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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Is natural gas converted by a supermarkets fuel cell to electricity exempt from sales tax?
Partly. The supermarket does production activities (baking, cutting/packaging meat, slicing deli items) and sells those goods, so it produces tangible personal property for sale. Gas, electricity, and…
Can manufacturing production-control software be sold tax-free as machinery used directly in production or in research and development?
No. The software lets manufacturers quote prices, process orders, schedule jobs, control materials, track labor, and ship orders -- coordinating and monitoring the production process. But it does not …
Is a company that applies coatings to manufacturers' parts a 'producer,' and is its coating equipment and fuel exempt from sales tax?
Yes, with conditions. Applying coatings that change the nature of a customer's parts is 'processing,' and the coater is engaged in production for sale -- as long as the coated parts are, or become a c…
Which solar-farm equipment, installation, and warranties are exempt from NY sales tax when the facility generates electricity for sale?
Equipment used directly and predominantly to generate electricity for sale is exempt under Tax Law 1115(a)(12)/1105-B, and the production process ends at the inverter. Exempt: solar panels, racks, com…
Is BP's construction of a wind farm on leased land a capital improvement, and which equipment is exempt?
No, it's not a capital improvement. Because BP installs the equipment on leased land under a lease that keeps title with BP, lets BP move/replace/refurbish it, and requires BP to remove everything (in…
Which wind-farm components and construction services qualify for New York's exemption for electricity-generation machinery?
A commercial wind farm generating electricity for sale is an eligible production activity, so the wind turbines -- rotor blades, hub, nacelle, and tower as a unitary machine -- plus integrally connect…
Are a photo-shoot company's sales and the props, equipment, and services it buys subject to sales tax?
It depends on how the photo is delivered. Photographs delivered on tangible media (disc, print, flash drive) in New York are taxable; photographs delivered electronically are not taxable. Because all …
Does equipment used in a flywheel energy-storage facility that helps stabilize the electrical grid's frequency qualify for New York's sales tax exemption for machinery used to produce electricity for sale?
No. Equipment in a flywheel-based frequency-regulation facility does not qualify for New York's production exemption because it stores and returns electricity generated by others rather than generatin…
If I resell a product that arrives partly cooled or degraded and I use fuel and electricity to restore it to a saleable condition before delivery, do those utility purchases qualify for New York's production exemption?
No. Fuel oil and electricity used to reheat previously-manufactured liquid asphalt so it can be stored and delivered are taxable, because reheating for storage and delivery is a post-production, distr…
Does a conveyor that moves wet concrete aggregate from inside a plant to outdoor stockpiles, where it continues drying before sale, qualify for New York's production-equipment sales tax exemption?
Yes. Because the wet aggregate keeps drying to meet sale specifications after leaving the plant, the conveyor moving it to the stockpiles is still part of production, so it qualifies for the productio…
Does a construction-debris recycler's rock-crushing machine qualify for New York's production-machinery sales tax exemption?
The rock crusher can qualify for the production-machinery exemption, but only if the recycler can show that more than 50% of its use processes construction debris into materials that are actually sold…
Do a railroad-debris salvage company's sorting equipment, rock crusher, tie-assembly operation, and highway trucks qualify for New York's production-machinery sales tax exemption?
It depends on the equipment and activity: merely sorting and segregating usable from unusable salvaged railroad ties and scrap steel is NOT exempt production, but assembling new railroad ties for sale…
Is cable sold to a wind farm developer exempt from New York sales tax as production machinery, or taxable as a contractor purchase?
Taxable. Because production of electricity ends at the generator, cable that carries the electricity from wind turbines to a substation is used in distribution rather than production, so it doesn't qu…
We refine raw sugar into crystal sugar and liquid sucrose, using an on-site power plant fueled by heating oil to generate steam and electricity for the process. Are we a 'petroleum business' subject to New York's Petroleum Business Tax just by using heating oil, and does that heating oil qualify as tax-favored 'manufacturing gallonage'?
Not a petroleum business, but partly liable for the tax anyway on non-production fuel use. American Sugar Holdings, Inc. produces crystal sugar and liquid sucrose from raw sugar at its Yonkers facilit…
Does a contractor installing underground high-voltage electric cable and related equipment for a utility owe New York sales tax on the materials it buys for the job?
