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 a foreign life insurance corporation with no New York premiums subject to New York tax because it holds a limited partnership interest with a basis over $1 million in a partnership doing business in New York?
Yes, with an exception. A foreign life insurer with no New York premiums is subject to Article 33 tax because its limited-partner basis in a New York partnership exceeded $1 million (deeming it to par…
Do jobs created for an Empire Zone location but temporarily worked at a non-Empire-Zone facility qualify for the Empire Zone wage tax credit, and for how many years?
Only inside the zone. Jobs at the Empire Zone building qualify for the wage tax credit; the same jobs temporarily worked at a non-zone facility do not qualify until the employees move into the zone, a…
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 …
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…
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…
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-…
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…
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 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…
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…
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…
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…
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…
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 an out-of-state manufacturer exceed mere solicitation (and lose Public Law 86-272 protection) when a subsidiary delivers its products and it licenses university-developed products for a royalty?
No, its activities do not exceed mere solicitation, so it is not subject to Article 9-A tax under Public Law 86-272. Sales originate from out-of-state salesmen or independent contractors, orders are a…
Is an unauthorized foreign life insurer that makes New York mortgage loans through a disregarded LLC subject to Article 33 instead of Article 9-A, and what is its tax?
It is subject to Article 33, not Article 9-A, and its computed tax is zero but it must still file. Because the single-member LLC is disregarded, its New York mortgage-lending activity is treated as th…
Are a New York corporation's commission receipts allocated to New York when its sole shareholder-president never works out of its New York office?
No, none of the commission receipts are allocated to New York. A corporation's receipts from compensation for services are allocated to New York if the services are performed there, including by a sal…
Is an out-of-state alarm-monitoring company doing business in New York when it uses third-party contractors to install and service equipment for its New York customers?
Not from the contractors alone. An out-of-state alarm-monitoring company with no New York office, employees, representatives, or inventory is not doing business in New York merely because it hires thi…
Is a Florida corporation that owns entities holding New York lottery annuity rights doing business in New York, and can it claim a credit for income tax withheld on those payments?
No, it is not doing business in New York and owes no Article 9-A tax. A corporate partner is subject to Article 9-A only if a partnership it owns is doing business in New York; here the entities merel…
Is a ferry company that runs New York City interborough routes under a city lease taxed under Article 9 (sections 183/184) or Article 9-A, and how are its ferry receipts allocated to New York?
It is taxed under Article 9-A, not sections 183/184. A ferry company operating between New York City boroughs under a lease granted by the city is exempt from both the section 183 franchise tax and th…
Are a corporate partner's allocations of a limited partnership's trading profits investment income or business income for New York Article 9-A purposes?
The character flows through from the partnership. Under the aggregate method (Regulations section 3-13.3), a corporate partner is treated as realizing each partnership item directly from its original …
When an Empire Zone company has a short tax year with none of the four quarterly measuring dates, how does it count employees for the EZ and QEZE credits?
Use the headcount on the last day of the short year. The EZ wage credit, EZ employment incentive credit, QEZE tax reduction credit, and QEZE real property tax credit normally average employees measure…
Are an affiliate's receipts from selling mobile-phone equipment subject to New York's section 186-e telecommunications excise tax, and do they pass through to its members or partners?
No, the equipment receipts are not subject to section 186-e. An affiliate (Equipco) that sells mobile-telecommunications equipment but does not sell the telecommunications service itself is not a prov…
Is an out-of-state computer-hardware company that sells in New York only through one home-based sales representative exempt from New York franchise tax under Public Law 86-272?
Yes, it is exempt from Article 9-A franchise tax under Public Law 86-272. The company's only New York activity is one sales representative soliciting orders for tangible personal property (thin-client…
Is an out-of-state corporation whose only New York activity is a researcher it hired to work at a New York university subject to New York Article 9-A franchise tax?
It depends on the worker status. If the New York researcher is the corporation's employee, that activity is doing business in New York and the corporation owes Article 9-A franchise tax and must file …
Is a Texas parent that runs payroll for its New York operating subsidiary subject to New York Article 9-A franchise tax?
