It exchanged t…
Is installing energy-saving reflectors in existing fluorescent light fixtures a nontaxable capital improvement or a taxable installation?
Taxable. N.R.G. Savers installs custom-designed reflectors in existing fluorescent fixtures — repositioning the sockets and cutting a four-lamp fixture to two lamps (or two to one) to save energy. Tha…
Is the Savings Bank Life Insurance Fund a New York State agency or instrumentality exempt from sales and use tax?
Yes. The Savings Bank Life Insurance Fund was created by an Act of the New York Legislature (L.1940, ch. 449; Banking Law § 270) as a body corporate within the banking department, and it grew directly…
Is New York sales tax charged on the federal luxury tax when a car is bought or leased, and how does it work on a lease?
No sales tax on the separately stated federal luxury tax. The federal retail excise tax on luxury items (26 U.S.C. ch. 31) is imposed on the consumer, so under regulation § 526.5(b)(2) it is excluded …
If an out-of-state broker-dealer trades securities in New York only through independent brokers, but also acts as an AMEX options specialist requiring a leased exchange seat, is it doing business in New York for franchise tax purposes?
Yes. Taxpayer, a Delaware S corporation whose sole office is in Houston, Texas, trades stocks, bonds, and options on exchanges nationwide, executing all trades -- both proprietary and client -- throug…
Are environmental testing and reporting services on a landfill's own ground taxable in New York?
It's not a taxable information service, but it can be taxable as a real-property service. A landfill hires outside vendors to analyze and report the levels of motor oil, groundwater, leachate, condens…
Since 1990, can a long-distance reseller still deduct the cost of local exchange carrier access service it buys and resells, and does it owe New York's section 186-a excise tax on international calls it merely routes through a New York gateway?
The resale mechanics changed, and the international-traffic question turned on facts not yet in the record. Since a July 1990 law change, local exchange carriers can no longer exclude receipts from se…
We're a federal government-chartered corporation that buys and resells mortgages nationwide. When mortgagors on our New York mortgages default and we foreclose or take a deed in lieu of foreclosure, are we exempt from New York's Real Property Transfer Gains Tax and Real Estate Transfer Tax as the transferee, and later as the transferor when we resell the foreclosed property? And do we still have to file the tax return paperwork even if we're exempt?
Exempt as a federal instrumentality, but filing obligations still apply. The Federal Home Loan Mortgage Corporation (Freddie Mac), a federally chartered corporate instrumentality of the United States,…
Are medical billing, payment processing, collection, and customer-service functions subject to New York sales tax?
No. Datamedic Corp. provides medical practices with billing, insurance-claim/payment processing, collection, and patient customer-service functions (coding claims, submitting them to carriers, posting…
Is an on-line financial news service an exempt newspaper/periodical, or a taxable information service, and is the delivery equipment taxable?
Taxable information service, not an exempt newspaper or periodical. Market News Service's 24-hour on-line international financial news is delivered as an electronic readout/display on a screen, not in…
Is a banquet gratuity charge subject to sales tax when the operator keeps part of it instead of paying the entire gratuity to the banquet employees?
Yes — the entire gratuity charge is taxable. A separately stated, gratuity-designated charge escapes sales tax only if ALL three conditions in 20 NYCRR § 527.8(l) are met, and the third is that all of…
On an automobile lease with a purchase option, is sales tax due on the down payment, and who is responsible for collecting the tax on the full lease price?
For this pre-June-1, 1990 automobile lease with a purchase option, sales tax was due on the FULL lease price and had to be collected on each payment made under the lease — and the lessor/vendor (the l…
Is equipment installed at an IDA-financed facility exempt from sales/use tax when purchased as the IDA's agent with title passing to the IDA?
Exempt — but only if two conditions hold. American Linen installed a Memtek wastewater treatment system as replacement equipment at a Buffalo plant financed under a 1978 industrial revenue bond lease …
Is a fireworks-display contract taxable, and is selling fireworks outright to an exempt organization that runs its own display taxable?
It depends on which of two arrangements is used. (1) When Auburn Fireworks contracts to PUT ON a fireworks display — providing the pyrotechnics, crew, and insurance — the customer never takes title or…
Our cooperative housing corporation ended up owning back its own unsold shares (for 8 vacant and 22 occupied units) after a messy chain of foreclosures and a bank settlement, paying the bank $1,215,000 for the first mortgage, second mortgage, and all the unsold shares combined. When we eventually resell those unsold units, is that subject to New York's Real Property Transfer Gains Tax, and what's our original purchase price?
