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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For a large Manhattan health club charging an initiation fee plus per-service fees for personal training, sports leagues, child care, and locker rentals, which specific charges are subject to New York State or New York City sales tax?
Most of the club's fees -- initiation, dues, personal training, workshops, sports leagues, private lessons, guest fees, child care, and lost-card replacement charges -- are not subject to sales tax at…
For a large health club charging an initiation fee plus per-service fees for things like personal training, spa treatments, child care, and locker rentals, which specific charges are subject to New York State or New York City sales tax?
Most of the club's fees -- initiation, dues, personal training, workshops, sports leagues, private lessons, guest fees, child care, and lost-card replacement charges -- are not subject to sales tax at…
Can a newly formed manufacturer that acquires a related company's New York operations qualify as a QEZE for the real property tax credit, wage credit, investment credit, and sales tax exemption?
Partly. Assuming Empire Zone certification, the company can claim the QEZE real property tax credit, the Empire Zone wage credit, and the EZ investment credit. But because it is substantially similar …
If an airport parking company also drives customers to and from the airport, can it split its charge into a taxable parking portion and a separate, nontaxable transportation portion?
No. Because the parking company never sells transportation independently of parking, its entire combined charge is a taxable parking charge, not a partly-exempt allocation.
Is glass-bottled spring water sold under a physician's prescription exempt from New York sales tax as a drug, medicine, or health-preservation product?
No. New York taxes bottled water regardless of container, and a physician's prescription for chemically sensitive patients doesn't turn spring water into an exempt drug, medicine, or health-preservati…
Are purely financial 'virtual' electricity trades in the NYISO wholesale market subject to New York sales tax on electricity, and does a virtual-only trader have to register as a sales tax vendor?
No. Virtual transactions in NYISO's market are purely financial and never involve actually generating, delivering, or consuming electricity, so they aren't taxable sales of electricity or electric ser…
Are a private golf and country club's dues, initiation fees, and add-on charges (locker, bag storage, tournament, etc.) taxable, even though its members don't run the club or control its activities?
Yes. Requiring every homeowner in the club's surrounding community to join as a condition tied to owning a home is itself a membership restriction, which makes the club a taxable social or athletic cl…
Are a billboard-advertising company's charges to clients, its poster-printing costs, its installer's charges, and its billboard-space fee subject to New York sales tax?
The company's fee to its clients for arranging billboard advertising is exempt as an advertising service, but the company itself owes tax on its own poster-printing purchases and its installer's and b…
How does a New York S corporation figure out how much of a nonresident shareholder's income counts as New York source income?
The source of a New York S corporation's income, gain, loss, and deduction items is determined at the corporate level, using the same business allocation percentage and investment allocation percentag…
Does a New York LLC that is taxed as a partnership and formed only to trade securities for its own account have to pay the annual LLC filing fee under Tax Law § 658(c)(3)?
No. Because the LLC's only activity is buying and selling securities for its own account - not holding property for sale to customers - Tax Law § 631(d) means it is not carrying on a business in New Y…
Is a New York resident's distribution from an out-of-state 529 college savings plan subject to New York State personal income tax if it's used for qualified tuition expenses?
No. Because the distribution qualifies as a federal tax-free withdrawal under IRC § 529(c) and no Tax Law § 612 modification requires adding it back, the entire distribution - including earnings - pas…
Can a property owner get a New York sales tax refund on building materials used to rehabilitate a building that's part qualifying commercial space and part nonqualifying residential space in an Empire Zone?
Yes, but only for the commercial portion. The sales tax refund on building materials should be allocated between the qualifying commercial space and the nonqualifying residential space by any reasonab…
When a computer consulting firm sells hardware, prewritten software, installation, and consulting together in one deal, which pieces are taxable and which are exempt?
Hardware and prewritten software sales, and hardware installation/repair, are taxable; computer consulting and software-only services (troubleshooting, reconfiguring, custom coding) are exempt only if…
When an out-of-state company uses an unrelated fulfillment provider that leases a warehouse from the company's affiliate, is that warehouse the provider's 'premises' so the fulfillment-services exemption protects the company?
Yes for the user, no for the owner. A warehouse an affiliate leases to an unrelated third-party fulfillment provider is treated as the provider's 'premises,' so the out-of-state company using those fu…
If a sightseeing cruise ticket bundles in a meal that can't be purchased separately, can the operator allocate the price between an exempt cruise portion and a taxable meal portion?
No. Because the meal isn't merely incidental to the cruise, the entire combined charge for a cruise-with-meal package is taxable as a restaurant sale, and splitting the price between cruise and meal d…
A 62-year-old homeowner took out a federally-insured HUD reverse mortgage (HECM), but years earlier had deeded the property to family members under 60 while keeping a life estate for herself. Because title is held by people who don't meet the state's own age-60 reverse-mortgage rules, does the mortgage still qualify for New York's reverse mortgage exemption from recording tax?
