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 a New York State employee directly transfers funds from a New York State-sponsored IRC 403(b) plan to a different 403(b) plan, are the retirement benefits later received from that second plan still exempt from New York personal income tax?
Yes, if New York State actually contributed to the original 403(b) plan - the direct plan-to-plan transfer is not a taxable distribution, so the transferred funds and their earnings keep their exempt …
Is a non-U.S. fund whose only activity is buying and holding life-settlement policies - some originally owned by New York residents - subject to New York's insurance tax or general business franchise tax?
No. A non-U.S. fund whose sole activity is buying and holding traded life-insurance (life-settlement) policies is not 'doing an insurance business,' so it is not an insurance corporation under Article…
Can a central-station alarm company buy the burglar and fire alarm equipment it installs at customer sites exempt from sales tax as a purchase for resale?
Only if the alarm equipment remains fully functional on its own (usable as a stand-alone local alarm or with another provider's monitoring) and Petitioner genuinely rents it to the customer at a reaso…
Are a document-processing company's charges for scanning surveys and extracting raw data into computer files subject to New York sales tax?
No, as long as the extracted data is delivered electronically -- converting scanned paper surveys into raw electronic data files is a nontaxable format-conversion service, not a taxable information se…
How is New York source income determined for guaranteed payments a nonresident law firm partner receives, when he personally works only from an out-of-state office and serves mostly out-of-state clients?
Guaranteed payments to a nonresident partner are treated as a distributive share of partnership income, not personal compensation, so New York sourcing follows the partnership's own books and records …
When a partner's interest in a partnership is reduced after brownfield property is placed in service but within the same partnership tax year, which ownership percentage governs the partner's share of the brownfield redevelopment tax credit?
The partner's ownership percentage on the date the qualified tangible property is placed in service controls, even if that percentage is later reduced within the same partnership taxable year. Under I…
Can a corporation elect to treat its Eurodollar deposits, other time deposits, and Yankee certificates of deposit as investment capital, apportioned by its investment allocation percentage?
Yes. Eurodollar deposits, other time deposits, and Yankee CDs maturing within six months and one day are debt instruments treated as cash on hand or on deposit. Because the corporation also holds long…
As part of the Brooklyn Bridge Park redevelopment, I own land I'll sell to the park's development subsidiary for $1.00, then lease back for up to 99 years to build a mixed-use condo project, with an option to buy the fee back for $1.00 when the lease ends. I've agreed to pay any transfer taxes that ARE due. Is this $1-sale/leaseback/$1-repurchase structure a taxable RETT conveyance, or does it qualify as debt-security financing?
Exempt as a whole -- but ONLY conditionally, and several add-on transactions ARE independently taxable. A Brooklyn landowner planned to sell its property to the Brooklyn Bridge Park Development Corpor…
Does an out-of-state company selling product service contracts through in-state retailers, web referrals, or direct mail have enough nexus with New York to have to collect sales tax?
Yes, in all three sales scenarios described -- because New York retailers act as Company's designated repair centers performing warranty repairs on its behalf, that in-state activity by a representati…
Can a trash-hauling company buy its trash containers tax-exempt as purchases for resale when it separately bills customers for container rental and trash removal?
Only if the container rental is a genuinely separate transaction from the trash removal service -- meaning customers can rent a container without buying removal service and vice versa, the price is re…
We're the Port Authority, redeveloping the World Trade Center site after 9/11. Private lessees will borrow from outside lenders to fund redevelopment costs, and we'll be named mortgagee (alone or with the lenders) on their leasehold financing before assigning our interest to the actual lenders. Is that mortgage -- and its later assignments, splits, and modifications over the years -- exempt from mortgage recording tax?
Exempt for Port Authority-named mortgages; later increases in debt remain taxable. The Port Authority of New York and New Jersey -- created by a 1921 interstate Compact and long recognized as a govern…
Can a charitable nonprofit that provides paramedic services (but doesn't transport patients) get New York's motor fuel, petroleum business, and sales taxes refunded on the fuel for its response vehicles?
Only partly — it can recover the sales tax but not the motor fuel or petroleum business tax. Greene County Emergency Medical Services is a 501(c)(3) charity exempt under Tax Law § 1116(a)(4), but it i…
Is New York sales or use tax due on an art collector's overseas-delivered artwork, its bequest to his children, transferred company shares, or a nonresident's artwork brought into New York upon relocating?
