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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How do New York's production exemptions and the resale exclusion apply to a maker of lithographic plates and printer supplies — and when does the New York City tax still apply?
Mostly exempt — with a New York City carve-out and item-by-item rules. Polychrome Corporation makes lithographic plates and film and a range of printer supplies. The Department applied New York's prod…
New York Advisory Opinion TSB-A-81(9)I: How does a shareholder of a professional service corporation compute the section 612(b)(7) add-back to New York adjusted gross income when the corporation's retirement plan is a defined benefit plan, rather than a defined contribution plan?
The add-back is the difference between the shareholder's share of the corporation's federal deduction for the contribution and what the shareholder could have deducted for the same benefit level had h…
For a pay-TV programmer, which are taxable — broadcast royalties, film taken only to copy, videotapes reworked in post-production, signal transmission, and post-production done for others?
It depends on the piece — several different answers. Showtime Entertainment, a pay-TV programmer weighing New York post-production, playback and uplink facilities, got a multi-issue ruling. (1) A roya…
New York Advisory Opinion TSB-A-81(11)I: Is a newspaper columnist and freelance writer's income subject to New York's unincorporated business tax under Article 23 of the Tax Law?
No, so long as the writer's income is genuinely personal-service income. The Department held that authorship - including newspaper column and freelance writing - has been consistently treated as the '…
New York Advisory Opinion TSB-A-81(10)I: Can a professional pilot deduct the cost of a flight-school course that qualified him to fly a new type of aircraft, as a New York itemized deduction?
Yes. The Department held that a commercial pilot's course qualifying him to operate a Boeing 727 - a new type of aircraft he wasn't previously licensed to fly - was a deductible business expense becau…
Does a New York jeweler have to collect sales tax on jewelry sold to foreign customers who are only temporarily in the United States?
The in-store sale is taxable — an export exemption applies only if the goods are shipped abroad through a carrier. F. Staal, Inc., a Fifth Avenue jeweler, asked about sales of jewelry to foreign custo…
Is a solar hot-water heating system taxable when it's installed for the property owner, when it's leased, and when it's sold uninstalled?
It depends on how it's provided. American Sunsystems asked about three ways of supplying solar hot-water heating systems. (1) Installing a system for the owner of the real property is a capital improv…
Does a tax-exempt organization have to collect sales tax when it sells books and tapes from a display table at its monthly meetings?
Yes — those sales are taxable. Women's Aglow Fellowship (Elmira Chapter), a § 1116(a)(4) exempt organization, bought books and tapes from its national body and sold them from a display table at its mo…
Is a contractor's charge for temporary electrical service to power a construction site until the permanent system is installed subject to sales tax?
Not taxable — it's part of a capital improvement. Industrial Power and Light Corporation installs 'temporary electrical services' (a temporary fuse box or circuit breakers, fed through a meter) to pow…
A New York savings bank plans to form a single-purpose financing subsidiary -- limited by its charter to buying mortgages from the bank and issuing mortgage-backed bonds against them -- and wants to include that subsidiary in its Article 32 consolidated banking-corporation tax return. Does the subsidiary qualify?
No. The National Savings Bank of the City of Albany, a New York-chartered Savings Bank governed by Banking Law Article 6, planned to form a subsidiary whose sole authorized purpose (fixed by an unamen…
A foreign holding company owns 100% of two operating subsidiaries based in New York City, but has no employees, office, property, or bank accounts of its own in New York, doesn't lend to or guarantee loans for its subsidiaries, and is run entirely by non-resident directors from abroad. Its only New York-resident officer is an unpaid, powerless secretary, and its books and records happen to be kept in New York City by outside lawyers and accountants. Does any of this create New York franchise tax nexus for the parent holding company itself?