Exempt. A 62-year-old borrower obtained a Home Equity Conversion Mortgage (HECM) reverse mortgage -- a federally insured HUD program under 12 U.S.C. section 1715z-20 -- secured by her single-family Ne…
Can a financial data provider buy servers and routers tax-exempt as 'purchases for resale' when it separately charges customers an additional fee to use that equipment alongside its data-feed service?
Yes. Because the equipment is optional, not required to access the underlying data service, and separately and reasonably billed, providing it for an extra fee is a genuine equipment rental to the cus…
As a follow-up to an earlier ruling on my Cultural Resources Trust condominium conversion (Title Conveyance, Leaseback, Reversion), I now need to split my existing $365 million Wachovia mortgage across two new condominium units and spread part of it to cover the leaseback and a future 'springing' affiliate lease -- with no new borrowing, just restructuring the existing debt. Do these mortgage split, modification, and spreading steps trigger New York's Mortgage Recording Tax, and does my earlier RETT exemption still hold with this added mortgage detail?
Both confirmed exempt. This is a follow-up petition to the same taxpayer's earlier ruling (TSB-A-07(1)R) on converting a Manhattan office building into a two-unit condominium (a 'Channel 13 Unit' leas…
After a corporate reorganization splits a natural-gas compression business into equipment-owning partnerships and customer-facing service entities, is the customer's charge a taxable equipment rental or an exempt service, and are the internal compressor transfers taxable sales?
The customer-facing compression charge is an exempt service, not a taxable equipment rental, because the operating company keeps dominion and control of the compressors; the equipment transfers into t…
Does installing a gas stove that requires building a new chimney and adding new gas and electric lines qualify as an exempt capital improvement rather than a taxable installation service?
Yes. Because the installation required a new chimney (cutting a hole in the roof) plus new gas and electric lines rather than simply plugging in an appliance, the whole project is a capital improvemen…
Can a New York taxpayer subtract military active-duty pay and a related state-employer supplement from federal adjusted gross income under Tax Law section 612(c)(8-b)?
No. Section 612(c)(8-b) only lets members of the New York State organized militia (Army/Air National Guard, inactive National Guard, Naval Militia, and the New York Guard) subtract active-duty pay. Be…
Is a construction subcontractor on a project for a foreign government's UN mission exempt from New York's tax on independently procured insurance from an unauthorized insurer?
Not exempt - usually. A subcontractor that buys insurance from an unauthorized insurer for a foreign-mission construction project owes New York's Article 33-A tax on independently procured insurance, …
Are a nursing home's purchases of disposable adult diapers exempt from New York sales tax?
Not as medical supplies -- a for-profit nursing home is providing medical services for compensation, which disqualifies the medical-supplies exemption. But adult diapers still qualify for New York's c…
Is the fee to use a high-wire, zip-line tree-top adventure course taxable as an amusement admission, or exempt as a charge for a participant sporting facility?
Exempt. Because customers are active participants physically navigating zip lines, rope bridges, and obstacles themselves (not spectators), the charge is for use of a participant sporting facility, th…
Are prepaid cards sold at retail that let a customer download ringtones, wallpaper, and games to a cellphone taxed at the time the card is sold?
No, not at the time of sale. Like a gift certificate, the card's purchase isn't itself a taxable transaction -- tax is only due (if at all) when the customer redeems a credit for a taxable product, an…
Are purely financial 'virtual' electricity trades in NYISO's wholesale market subject to New York sales tax, and does a trader who only does virtual trades have to register as a sales tax vendor?
No to both. Virtual electricity transactions in NYISO's market are purely financial and never result in actual generation, delivery, or consumption of electricity, so they aren't taxable sales of elec…
Can medical practitioners purchase neck braces, knee braces, and similar devices tax-exempt as 'for resale' when they provide them directly to patients as part of treatment?
No. Because the practitioners provide these devices only in conjunction with their own paid medical services, not as a separate retail sale, their purchases of the devices are taxable -- they don't qu…
Is a tax-exempt nonprofit's charge for maintenance and repair services on low-income housing projects, billed to for-profit property-owning partnerships, subject to New York sales tax?
No. A section 1116(a)(4) exempt organization is not required to collect sales tax on its sales of maintenance and repair services, even though the property owner it bills is a separate for-profit enti…
We're a section 1411 not-for-profit local development corporation administering a federally-seeded revolving loan fund for Albany County businesses. Are the mortgages we take as collateral on our loans exempt from New York's mortgage recording tax?
Exempt. The Albany County Business Development Corporation is a not-for-profit local development corporation (LDC) incorporated under section 1411 of the Not-For-Profit Corporation Law, administering …
For an event-production company that rents AV/staging equipment and provides setup labor, planning, and decor services for corporate events, which charges are subject to New York sales tax?