No New York sales or use tax is due in any of these situations: artwork delivered and titled outside New York escapes sales tax under the destination rule, an estate's no-consideration bequest of artw…
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…
In a long-term car lease where the dealer sells and assigns the lease to a leasing company, who is responsible for collecting New York sales tax -- the dealer or the leasing company?
The motor vehicle dealer is the original lessor and is responsible for collecting and remitting the full upfront sales tax on a long-term vehicle lease at the time of the first lease payment, even tho…
Does building and operating a new natural gas vehicle-fueling station count as a 'new business,' so the owner can get a refund of unused investment tax credit instead of just carrying it forward?
Yes. Because Petitioner's compressed natural gas fueling station is not substantially similar in operation and ownership to his existing farming, mortgage, life insurance, and investment businesses, i…
Does the payroll a payroll/employee-leasing company processes for its clients' employees count as the company's own gross payroll when computing the fixed dollar minimum tax?
No. The clients' employees are not the company's employees - the clients keep full control over hiring, firing, pay, and duties - so the payroll the company merely processes for clients is excluded fr…
If an incapacitated Florida resident is moved into a New York nursing home, does that make her a New York resident for personal income tax and estate tax purposes?
No — for both taxes. A person is a New York resident for personal income tax only if domiciled in New York, or, if not, only if she keeps a permanent place of abode in New York for substantially all t…
Is a condominium board of managers' resale of submetered electricity and steam to unit owners subject to sales tax, and may a utility include the section 186-a gross receipts tax in its transmission charges?
Yes, the board's resale of submetered electricity and steam is taxable and it must register as a vendor. Water through mains is exempt; residential energy is exempt from the state sales tax but not lo…
Are an airline's galley carts, passenger safety cards, and blankets/pillows exempt from New York sales tax under the commercial aircraft exemption?
Galley carts and their parts qualify as exempt equipment installed on commercial aircraft, but pillows, blankets, and laminated passenger safety instruction cards are not equipment installed on the ai…
If a nonresident leases out a membership (seat) in a New York stock or commodity exchange, or later sells it, is that rental income or sale gain New York source income?
Generally no for a single lease or a single sale contract - a lone transaction usually lacks the continuity and regularity needed to be a business carried on in New York, so the income isn't New York …
Do the master tapes of television programs a broadcaster produces in New York qualify for the New York investment tax credit?
Yes, if the life test is met. Master tapes of television programs are tangible personal property principally used to produce goods by manufacturing or processing, so they qualify for the investment ta…
Are a 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…
Is a federal qualified settlement fund subject to New York's corporate franchise tax, or treated as a trust for New York State and City personal income tax?
No to both. A federal qualified settlement fund is not deemed a corporation for the Article 9-A franchise tax, because it only collects and distributes income rather than conducting a business. And be…
Is an out-of-state manufacturer that solicits New York orders through a sales representative working from a New York home protected from the franchise tax by Public Law 86-272?
Yes. An out-of-state plastics manufacturer whose New York activity is limited to soliciting orders - approved and shipped from outside New York - is exempt from the franchise tax under Public Law 86-2…
Does an airplane leased to fly aerial pipeline-leak-detection surveys qualify as an exempt 'commercial aircraft' under New York's sales tax law?
No. An aircraft leased to fly laser and camera equipment over pipelines to detect leaks does not qualify as an exempt commercial aircraft, because using a plane to perform an aerial photography/imagin…
Are interest receipts a combined-group parent earns on loans to affiliates outside the combined group excluded from the combined group's business receipts factor?
No, they are included. In a combined report, only intercorporate receipts between members of the combined group are eliminated. Interest the parent earns on loans to affiliates that are outside the co…
Is installing new wall-to-wall carpet during a commercial tenant's office renovation an exempt capital improvement, or a taxable installation?
Taxable. Floor covering like carpet has its own narrower capital-improvement rule -- it's exempt ONLY as the initial finished floor covering installed in brand-new construction, a new addition, or the…
Is installing a hard-wired emergency home generator a tax-exempt capital improvement in New York?
Generally yes. Installing an emergency home generator that's permanently piped to a gas line, hard-wired into the building's electrical system with a required transfer switch, and mounted on a concret…
Is a lump-sum distribution from an employer's nonqualified supplemental retirement plan taxable New York source income when it's paid to someone who becomes a nonresident before receiving it?
No, assuming the plan qualifies. Because the SEFCU Nonqualified Plan was maintained solely to provide the petitioner retirement benefits exceeding IRC §§ 401(a)(17) and 415 limits, the lump sum is 're…
Are a web-analytics company's client-specific website statistics untaxed, while its aggregated industry-wide statistics service is taxable?