It depends on whose employees the New York workers are. A Texas parent that handles payroll for its New York operating subsidiary (PPNY) under the parent's federal EIN is subject to Article 9-A only i…
Can a single-member LLC or its corporate owner claim New York Brownfield Cleanup Program tax credits, and when, if costs are incurred or property is placed in service before the program's first effective year?
Yes, the corporate owner claims them. If the LLC is disregarded, it is a branch or division of its owner, so the owner (taxable under Article 9-A) claims the brownfield redevelopment credit (site prep…
Is an out-of-state ready-mix concrete seller that delivers to New York in its own trucks protected by Public Law 86-272?
Yes, if the concrete is central-mixed. An out-of-state seller whose New York activity is a phone listing and delivery of central-mixed (plant-mixed) concrete in its own trucks -- where the slow drum r…
Is an out-of-state professional employer organization subject to New York franchise tax because it processes payroll for two New York-resident drivers who work outside New York?
No. An Ohio professional employer organization whose only New York connection is processing payroll (for a fee) for two New York-resident truck drivers who work for an Ohio trucking company and do not…
Is an out-of-state manufacturer subject to New York franchise tax because a director listed the company's phone number in a New York directory without the company's knowledge?
No. An Ohio manufacturer of currency-changing equipment is not subject to Article 9-A where its only New York link was a telephone listing a director placed (using her own home number) in a New York d…
Does an out-of-state jewelry maker lose Public Law 86-272 protection by making retail sales and collecting sales tax at New York trade shows?
Yes, it loses protection and is taxable. An out-of-state jewelry manufacturer that attends New York wholesale trade shows to take orders (approved out of state) would stay within Public Law 86-272 sol…
Can a broker-dealer claim the investment tax credit on a building it owns when part of it is used by affiliated banks that are regulated securities dealers?
Yes, if the combined qualifying use exceeds 50%. For the section 210.12 investment tax credit, property is eligible if it is principally used in qualifying broker-dealer activities under section 210.1…
Does a fabless semiconductor company's production-testing of chips made by contract foundries count as manufacturing for the New York investment tax credit?
Yes. A fabless semiconductor company's Manufacturing Production Test Process -- testing the packaged devices that contract foundries and assemblers produced to its specifications -- is part of produci…
Are lease payments for satellite transponders included in the New York property factor, and how are they valued?
Only the tangible portion is included. A satellite transponder lease covers both tangible property (the transponder, which is tangible personal property under section 208.11) and intangible property (…
Is a New York-organized corporation eligible for franchise tax exemptions, and what must it do to claim Empire Zone wage credits and become a QEZE?
A New York-organized corporation (SLIC) cannot use the section 209.2 exemptions, which apply only to foreign corporations, so it is subject to Article 9-A. The Empire Zone wage tax credit (section 210…
Is an out-of-state life insurer that invests in New York mortgages through a partnership and receives orphan premiums subject to Article 33 instead of Article 9-A, and what is its tax?
It is subject to Article 33, not Article 9-A, and its computed tax is zero but it must still file. The insurer is doing business in New York through a partnership that invests in New York-secured mort…
Is an out-of-state life insurer that invests in New York mortgages through a partnership and receives orphan premiums subject to Article 33 instead of Article 9-A, and what is its tax?
It is subject to Article 33, not Article 9-A, and its computed tax is zero but it must still file. The insurer is doing business in New York through a partnership that invests in New York-secured mort…
Is an out-of-state life insurer that invests in New York mortgages through a partnership and receives orphan premiums subject to Article 33 instead of Article 9-A, and what is its tax?
It is subject to Article 33, not Article 9-A, and its computed tax is zero but it must still file. The insurer is doing business in New York through a partnership that invests in New York-secured mort…
Is an out-of-state life insurer that invests in New York mortgages through a partnership and receives orphan premiums subject to Article 33 instead of Article 9-A, and what is its tax?
It is subject to Article 33, not Article 9-A, and its computed tax is zero but it must still file. The insurer is doing business in New York through a partnership that invests in New York-secured mort…
Can a newly formed bank holding company elect to be taxed under Article 9-A, and must it file a combined Article 32 return with its banking affiliates, for its first short year?
Yes to the election, and no combined Article 32 return is required. A newly formed wholly owned domestic subsidiary that registers for the first time as a bank holding company and elects financial hol…
Does an out-of-state food distributor lose Public Law 86-272 protection when its delivery drivers pick up damaged goods and collect payments in New York?