Mostly yes -- because installing the cable, conduit, and related utility equipment is a capital improvement to real property (so the contractor's charge to the utility isn't taxable if it gets a Certi…
Does a fire-protection installation contractor owe sales tax on the labor portion of components fabricated for it by a commonly owned sister company?
Yes -- even though the two companies share the same two owners, officers, and workplace, because each maintains its own employees, payroll, books, and sales tax registration, they're treated as genuin…
Are a dental laboratory's charges to dentists for bite blocks, models, and impression trays used to make dentures, crowns, and bridges subject to New York sales tax?
No -- because dentures, crowns, bridges, and similar prosthetic devices are exempt prosthetic aids, and the bite blocks, models, and impression trays are really just tools the lab uses (and bills as l…
Does a coating company that processes its customers' tools and precision components for them qualify as a 'producer' entitled to New York's production exemption on its own machinery, tools, and utilities?
Yes, but only to the extent its work is really part of its customer's manufacturing process -- because the company's coating work changes the nature of its customers' tools and components (harder, mor…
In a chain of landlord, tenant, and sub-tenant manufacturers sharing one electric meter, who owes sales tax on the electricity, and does any of it qualify for the manufacturing production exemption?
It depends on how precisely the electricity is measured and billed. A landlord or master tenant who sub-meters and bills a sub-tenant for its ACTUAL usage is making a taxable resale of electricity and…
Which of a video/audio advertising production company's many line-item charges (scriptwriting, shooting, editing, studio rental, tangible media) are taxable to its clients, and which of its own production purchases qualify for exemption?
It depends on delivery format and purchase category. Selling a finished commercial on tape, CD, or other physical media is a fully taxable sale of tangible personal property — and every itemized produ…
When two commonly owned manufacturers share one unmetered facility and one pays 'rent' to the other for a share of the electric bill, is that charge a taxable utility resale, and does the manufacturing exemption still apply?
The landlord company's charges to its tenant company for a square-footage-based estimate of electricity usage are NOT a taxable utility resale — since there's no separate meter measuring the tenant's …
Can a toll galvanizing processor buy forklifts, forklift repairs, and forklift fuel tax-free when the forklifts move customers' steel between storage, the galvanizing plant, and shipping?
It depends on which part of the forklift's job you're looking at. A toll processor (like a galvanizer working on a customer's own steel) still counts as 'producing tangible personal property for sale'…
Does a media/PR company owe New York sales tax on its fees for producing and distributing news stories, satellite/wire transmissions, and other media-relations services to news outlets?
No, in general — producing and placing news stories, video and audio features, satellite media tours, and similar public-relations services with news outlets is treated as a form of advertising, which…
Can a company that designs, builds, and installs custom 'clean in-process' sanitary piping systems for food, beverage, and pharmaceutical manufacturers buy its machinery, tools, and supplies tax-free under New York's manufacturing exemption?
It depends on how the finished system is installed. If the completed CIP system retains its identity as tangible personal property once installed at the customer's plant (not a capital improvement to …
Can a diesel-engine manufacturer get back the New York petroleum business tax it paid on kerosene and No. 2 fuel oil used to run and test the engines it makes, when none of the fuel is used on the highways?
Yes, potentially — if the engine testing is part of the production line and the fuel is unenhanced diesel used entirely in production, the fuel is 'manufacturing gallonage' eligible for reimbursement …
Which of a semiconductor/automotive-electronics factory's specialized production support systems (compressed air, vacuum, nitrogen, hydrogen, cooling water, exhaust, and clean-room HVAC) qualify for New York's manufacturing exemption on equipment, parts, maintenance, electricity, and water?
Most of the specialized systems qualify, but the general climate-control system does not. Motorola's Compressed Air, Vacuum, Nitrogen, Hydrogen, Process Cooling Water, and Exhaust systems all act dire…
Does New York's sales-tax exemption for manufacturing/production equipment cover the equipment, materials, and supplies bought to build a sewage treatment plant that will be dedicated to a county government once finished?
No. Materials, equipment, and supplies purchased to construct a sewage treatment plant are not exempt under New York's production exemption, because neither the developer building the plant nor the co…
Do a home-improvement retailer's cardboard baler and its in-store lumber, pipe, and flooring cutting machines qualify for New York's manufacturing/production sales tax exemption?