Yes, future sales of the unsold cooperative shares will be subject to the gains tax if their combined consideration reaches $1 million, and the cooperative corporation's original purchase price for th…
Are ophthalmic (eye) surgical suture materials exempt from New York sales tax as prosthetic aids or as drugs/medical supplies?
Exempt as medical supplies under Tax Law § 1115(a)(3), not as prosthetic aids under § 1115(a)(4). Alcon's ophthalmic sutures (silk, dacron/nylon, polypropylene, polyester) are used to close surgical e…
If the Tax Department issues a tax levy against 'Mr. X individually and as an officer of ABC, Inc.' for the corporation's unpaid taxes, can the bank apply the levy against the corporation's own bank account, or only against Mr. X's personal account?
Only the individual's account. ABC, Inc. failed to pay sales taxes it owed, so the Commissioner issued a tax warrant and then a tax levy naming 'Mr. X individually and as an officer of ABC, Inc.' and …
Are on-line financial news services delivered to subscribers on computer screens exempt newspapers or periodicals, or a taxable information service?
Taxable information service, not an exempt newspaper or periodical. The petitioner's client published four on-line financial newsletters delivered to subscribers as text on computer screens (via Teler…
For a railroad's charter excursions, is the transportation taxable, who pays tax on bundled event tickets, and what local rate applies to souvenirs and food sold on a moving train?
The Department answered three questions for a railroad running charter excursion trains. (1) Charter excursion fares — including tickets bundling rail transportation with admission to events like spor…
When a home-party hostess redeems earned credits for a direct-sales company's merchandise, is that a taxable sale even though no cash changes hands?
Yes, it is a taxable sale. Petra Fashions ran home merchandise parties and, as an incentive to host, gave hostesses credits redeemable only for its own line of merchandise. The Department held that tr…
Can a New York vendor keep computer-readable tapes instead of paper cash-register tapes to satisfy its sales tax recordkeeping duties?
Yes. A vendor may keep computer-readable tapes as an alternative to paper cash-register tapes to satisfy its sales tax recordkeeping duties under Tax Law § 1135(a)(1) and 20 NYCRR § 533.2(f)(1), provi…
My corporation and two related partnerships (with overlapping but not identical family ownership) plan to swap parcels of undeveloped land, with cash making up any difference in value. Does this land swap trigger New York's Real Property Transfer Gains Tax, and does the mere-change-of-identity exemption help since the same family owns pieces of all three entities?
The exchange is a taxable transfer on both sides (each party is a transferor of what it gives up), but each side gets a PARTIAL mere-change-of-identity exemption to the extent the exchange doesn't act…
Are an art advisor's consulting and support services taxable in New York, and when do they become taxable interior decorating and designing services?
It depends on what the art advisor actually does. Pure consulting — advising a client whether to buy particular works of art for their investment potential, or advising on framing/restoration without …
If a trucking company taxed under Article 9 (not Article 9-A) makes an S corporation distribution to its sole shareholder from the accumulated adjustments account, can the shareholder deduct that distribution on their New York personal income tax return?
No deduction is available. Petitioner is the sole shareholder of a federal S corporation trucking company taxed under Article 9 (sections 183 and 184) rather than Article 9-A. For franchise tax purpos…
Are a city impound lot's charges for towing, storage, notification letters, and DMV searches subject to New York sales tax, even though the operator is a government body?
Yes — the entire charge is taxable. Operating an auto pound is operating a place of business that provides storage of motor vehicles, which Tax Law § 1105(c)(6) taxes. The fact that the City of Roches…
Can a fireworks company buy pyrotechnic materials tax-free for resale when it uses them to put on a fireworks display for a customer?
No — the materials aren't bought for resale, because the company is selling a service, not the fireworks. Under its standard contract, Bay Fireworks furnishes a 'fireworks exhibition' — providing all …
How is New York sales/use tax applied to an oil- and chemical-spill cleanup company's services, the materials it uses, and its outright sales of cleanup supplies?
The Department treated Marine Pollution Control, an oil- and chemical-spill cleanup company, as a contractor and answered seven questions. Its spill cleanup and disposal is a service of maintaining, s…
My client can't keep up with interest payments on two large mortgages. The bank will agree to defer the unpaid interest, but only if additional interest accrues on that unpaid interest (compounding), while the mortgages' already-taxed maximum principal caps stay the same. Does adding compound interest to the mortgage trigger additional mortgage recording tax?