Yes -- the HBX Web Analytics service, which reports statistics about only a single client's own website and isn't shared with other clients, is an untaxed personal/individual information service, but …
Who owes sales tax at each stage when a modular-home dealer contracts with a manufacturer and a subcontractor to sell and install a modular home for a property owner?
The dealer's, manufacturer's, and subcontractor's charges up the installation chain are all exempt as a capital improvement once the property owner issues a Certificate of Capital Improvement (Form ST…
Which of a for-profit golf and country club's dues, fees, and rentals are subject to New York sales tax?
Because members hold no proprietary interest and don't control the club's management, dues and initiation fees aren't subject to New York's social-or-athletic-club dues tax, but the club's restaurant …
We're a New York State-chartered credit union making residential first mortgage loans. Banking Law section 479 says no tax law applies to us unless we're specifically named in it. Does that exempt us from the 'special additional' mortgage recording tax that mortgagees normally pay on small residential mortgages?
Not exempt. The special additional mortgage recording tax under Tax Law section 253(1-a) applies an extra 25 cents per $100 of debt on mortgages of small residential property (six units or less, each …
Does an out-of-state promotional-products company have New York sales tax nexus, and are its baseball caps and cameras shipped to New York recipients exempt promotional materials?
A Washington-based promotional-products seller with no property, employees, or solicitation activity in New York has no sales tax nexus and can't be required to register or collect New York tax, but i…
Does a medical-products distributor have to charge sales tax on alcohol prep swabs, iodine prep swabs, and antiseptic towelettes sold to healthcare practitioners?
Alcohol prep swabs and iodine prep swabs are exempt drugs or medicines because they're used directly on patients to sterilize injection sites, but antiseptic towelettes are taxable because they're use…
Does a modular-home dealer owe sales tax on the home and its installation, and does that depend on whether the manufacturer sells the home with or without installation?
A modular-home dealer's sale-and-installation to a property owner is an exempt capital improvement once the owner provides a Certificate of Capital Improvement, but whenever the dealer buys the home f…
Does a hotel owe sales tax on free rooms it gives to convention groups, employees, vendors, and visiting travel writers?
A hotel's complimentary rooms are exempt from sales tax when given to group-contract attendees (folded into the group's taxable charge), to employees whose lodging isn't income to them, or to travel w…
I'm forming a New York LLC for a client. Does an LLC have to register with the Department and file Form MT-610.1 under the Stock Transfer Tax's registration requirement, the way a corporation that maintains an office for selling its own stock would?
Generally no -- unless the LLC is itself acting as a stock broker or dealing in others' stock. An attorney organizing a New York LLC for a client asked whether the LLC would be subject to the Stock Tr…
Will a same-sex marriage legally performed in Canada be recognized for New York State and New York City personal income tax purposes?
No. Because Tax Law §§ 607(b) and 651(b) tie New York marital and filing status to federal income tax status, and the federal Defense of Marriage Act (1 U.S.C. § 7) did not recognize same-sex marriage…
Will New York recognize a same-sex marriage performed in Canada for state personal income tax filing status purposes?
No. Because Tax Law §§ 607(b) and 651(b) tie New York marital and filing status to federal determinations, and the federal Defense of Marriage Act (1 U.S.C. § 7) did not recognize same-sex marriages f…
I'm a licensed cigarette stamping agent that sells to Indian Nations and reservation retailers for resale on reservations. Now that Tax Law § 471-e has been enacted, has the Department changed its long-standing policy of not enforcing cigarette tax collection on reservation sales, and will it start assessing stamping agents for unstamped cigarettes sold to reservation sellers?
THIS OPINION WAS REVOKED effective February 23, 2010 -- do not rely on its enforcement conclusions. As originally issued in 2006, the Department held that the enactment of Tax Law § 471-e had not chan…
Does a company owe sales tax on a 'shipping and handling' fee it charges for an otherwise free trial-size product, and does it owe use tax on the free product itself?
A shipping-and-handling charge for a free trial product isn't a taxable sale as long as the fee genuinely reflects actual shipping and handling costs, but the company owes sales or use tax on the tria…
Does installing custom-fitted closet and storage systems (with shelving and mirrors) in a new or existing home or office qualify as a tax-exempt capital improvement?