Equipment rentals delivered in New York, and the labor to set up (install) that equipment, are taxable; a single combined setup-and-teardown charge is fully taxable too. But separately-priced equipmen…
For a company that licenses proprietary hardware/software to religious organizations, sells consulting, design, and web services, and lets the public download audio/video content, which parts of the business are taxable in New York?
The proprietary hardware/software package's monthly license fee is taxable prewritten software, and a bundled setup fee is taxable unless split from its nontaxable custom-programming portion; but genu…
Does an airline's baggage-handling-system renovation at its leased airport terminal, which becomes city property upon completion, qualify as a tax-exempt capital improvement, and how are the government's own security screening machines treated?
Yes, the baggage-handling system renovation is a doubly-exempt capital improvement (both as a capital improvement and as work on government-owned real property), so its labor and materials escape sale…
Is selling an alphanumeric code that lets someone download digital music -- whether the code is emailed or printed on a plastic card -- subject to New York sales tax?
No. A download code is treated like a gift certificate regardless of the physical medium used to deliver it, and the digital music itself is intangible property when downloaded electronically -- neith…
Is an email-marketing company's fee to run targeted email campaigns for clients subject to New York sales tax?
The company's charges to clients for running targeted email marketing campaigns are exempt as nontaxable marketing services (not information services), but its own purchases of the databases used to r…
Is an out-of-state company subject to New York's corporate franchise tax when its only New York activity is delivering equipment it sold, including occasional deliveries in its own truck?
No. An out-of-state party-equipment seller whose only New York activity is delivering goods it sold - by common carrier or occasionally its own truck - is not doing business, employing capital, owning…
I own a Queens shopping center and want to ground-lease a small newly-created parcel (less than half the shopping center's total rentable space) to a new retail tenant for more than 49 years, with substantial construction planned but no purchase option. The lease easily clears two of the three tests for a taxable long-term lease -- but does the third test, requiring the lease to cover 'substantially all' of the real property, look at just this one parcel or at my entire integrated shopping center?
No RETT is due on signing this ground lease, because the relevant 'premises' for the 90% test is the ENTIRE integrated shopping center, not just the newly-created parcel. A shopping center owner in Qu…
The Department already issued an Advisory Opinion on my $1 sale-leaseback-repurchase structure for the Brooklyn Bridge Park redevelopment (TSB-A-06(3)R), which said the eventual assignment of my lease to the condominium's Board of Managers would automatically be taxed like a sponsor-to-cooperative-housing-corporation conveyance. On further review, does that specific conclusion still hold?
This is a MODIFIED Advisory Opinion, correcting one specific conclusion from the Department's original November 30, 2006 ruling (TSB-A-06(3)R) on the same facts -- everything else stays the same. Same…
Are enrollment fees for a private airport 'Registered Traveler' expedited-security program subject to New York sales tax?
No. Enrollment fees for a TSA-authorized Registered Traveler expedited security-screening program are not a taxable sale of tangible personal property or any enumerated taxable service, though the com…
Can the individual members of a religious or apostolic organization exempt under IRC section 501(d) claim a pass-through share of the organization's New York investment tax credits and other tax incentives?
No. Even though a section 501(d) organization files a federal partnership return (Form 1065) to report its common-treasury income, it remains a corporation, not a partnership, and Tax Law section 607(…
When a deceased parent's IRA is split equally between two beneficiaries, does each beneficiary get the full $20,000 pension and annuity income exclusion, or must they share a single $20,000 amount?
They must share it. Under 20 NYCRR 112.3(c)(2)(iv), the decedent's $20,000 annual pension and annuity exclusion is allocated among multiple IRA beneficiaries in the same ratio as the distribution is s…
Will adding another party - Queens West Development Corporation (QWDC) - to a brownfield cleanup agreement and Certificate of Completion jeopardize the brownfield tax credits otherwise allowable to the original petitioners under Tax Law sections 21, 22, and 23?
No. The Department ruled that adding QWDC to the brownfield cleanup agreements and Certificates of Completion for the sites does not jeopardize the Petitioners' own brownfield redevelopment, real prop…
Is the sale of a video delivered electronically over the Internet subject to New York sales or use tax?
No. Videos delivered electronically for download, like electronically delivered music and photographs, are treated as intangible property and are not subject to New York sales or compensating use tax,…
To obtain property tax and other benefits under New York's Cultural Resources Act, I plan to convey one condominium unit of my building (currently leased to a public TV station) to the Trust for Cultural Resources of the City of New York for just $10, subject to my existing mortgages -- then immediately lease it back from the Trust for $10/year for up to 4 years, after which title automatically reverts to me. I'll stay liable for all the mortgage debt and expenses, and remain the beneficial owner for tax purposes the whole time. Do these title conveyance, leaseback, and reversion steps trigger New York's Real Estate Transfer Tax?