No nexus. Noga Holding (USA), Inc., a Delaware corporation wholly owned by a non-U.S. parent, owns 100% of two other Delaware corporations that are themselves engaged in business in New York City. Nog…
A New York subsidiary borrows from its foreign parent rather than an unrelated bank, because the parent can itself borrow more cheaply and re-lend on better terms than the subsidiary could get directly. If the parent's own loan came from a genuinely unrelated third-party lender and was re-lent essentially unchanged to the subsidiary, can the subsidiary's interest deduction escape the section 208.9(b)(5) related-party interest add-back as a mere pass-through, even though section 208.9(b)(5) does not spell out any such exception on its face?
Yes, according to this 1981 ruling -- but this answer was formally revoked two years later. The Department told Kowa Realty (America), Ltd. that interest paid to its foreign parent (Kowa Real Estate I…
A parent corporation and two of its subsidiaries are each separately certified (or in the process of being certified) as eligible for the Article 9-A eligible business facilities credit. Can the parent compute and claim that credit on a combined basis across all three corporations, or must each corporation compute its own credit separately using its own certificate?
Each corporation must compute the eligible business facilities credit separately, based on its own certificate of eligibility -- there is no combined-basis computation unless the corporations are actu…
How did New York's production exemptions apply, over time, to a New York City manufacturer's purchases of tools, supplies and welding gases — and did the city tax still apply?
State-exempt (phased in), but always subject to the New York City tax. World Display Fixtures, a New York City manufacturer of store display fixtures, asked how tax applies to its tools, supplies and …
Does Conrail, a private company running MTA commuter lines under contract, owe New York sales and use tax on its purchases for those lines — as the MTA, its agent, or on its own?
Conrail was taxable on those purchases until a federal law exempted it in August 1981 — and even then only from State, not local, tax. Consolidated Rail Corporation (Conrail), a private for-profit com…
A bank holding company plans to relocate its operations to New York and start doing business there, which would otherwise make it subject to New York's general corporate franchise tax. It wholly owns a commercial bank subsidiary that is taxable under Article 32 (the Banking Corporation Franchise Tax). Can the holding company instead get permission to file a single consolidated Article 32 return together with its bank subsidiary?
Yes -- assuming the stated facts hold, the Department committed in advance to grant permission for a consolidated Article 32 return. Natwest Holdings, Inc. planned to relocate to New York and begin do…
When an energy system is installed under a title-retaining lease with a purchase option, are the payments taxable as a lease or exempt as a capital improvement?
The lease payments are taxable; only the eventual buyout is a capital improvement. Hershey Enterprises designs and installs energy-conservation control systems, and under its 'Fuel Savings Participati…
Are a research firm's customized audience-estimate reports a taxable information service, and does it matter whether they reuse the firm's shared survey data?
It splits two ways, based on whether the underlying data is reused. Arbitron, a survey research company, prepares customized (non-syndicated) audience estimates for individual broadcaster and advertis…
Are diagnostic test kits sold to hospitals, labs and physicians exempt as 'drugs and medicines,' even though they're used on body fluids rather than on the body itself?
They're taxable medical supplies when sold to paid medical providers. Pharmacia, Inc., an out-of-state vendor, sold diagnostic kits (chemical solutions such as insulin, digoxin and ragweed extracts, p…
Is a bank taxed on on-line computer services that maintain its own depositor accounts, loans and internal reports?
It shouldn't be taxed — and the bank can claim a refund or credit. Oswego County Savings Bank bought on-line computer services from a service center to maintain its depositors' savings accounts, consu…
Does a nonprofit that sells a fundraising cookbook from a temporary sales table set up regularly during its season have to collect sales tax?
Yes — those cookbook sales are taxable. The Rochester Philharmonic Orchestra, a § 501(c)(3) organization, planned to sell a volunteer-compiled fundraising cookbook from a temporary sales table set up …
Is a fraternal organization like the Grange exempt from New York sales tax on meals and hotel rooms it buys for its meetings?