Yes -- installing custom-fitted closet storage systems and mirrors that are permanently, damage-causing-to-remove attached to the wall qualifies as a tax-exempt capital improvement in both new constru…
Is an aircraft owned by a single-purpose affiliate that flies its parent companies' employees and guests for a fee an exempt commercial aircraft?
Yes -- because the aircraft-owning affiliate is a genuine separate legal entity, retains full operational control, and uses the aircraft at least 50% of the time to provide transportation for hire (bi…
Does a law firm owe sales tax on a record-retrieval service's fees for obtaining its clients' own confidential medical and financial records?
A record-retrieval service's fees for obtaining copies of a specific client's own confidential medical, psychological, or financial records aren't taxable information or detective services, because th…
Is the federal gain a nonresident partner recognizes under IRC sections 731 and 752, when a New York investment partnership pays down its liabilities, treated as New York source income?
No. Because federal law treats the decrease in the partner's share of partnership liabilities as a deemed distribution that produces gain from the sale or exchange of the partnership interest, and gai…
Does a New York corporation have to apply a backup withholding tax on interest it pays to its foreign parent corporation?
No. New York's Tax Law does not impose any backup withholding tax on a corporation for interest it pays to a foreign affiliate. So a New York subsidiary owes no backup withholding on interest paid to …
Does a for-profit school owe sales tax on at-home course software, and are electronic textbook readers exempt as college textbooks?
A school (not its students) owes sales tax on prewritten course software it purchases, because its own charge to students is for a nontaxable educational service; a standalone textbook reader device i…
Which of a for-profit online executive-education company's Internet courses, CD-ROM materials, digitized collections, demo videos, and derivative products are subject to New York sales tax?
A for-profit online certificate program delivered purely through the Internet (even with free welcome packages, academic support, or incidental CD-ROM/textbook materials) isn't subject to sales tax as…
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 for-profit school owe sales tax on course materials and textbooks it buys and gives to students as part of one all-inclusive tuition fee?
The school owes sales tax on its own purchase of course materials and textbooks that it bundles into one all-inclusive tuition fee (they aren't purchased tax-free for resale, since they're incidental …
Is a chemical used to keep apples from ripening and spoiling exempt from sales tax as a food preservative?
Yes -- a fruit wholesaler's purchases of SmartFresh (1-MCP), a gas used to block apples' natural ripening and spoilage so they stay saleable for months longer, qualify as an exempt food preservative u…
Is installing an 'invisible fence' pet containment system a tax-exempt capital improvement, or does it stay taxable as tangible personal property installation?
No -- an invisible pet containment system doesn't qualify as a capital improvement because it isn't affixed to the property to the degree required (it's removed by simply unscrewing the transmitter an…
Does renting furnished corporate apartments for one week to one year count as operating a taxable hotel, or is it an untaxed real estate rental?
Under its current facts -- no food service, entertainment, concierge, or other customary hotel amenities, and services offered equally to long-term unfurnished tenants -- the landlord's furnished corp…
Can amounts rolled over from another state's 529 college savings plan, or rebates accumulated through the Upromise Rewards Service, be deducted as contributions to New York's 529 plan under Tax Law section 612(c)(32)?
Yes to both. Amounts rolled over from another state's 529 plan into the New York 529 Plan - including the earnings portion not taxed under IRC section 529(c)(3)(C)(i) - count as a deductible 'contribu…
Does the production-machinery exemption cover equipment, repairs, utilities, and building improvements at a standalone cold storage facility that holds fruit for processors?
No -- a standalone cold storage facility that merely holds fruit owned by processors (retarding ripening until the fruit is transported to the processor's own plant) doesn't qualify for New York's pro…
Is a building-materials retailer's restocking charge on returned merchandise subject to sales tax?
No -- a reasonable, separately stated restocking charge deducted from a customer's refund on returned merchandise isn't subject to sales tax, because it's a separate transaction from the cancelled sal…
Can an affiliated finance company (or the retail vendor that sold to it) claim a sales tax refund on bad debts from accounts the finance company bought at a discount?
Neither the affiliated finance company nor the retail vendor can claim a sales tax refund or credit for bad debts on accounts the finance company purchased, because the finance company doesn't qualify…
Does an environmental drilling company owe sales tax on its hydrogeologic site reports and the temporary groundwater monitoring wells it installs to prepare them?
An environmental drilling company's confidential hydrogeologic site-condition reports aren't subject to sales tax because report-writing isn't an enumerated taxable service, and it doesn't have to col…
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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.