No, none of them. Lowe's cardboard baler/compactor doesn't qualify because Lowe's isn't producing anything for sale with it — it just compacts scrap for a hauler to remove and later resell. The saws a…
Does equipment used to inspect, repair, rebuild and repaint used shipping pallets qualify for the production-machinery sales tax exemption or the investment tax credit as manufacturing?
No. A pallet-pooling company's automated inspection, repair/rebuild and painting/stenciling of used industry-standard pallets is repairing and reconditioning previously manufactured pallets, not the p…
Does New York sales tax apply to a recording studio's ISDN transmission of radio commercials, studio rental time, hook-up fees, or backup dubs?
Mostly untaxed, with two exceptions: transmitting finished radio commercials by ISDN to out-of-state destinations is a nontaxable interstate service (and its hook-up fee rides along untaxed), and bare…
Are an auto club's member Triptiks, maps, tourbooks, and membership kits exempt from sales tax as promotional materials?
Mostly yes, with limits. An auto club's personalized Triptiks, maps, tourbooks, membership kits, and applications qualify as exempt promotional materials when mailed or shipped free of charge to membe…
Are the film and processing supplies used in coin-operated photo booths exempt from New York sales tax as production supplies?
Yes -- because the amusement park's photo booths develop the customer's own negatives and print the photographs from raw film and chemicals, the whole process counts as manufacturing tangible personal…
Is equipment used to make both soft-serve and prepackaged ice cream exempt from New York sales tax as production machinery?
It depends on which product the equipment makes -- machinery used more than half the time to produce prepackaged ice cream for sale (like Petitioner's hardening cabinet) can qualify for the production…
Are a pharmacy's printers, toner, and paper used to produce prescription labels and medical information pamphlets exempt from sales tax?
Yes -- because Petitioner's prescription drug labels and accompanying medical information pamphlets are critical elements of the medication product it sells (not just packaging overhead), the toner an…
Can a lawn care company buy the mixer drums, pumps, pulleys, chains and engine parts it uses to blend its own fertilizer tax-free as production machinery and equipment?
No -- a lawn care company's mixer drums, pumps, pulleys, chains and vehicle engine parts used to blend fertilizer are subject to sales and use tax (and so are repairs to them), because the fertilizer …
How does New York sales tax apply to a company that thermally treats and recycles contaminated soil -- on the processing charge, on transportation, on the treatment equipment and fuel, and on any reclaimed soil it later sells?
A company that thermally treats and recycles contaminated soil is performing a taxable processing service under Tax Law § 1105(c)(2) (not exempt waste removal), taxed on the full contract price includ…
Can a textile manufacturer buy the artwork and design mechanicals it uses to silkscreen or weave patterns into its products tax-free under the production exemption?
Yes -- artwork and design mechanicals a textile manufacturer buys and uses directly to silkscreen or weave patterns into products it manufactures for sale qualify for the production machinery and equi…
Which parts of a print-and-mail company's letter-printing and mailing service are taxable printing versus exempt mailing, and does the tax rate depend on where the letters are mailed to?
A company that prints and mails specialized notices and letters must charge sales tax on its printing of letters, envelopes and address labels (taxable under the printing/imprinting rules), but not on…
Is artwork a fabric manufacturer buys and scans to design a computer-generated weaving blueprint for upholstery fabric exempt from New York sales tax as production equipment?
Yes -- artwork a textile manufacturer purchases and scans into a computer to design a weaving blueprint for upholstery fabric qualifies for New York's Statewide production machinery and equipment exem…
Is an integrated CAD/CAM/CAE computer system used both to develop generic product designs and to configure specific customer orders exempt from New York sales tax as research and development or production equipment?
A fully integrated CAD/CAM/CAE hardware, software and maintenance system qualifies for the research and development exemption when used to create documented, generic marketable product designs, and se…
Is a manufacturer's purchase of source artwork (paintings, antique fabric swatches, or similar images) used to design a computer-generated textile pattern exempt from New York sales and use tax as production equipment?
Yes -- an upholstery fabric manufacturer's purchase of source "artwork" (a painting, antique fabric swatch, carved molding, or polished stone slab) that is scanned and used to design the computer-gene…
Is the electricity a paper mill uses to run dedicated air conditioning for rooms housing its production equipment's electrical controls exempt from New York sales tax?