No — the Grange must pay the tax. The New York State Grange (Patrons of Husbandry) and its subordinate Granges asked whether they are exempt from sales tax on meals (§ 1105(d)(i)) and hotel rooms (§ 1…
Is a transfer of assets from a subsidiary to its parent company subject to New York sales tax when it is booked as an intercompany account receivable?
Yes — the transfer is taxable. The Augsbury Corporation, a wholly owned subsidiary, transferred fixed assets (primarily a corporate aircraft) to its parent holding company, The Augsbury Organization (…
A manufacturer's representative with its only office in New York earns commissions on sales of a New York manufacturer's goods, some of which are ultimately shipped to customers outside New York. For purposes of the Article 9-A receipts factor, are those commissions allocated entirely to New York, or only allocated based on where the underlying goods end up?
All of the commissions are allocated to New York, regardless of where the sold goods are ultimately shipped. Carroll McIntosh Metro Sales, Inc., a manufacturer's representative whose sole office was i…
Are barges (scows) that carry cargo mostly through other states' waters exempt from New York sales and use tax as commercial vessels engaged in interstate commerce?
Yes — the barges and services on them are exempt. Lone Star Industries planned to have a new subsidiary carry crushed stone and sand by scow (barge) from New York plants on the Hudson to piers in New …
Does a New York precious-metals broker have to collect New York sales tax on bullion it brokers or sells to New York customers, including drop-shipments from an out-of-state supplier?
Yes — as broker or seller, the petitioner must collect the tax unless it holds a valid certificate. Buffalo Refining Associates brokered and sold precious and strategic metals (bullion, coins, ingots)…
Is a manufacturer's computer system exempt from New York sales tax under the production-machinery exemption when it is used mostly to track and route product through the plant?
No — the computer is taxable. Spence Engineering Co., a maker of automatic temperature and pressure regulating valves, bought a computer system it said would be used about 60% to route product through…
Does a caterer owe sales tax on tableware it rents to use in serving meals, even though it collects tax from customers on the full price of the catered meals?
Yes — the caterer owes tax on the rented tableware and must still charge tax on the full meal price. Gates Circle Realty Corp., a caterer, rented plates, cups, glassware, flatware and similar items to…
Is food sold to nursery, kindergarten, elementary or secondary students at a school cafeteria on the premises subject to New York sales tax?
No — the school-cafeteria meals are not taxable. Potsdam Auxiliary and College Educational Services, Inc. runs the food service at the State University College at Potsdam, whose Campus Learning Center…
Can a vehicle-rental company buy parts, repairs and fuel for its rental fleet tax-free with a resale certificate, and what happens if a supplier won't accept the certificate?
The purchases are for resale and tax-free with a resale certificate — but a supplier isn't required to accept the certificate. Migay Trucking Corp. builds, maintains and rents out vehicles, earning in…
Is the sale of a business's customer list subject to New York sales tax?
Yes — the sale of the customer list is taxable. Troiano Fuel Oil Co., a retail heating-oil distributor, sold a list of the customers it had sold fuel oil to over the prior year, arguing the informatio…
Is a fast-food restaurant a 'manufacturer' entitled to the production exemption on the utilities and equipment it uses to prepare food?
No — preparing restaurant food isn't manufacturing, so most of the utilities and equipment are taxable, but bulk ice cream is a carve-out. Tri City Desserts runs a fast-food operation: it makes soft-s…
Does a local-transit bus company owe sales tax on the buses, radios, fuel and parts it buys under a county transit contract — or is it exempt?
The bus company isn't exempt, but it can claim a § 1119(b) refund or credit scaled to its local-transit mileage. Louis A. Fuoco Bus Line, a local transit operator, asked about sales tax on five mini-b…
If a contractor accepts a customer's exemption certificate in good faith, can New York later recover the uncollected sales tax from the contractor?
No — a good-faith certificate protects the contractor from the uncollected tax, but two big caveats remain. Harron's Electric Service, an electrical contractor, accepted from customers, in good faith,…
Are a foundry's machines that make its own sand molds and cores — and the energy to run them — exempt from New York sales tax as production equipment?