All three steps -- the Title Conveyance, the Leaseback, and the Reversion -- are exempt from RETT. The owner of a Manhattan office building planned to create a condominium with two units: one covering…
Does a company that retrieves and delivers a patient's confidential medical records to insurers, attorneys, or the patient have to charge New York sales tax on its fee?
No. Retrieving and delivering an identified patient's own confidential medical records is not a taxable sale of tangible personal property or a taxable information service, but a separately stated cha…
Is installing a hard-wired access control security system a tax-exempt capital improvement, or a taxable sale of tangible personal property?
It depends on the component: the credential readers, alarm sensors, and control panel can qualify as an exempt capital improvement if they're permanently affixed and the owner receives full, unremovab…
Does a commercial landlord have to charge sales tax when it resells submetered electricity to tenants, and are its CAM and trash-removal charges also taxable?
Yes for electricity resold to tenants through submeters (the landlord must register as a vendor and collect tax) and for the related meter-reading fee, but no for CAM charges billed as additional rent…
In a New York combined franchise tax report, does the federal IRC section 382 limitation and the SRLY-overlap rule of Treasury Regulation 1.1502-21(g) apply when computing the net operating loss deduction?
Yes. In a New York combined Article 9-A report, the net operating loss deduction follows the federal rules: the IRC section 382 limitation and the SRLY-overlap provision of Treasury Regulation 1.1502-…
Is a progesterone topical cream marketed as 'not intended to diagnose, treat, cure, or prevent disease' exempt from New York sales tax as a drug or medicine?
No. Because neither the seller nor the manufacturer claims the cream treats, cures, or prevents any illness or disease -- the manufacturer's own website disclaims that use -- it doesn't qualify as an …
Does a subscription investment-analysis publication qualify for New York's tax exemption for periodicals, in both its hardcopy and electronic versions?
The hardcopy version qualifies as an exempt periodical because it's published quarterly, isn't a book, has continuity of subject and format, and is available to any subscriber, but the electronic vers…
Does a bank subsidiary's one-time election to be taxed under Article 9-A instead of Article 32 carry over after it converts from one state's corporation into a Delaware corporation?
No. The bank's one-time section 1452(d) election to be taxed under Article 9-A instead of Article 32 does not carry over to the converted Delaware corporation. Because the conversion creates a new Del…
Are ride tickets for portable funhouse amusements at a county fair subject to New York's admission-charge sales tax?
No. Ticket sales for portable funhouse amusements at a county fair are not subject to the sales tax on admission charges, because a funhouse is an amusement ride or device rather than a 'place of amus…
Are materials a developer buys to rehabilitate New York City Housing Authority buildings exempt from sales tax if the Authority takes immediate ownership under a long-term lease?
Yes. Materials purchased by a developer, its contractors, or subcontractors that become an integral component part of buildings owned by the New York City Housing Authority (a tax-exempt governmental …
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…
Are a party-entertainment company's charges for entertainers, equipment rentals, novelty items, and food packages subject to New York sales tax?
It depends on the offering: charges for entertainers alone (clowns, DJs, magicians) aren't taxable, but renting equipment the client operates without staff control is a taxable rental, novelty items a…
Is installing a wood, pellet, or gas burning stove, a zero-clearance fireplace, or manufactured stone veneer a tax-exempt capital improvement in New York?
Generally yes. Installing gas, wood, or pellet burning stoves that require cutting holes, installing chimney flues or liners, or reinforcing floors and walls, along with installing zero-clearance fire…
Is the gain from selling a passive interest in a lower-tier partnership that owns New York real estate treated as New York source income for a nonresident partner?
No. Because Petitioner never used its interest in the lower-tier partnership (589 Associates, LP) in a New York trade or business - it was purely a passive investment, not pledged as collateral or oth…
Are a shopping mall landlord's unmetered electricity reimbursement, trash-removal, and CAM charges to tenants subject to New York sales tax?
No for all three: a landlord's fixed, unmetered monthly electricity reimbursement is part of the rent (not a taxable utility sale) because it isn't tied to actual usage, and flat trash-removal and CAM…
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…
Are a freelance fashion stylist's services and the clothing/props they provide for photo shoots subject to New York sales tax?
A fashion stylist's coordinating and styling services aren't taxable, but clothing, accessories, and props that are actually transferred (sold) to the client are taxable tangible personal property, an…
Is a graphic design studio's charge for a client's final logo or branding design subject to New York sales tax when it's delivered electronically versus on a disk?
Design charges are not taxable when the final design (logo, branding, artwork) is delivered to the client purely electronically, since that's a sale of intangible property, but the same design deliver…
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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.