Yes -- a paper mill's electricity used exclusively to run dedicated air conditioning systems that keep separate, restricted-access control rooms cool enough to prevent the electrical components (switc…
New York Advisory Opinion TSB-A-96(34)S: When a nonprofit cooperative housing corporation generates its own electricity and submeters it to residential and commercial tenants at cost, are those electric charges taxable utility sales, do residential tenants get a reduced rate, and can the co-op get a refund on the sales tax it paid for the fuel oil used to generate that electricity?
Yes, all three questions get detailed yes answers. Mutual Redevelopment Houses, Inc., a nonprofit cooperative, generates its own electricity and bills residential and commercial tenants separately fro…
Are recording tape and equipment rentals used to make promotional demo tapes taxable, or exempt as production equipment?
They are taxable. An artist-promotion company bought recording tape and rented equipment to make demonstration tapes it sent free to record companies. Buying tape and renting equipment are taxable ret…
How does New York sales tax apply to selling, leasing, and using a medical PAP-smear screening device and a slide-scanning service?
It depends on the transaction and delivery point. Selling or leasing the 'Classifier' device to a New York laboratory that uses it in performing medical services for compensation is taxable, because t…
Can a printer buy its machinery, equipment, and supplies tax-free under the production exemption?
Only when it uses them to produce its own goods for sale. If a printer uses machinery, equipment, and supplies directly and predominantly (more than 50%) to produce printed matter that it will sell --…
Is renting out a topsoil-screening machine subject to sales tax, or exempt as production equipment?
It can be exempt, but only in specific circumstances. Renting a 'power screen' topsoil-screening machine is normally a taxable retail sale under Tax Law sections 1101(b)(4), 1101(b)(5), and 1105(a). H…
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…
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…
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 cranes and equipment a contractor buys to install a gas pipeline and electric distribution grid for a utility exempt from New York sales tax as production machinery?
No. Bancker Construction Corp. bought heavy cranes to help install a gas pipeline and an electrical distribution grid for Long Island Lighting Company (LILCO). It asked whether that equipment qualifie…
For gas producers, are meter-maintenance and meter-installation fees taxable, and are chart-integration services (personalized well analyses) taxable?
The meters qualify for the production exemption, and the well reports are a nontaxable personal information service. The Independent Oil & Gas Association of New York asked about three charges its mem…
Does machinery a recycler uses to process construction debris into new products qualify for New York's production exemption?
Only the machinery used mostly to make products that are actually sold qualifies. Vigliotti Recycling Corp. accepts mixed construction and demolition debris for a fee and converts it into wood chips, …
Is the sale and installation of power-grid equipment for an electric utility taxable when the seller never received an exemption certificate from the utility?
Yes — the seller must collect tax on the entire sale-and-installation charge because it never received an exemption certificate. ABB Power Transmission, Inc. sold and installed a Static Var Compensato…
Do a window-and-door distributor's fabrication operations qualify its machinery for the manufacturing (production) exemption?
Yes — its production machinery qualifies for the exemption. RyTown Millwork, Inc., a distributor of windows and doors that sells to builders and contractors but does no installation, asked whether its…
May a lessor buy a CAT-scan machine for resale, and are its lease charges exempt under the production exemption?
The machine can be bought for resale, but the lease charges are not production-exempt. Segal Equipment Associates owns a CAT-scan machine it leases monthly to a corporation that uses it to produce dia…
Are wheelchair wheel covers exempt as medical equipment, and are the maker's production and subcontracting costs also exempt?
Yes — the covers are exempt, and so are the related production costs. New Directions International Inc. manufactures plastic wheelchair wheel covers that clip over the spokes to keep the occupant's fi…
Is a machine used to master compact discs exempt production equipment, and does it matter whether the discs are made for sale?
It is exempt when used to produce discs for sale, and the for-sale requirement is decisive. Script Systems, Inc. makes a compact disc-interactive 'Authoring System' that records video, audio, and text…
Is a design change to a printing press taxable, and does it matter whether the change happens before or after the press is delivered to the customer?
It depends on timing: a design change made before the press is delivered is exempt, but one made after delivery is a taxable repair subject to local (but not state) tax. William R. Barlow sells printi…
Does laboratory furniture used to test incoming electronic equipment for quality control qualify for New York's research-and-development or production machinery sales-tax exemption?
No — it qualifies for neither exemption, so it's taxable. Grumman Aerospace Corporation bought laboratory furniture (work stations, multi-wired legs, pedestals, etc.) for its avionics lab, where it te…
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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.