Yes — the mold-making machines and their energy are exempt (except in New York City). Frazer & Jones Co. manufactures mine roof (expansion) supports by pouring molten metal into sand molds, and makes …
My New York corporation is being acquired: 85% of the stock is being sold directly to the acquirer under separate stock purchase agreements (with some signing and delivery steps happening in New York and some out of state), and the remaining shares will be cashed out in a follow-on merger through paying agents, one in California and one in New York/New Jersey. Which of these steps trigger New York's Stock Transfer Tax, and does it matter where each individual step in the transaction physically happens?
It depends on where each specific step physically happens -- New York's Stock Transfer Tax attaches if ANY ONE of several taxable events (the sale, the agreement to sell, the delivery of certificates,…
Are installed wood/coal stoves, fireplace inserts, boilers and solar energy systems capital improvements that escape New York sales tax?
It depends on what's installed: free-standing stoves and inserts are taxable, while a permanently connected boiler or solar system is a capital improvement. M & C Stove World sells fireplace inserts, …
Which of a photographer's purchases and charges — film, chemicals, equipment, printing, framing, sitting fees — are subject to New York sales tax?
It splits by activity: printing is taxable production, but production equipment can be exempt and the materials resold with the photos can be bought for resale. Victor LaSala, a photographer and photo…
Are adjustable beds bought with a doctor's prescription exempt from New York sales tax as medical equipment?
No — the beds are taxable even with a prescription; only the specialized medical attachments are exempt. Craftmatic Comfort Manufacturing asked whether its adjustable beds sold March 1, 1978–February …
Can a contractor buy dynamite tax-free because it's used to blast a construction site for a tax-exempt organization's project?
No — the dynamite is taxable. F.G. Compagni Construction, which performs capital-improvement contracts for exempt organizations, argued that dynamite and caps used for site-preparation blasting are co…
Does the owner of school buses have to collect sales tax when leasing them to a transportation company that will use them to serve exempt schools?
Yes — the owner must collect sales tax on the lease. Barry Arnold owns school buses and wanted to lease them to a New York transportation corporation that would use them to serve New York City schools…
In a multi-party drop-shipment, must a registered manufacturer collect New York sales tax when it ships goods to a New York customer at another party's direction?
Yes — the manufacturer must collect the tax because it delivered the goods in New York and got no certificate. Sterling Electric, a California electric-motor maker registered to collect New York sales…
Does a company owe New York sales tax on an information service sold to a New York customer but delivered out of state to a third party the customer designates?
No — because the service is delivered outside New York, no New York tax is due. Hooper Holmes, a New Jersey company, processes information for 'B', a New York corporation — a service that would be tax…
Does a manufacturer have to collect New York sales tax when it fills an out-of-state company's order by shipping the goods to that company's customer in New York?
Yes — the manufacturer must collect the tax because delivery is in New York and it holds no certificate. Ketchum Manufacturing receives a purchase order from an out-of-state company, fills it, and shi…
Is a manufacturer's chip-filtration and cooling system exempt from New York sales tax as production equipment?
Yes — the filter system is exempt production equipment. Cummins Engine Co. manufactures diesel engines and uses a central filtration and cooling system with its machining equipment. The Department hel…
Does a customer's letter saying it doesn't want to be charged sales tax relieve a vendor of collecting the tax?
No — a customer's letter doesn't relieve the vendor; only a proper certificate does. Mohawk Dental Supply Company sells taxable and non-taxable items to dental laboratories. Some labs sent letters say…
Are a lease's cancellation fee and transportation charges taxable when the leased property was damaged en route and never entered New York?
No — because the property never entered New York, no tax is due, including on the cancellation fee and transportation charges. Airway Services agreed to lease a mobile passenger lounge (a large non-hi…
I sold a mixed-use building (a tavern with apartments upstairs, six units total or fewer with separate kitchens) and took back a purchase money mortgage from the buyers. Do I, as the seller/mortgagee, or the buyers, as the mortgagors, owe the special additional mortgage recording tax?