No additional tax due -- but only because the compounded amount stays within the mortgage's already-taxed maximum, and there's an important enforcement trap lurking underneath. A client held real prop…
When a New York S corporation reincorporates into a different state through a tax-free F-reorganization merger, does its New York S election survive, or do the shareholders have to make a brand-new election and file two short-period corporate returns?
The S election itself survives, but two short-period corporate franchise tax returns are still required. X Corp, a New York corporation that had elected both federal and New York S status, will merge …
Are weekly rentals of self-contained motel housekeeping/efficiency units subject to New York sales tax when no hotel services are provided?
Not taxable, on these facts. The Juliana Motel rents housekeeping and efficiency units — each with its own kitchen, bathroom, and sleeping room and no services provided — on a weekly basis through the…
As bankruptcy trustee for 68 limited partnerships, I'm selling their real estate free and clear of liens under court order, with liens attaching instead to the sale proceeds. Depending on whether the buyer is a stranger to the mortgage, partially assumes it, or is the mortgage-holder itself credit-bidding at a bankruptcy auction, how is 'consideration' calculated for New York's Real Property Transfer Gains Tax in each scenario?
Consideration is calculated differently in each of the three scenarios -- the price actually paid if the buyer doesn't touch the mortgage, price paid plus the assumed portion if the buyer partially as…
Which of a property manager's charges — management fees versus cleaning, repair, and maintenance — are subject to New York sales tax?
It splits by the type of service — and separate billing matters. Certified Properties manages apartments and houses. Its core management services — renting units and signing leases, collecting and dep…
Is a company's charge to remove a wheel 'boot' from an illegally parked car subject to New York sales tax — as a parking service or as servicing tangible personal property?
The boot-removal fee is taxable — but not as a parking service. A-Z Parking runs a private-property enforcement program: its teams place an immobilizing wheel 'boot' on unauthorized vehicles, and the …
Is an unincorporated residential condominium association that rents out parking spaces and may lease units subject to Article 9-A franchise tax for every year since it was organized, including years before the 1989 law change?
Yes, for all years since organized. Bayside Mews Condominium, an unincorporated 142-unit residential association organized in 1982 under Real Property Law Article 9-B, derives its core revenue from co…
When a company buys taxable information reports delivered to offices both inside and outside New York, how much of the charge is subject to New York sales tax?
Only the reports delivered in New York are taxed, and the taxable share is allocated by where delivery happens. Clairol buys professional research/marketing reports that are assumed to be taxable info…
Can a rental company buy storage containers and trailers tax-free for resale when it only rents them out and delivers/picks them up?
Yes. Gibney Leasing rents storage containers and trailers, delivering them to customers in New York and picking them up at the end of the rental for a separate delivery/pickup charge. Under New York l…
Are accident reconstruction investigation services for attorneys and insurers subject to New York sales tax?
Yes. Robert Burns runs an accident reconstruction business for attorneys and insurance companies — visiting accident scenes after the police, taking photographs and measurements, interviewing drivers …
How should an HVAC contractor handle sales tax when customers give it exemption certificates or direct-pay permits instead of capital-improvement certificates, and can it buy repairs to rented equipment for resale?
The Department answered four questions for X, an HVAC seller-contractor. Under Tax Law § 1132(c) and 20 NYCRR § 532.4, all receipts are presumed taxable and the customer bears the burden of proving an…
If three doctors incorporated only to satisfy a bank's mortgage requirement, believed the corporation was dissolved and the property reconveyed to them personally years earlier, but the corporation was actually dissolved by proclamation years later than believed, for which years does it owe Article 9-A tax?
Highmount Medical Building, Inc. was incorporated in 1978 solely because a construction lender required the mortgagor to be a corporation (with the lender's advance consent to later reconvey the prope…
John Panos rebuilds old, non-working starters and alternators using a mix of original and new parts, and separately assembles brand-new starters and alternators from new parts, selling the finished units to retailers and trucking companies. Does the building, equipment, and tools he uses in this business qualify for New York's investment tax credit under Tax Law § 606(a), which requires the property to be principally used in "manufacturing" rather than mere repair?
Yes. The Department ruled that both of Panos's processes - rebuilding old starters and alternators and assembling new ones from new parts - constitute "manufacturing" under Tax Law § 606(a)(2), becaus…
Are combined shipping-and-handling charges on a mail-order purchase subject to New York sales tax?
Yes — because the charges are combined. Neil Harrison buys compact discs by mail from Columbia House, which bills each disc's cost plus a single combined 'shipping and handling' charge and computes sa…
When a leased car is stolen or totaled, does the lessor collect sales tax on the insurance buyout, and can the lessee get back tax already paid on the lease?
Two answers. First, when a leased car is stolen, lost, or totaled, the lessor does not collect sales tax on the insurance company's buyout or on any shortfall the lessee must pay: sales tax is not imp…
At a social or athletic club, is buying stock in a related land company — required for membership or bought voluntarily to cut annual dues — subject to sales tax as dues?
Yes, both are taxable as dues. St. George Operating and Improvement Co. is a title-holding company that owns a golf course leased to the St. George Country Club; its shareholders are almost all club m…
For an out-of-state natural gas wholesaler that briefly holds title to gas passing through New York, does New York tax turn on where its customers are located, or on where the gas actually changes hands (the point of sale)?
The point of sale controls, not customer location. A foreign corporation that buys and resells natural gas in bulk -- taking brief title only to facilitate the transfer from supplier to end-user, with…
Does a nonresident company owe New York sales or use tax on an aircraft delivered out of state but then hangared and maintained in New York?
No New York sales or use tax is due. Arepo Corporation, a Delaware holding company with no New York office, employees, or business, took title and possession of two Gulfstream jets in Delaware, then h…
Can a newly formed sister corporation buy pool construction materials for resale to an affiliated pool-building contractor, and collect tax on those resales?
Yes — the structure works, and the sales to the affiliate are taxable. Majestic Pools builds in-ground concrete pools (a contractor) and its shareholders want to form a new sister corporation, 'Newco,…
How does New York sales tax and the passenger-car-rental tax apply to a rental company's rental charges, incidental fees, insurance, fuel, promotions, and fleet purchases?
In a 25-question opinion for Alamo Rent A Car, the Department confirmed that renting a car is a taxable sale of tangible personal property (Tax Law §§ 1101(b)(5), 1105) and also carries the special 5%…
Are janitorial services by resident apartment superintendents taxable when they are the complex's employees but are paid through a related company's central payroll?
Not taxable — the superintendents are the complexes' employees. Max Farash owns apartment complexes, each with a resident on-site superintendent who does light janitorial and related work. Each superi…
Can an extended-warranty administrator give repair shops a resale certificate for warranty repair work it pays for, or must its retail clients do that?
It can issue the resale certificate itself. Warrantech develops and administers extended warranty programs: retail vendors sell the extended warranties (collecting tax on the merchandise and the warra…
If a mutual savings and loan converts to stock form and is simultaneously acquired by a new holding company in a transaction the IRS treats as tax-free, is the whole conversion and acquisition also tax-free for New York's Article 32 banking franchise tax?
Yes. The Homestead Savings (FA), a federally chartered mutual savings and loan association with no capital stock, plans to convert to stock form ('Stock Homestead') while simultaneously becoming a who…
Does a not-for-profit homeowners association lose its Article 9-A tax exemption once it starts collecting dues and maintaining shared community property for its members?
Yes, once the association becomes active. Lake Shore Hills Homeowners Association was incorporated in 1983 but stayed inactive -- no dues, no maintenance activity -- until 1988, when it began collecti…
Are charges for picking up and shredding confidential documents subject to New York sales tax?
Yes. Confidential Data Management picks up confidential documents at customer sites, transports them to its plant, and shreds and bales them (recycling or disposing of the result); it bills a shreddin…
Does a New Jersey printing company that only solicits orders in New York, ships from out of state, and occasionally delivers finished goods through its salesmen owe New York's Article 9-A corporate franchise tax?
No. ROP Color, Inc., a New Jersey computerized typesetting and color-separation business, had no office, property, or capital in New York -- its only in-state activity was salesmen soliciting orders (…
My client (a tenant under a nearly-49-year lease) is negotiating a lease amendment with two parts: one clause simply clarifies the tenant's existing right of first refusal if the landlord decides to sell, and a second clause forces the landlord to offer the tenant the property once a large enough third-party cash offer comes in, even if the landlord doesn't want to sell. Does either part of this amendment turn the lease into a taxable 'transfer of real property' under New York's Real Property Transfer Gains Tax?
The two clauses get opposite answers -- the ordinary right-of-first-refusal clause isn't a taxable transfer, but the clause forcing the landlord to offer the tenant the property once a qualifying thir…
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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.