The mortgagee (seller) is liable. Lawrence Harper sold a building in the village of Greene, Chenango County -- a structure with a tavern, dining and pool-table rooms, a kitchen, a one-car garage, and …
Can a soft ice cream stand claim the production exemption on the electricity used to make and store its ice cream?
Mostly no — electricity for cones, sundaes and shakes is taxable; only the power used to make bulk ice cream qualifies. A soft ice cream stand (through its CPA, Herman H. Gerstman) asked whether elect…
Is sales tax due on the artwork, printing and mailing services for a free company magazine, and does it matter whether copies are mailed by the printer or distributed by the company itself?
Yes, it's taxable — but the tax follows where the copies go. Carrier Corporation asked how sales tax applies to the art, printing and distribution services for 'Carrier World,' a magazine it planned t…
Does laboratory testing and quality-control equipment used during steel production qualify for New York's manufacturing exemption, even if it sits in off-line labs?
Yes — the testing equipment qualifies for the production exemption. Al Tech Specialty Steel Corporation uses laboratory equipment at its two plants, more than 50% of the time, to chemically analyze mo…
Can a monument and memorial maker buy its tools, parts and supplies tax-exempt under the manufacturing exemption, and does it matter whether it also installs the monuments?
It depends on what the monument builder mainly does. The New York State Monument Builders Association asked whether the parts, tools, equipment and supplies used to produce monuments and memorials are…
Is a hospital linen-supply company's service an exempt laundering service, so that it owes sales tax on the linens it buys to furnish that service?
Yes — the service is exempt laundering, so the company pays sales tax on the linens it buys. Linen Systems for Hospitals furnishes and regularly launders bed, surgical, infant, apparel and kitchen lin…
Are the replacement parts for a ready-mix concrete mixing unit exempt from sales tax, and is the rental of trucks hired to deliver the concrete taxable?
Partly — the mixing unit is exempt, but the truck under it isn't. Gilford Construction Corporation makes ready-mix concrete in mixing units mounted on truck chassis and asked about (1) replacement par…
Must an out-of-state mail-order business with no offices, employees or agents in New York — soliciting only by catalog — register as a vendor and collect New York sales tax?
No — on these 1981 facts, the out-of-state mail-order company had no duty to collect New York tax, but that rule has since changed. Spiegel, Inc., an Illinois mail-order retailer, had no place of busi…
Are a contractor's charges for hauling away debris from demolition and construction sites subject to New York sales tax?
Yes — construction debris removal is a taxable service. Young Contracting Corp. had been collecting sales tax on charges for removing debris from demolition and alteration sites, then heard from custo…
Is the sale and installation of energy-saving 'window quilts' a tax-exempt capital improvement, or is the full installed charge taxable?
Yes — the entire installed charge is taxable. David W. Sprague sells and installs 'window quilts,' custom-cut insulating window coverings attached with nails, screws or glue, with a 15-year life and e…
How does New York's compensating use tax apply to the equipment, supplies, component materials and packaging a rubber printing-plate manufacturer uses?
Mostly exempt — only the billing invoices are taxable. Colby Engraving and Rubber Plate Corp. makes rubber printing plates to customer specifications and asked how the compensating (use) tax applies t…
Can a keypunch service rent its keypunch machines and buy its keypunch cards without paying sales tax, when the finished cards are delivered to customers?
Yes to both — the machines and the cards can be obtained tax-free. Benjamin Swartz runs a keypunch service that predominantly uses keypunch machines to produce keypunched cards, which it delivers to i…
Are receipts from renting movies taxable, and is a membership fee that only buys the right to rent at a discount subject to sales tax?
Movie rentals are taxable; the membership fee was held not taxable in 1981 — but that second holding was later reversed. Norman Eiger planned a movie-rental store where customers paying a membership f…
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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.