Yes. The Pennsylvania food distributor's salespeople solicited orders in New York and it delivered by its own trucks (activities that, by themselves, stay within Public Law 86-272). But its delivery d…
For the broker-dealer investment tax credit, does having 83% to 88% of administrative and support employees in New York satisfy the substantial-portion requirement?
It appears yes. For the broker-dealer/investment-advisor investment tax credit under section 210.12(b)(i)(D), (E) and (F), all or a substantial portion of the administrative and support employees tied…
For the broker-dealer investment tax credit, does having 87% to 92% of administrative and support employees in New York satisfy the substantial-portion requirement?
It appears yes. For the broker-dealer/investment-advisor investment tax credit under section 210.12(b)(i)(D), (E) and (F), all or a substantial portion of the administrative and support employees tied…
How are the federal treatment of nuclear decommissioning trusts and a utility's sale of nuclear units treated for Article 9-A entire net income and for the section 186-a utility tax?
For Article 9-A, entire net income starts from federal taxable income and section 208.9 contains no modification for the decommissioning trusts, so the federal treatment of the qualified and non-quali…
Can a corporation claim the industrial or manufacturing business credit for energy taxes when all of its manufacturing is done outside New York but its headquarters are in New York?
Yes, with a limit. Whether a corporation is principally engaged in manufacturing (and thus an industrial or manufacturing business) is tested by looking at its entire business inside and outside New Y…
Does an out-of-state corporation moving into a New York empire zone qualify as a new business eligible for a refund of the empire zone wage tax credit?
Yes. After a planned recapitalization left more than 50% of its voting stock owned by entities not subject to New York franchise tax, and given that it was not substantially similar in operation or ow…
Must a corporation add back to its entire net income the interest it pays on a loan from an individual shareholder who owns more than 50% of its stock?
No. There is no provision in Article 9-A that requires a corporation to add back to federal taxable income the interest it pays to an individual shareholder -- even one owning more than 50% of the sto…
Is a foreign corporation that rents a small New York office for its New York-resident president subject to New York franchise tax under Article 9-A?
Yes. The corporation, a Delaware company headquartered out of state, rented a small New York office for its New York-resident President/CEO who used it about one week a month, and the office phone was…
Does an out-of-state seller lose Public Law 86-272 protection when its employees assemble machines and perform warranty service in New York?
Yes. The Illinois seller's New York employees assembled and disassembled large glass machines shipped in by common carrier and performed warranty and repair service. Those activities went beyond deliv…
Is a dissolved corporation that merely holds record title to New York real property as a nominee, and is otherwise inactive, subject to Article 9-A tax?
No, not after dissolution. A corporation that merely remained the record title holder of New York real property as a nominee for a partnership -- never operating, managing, or controlling the property…
How is an LLC running a telephone business, and its corporate members, taxed in New York -- under Article 9-A, sections 183/184, or section 186-e?
The LLC, treated as a partnership for New York tax purposes, is not subject to Article 9-A or sections 183/184, but as a provider of telecommunication services it owes the section 186-e tax. Its corpo…
How do the transitional depreciation rules apply to a utility's or power producer's depreciable property held under a synthetic lease?
The synthetic lessee (a qualified public utility or qualified power producer) is treated as owning the transition property, so the transitional depreciation rules apply. For Article 9-A it must add ba…
Are time-deposit placements by a corporation with an affiliated bank treated as cash on deposit for Article 9-A investment capital purposes?
It depends on the instrument. Time deposits (30 days or more) placed by a corporation with an affiliated bank generally qualify as cash on hand and on deposit under section 208.7(a), so the corporatio…
Can interest from cash items other than bank deposits be allocated by a zero investment allocation percentage when cash is treated as investment capital?
Yes for cash items other than bank deposits. When a taxpayer treats its cash on hand and on deposit as investment capital under section 208.7(a), the interest is investment income under section 208.6 …
Is a court-ordered litigation settlement fund a corporation or trust subject to New York State or City franchise or personal income tax?
No. A court-ordered litigation settlement fund that is a qualified settlement fund under IRC section 468B is not a corporation subject to Article 9-A (its activities are not the conduct of a business)…
Does Public Law 86-272 protect a company whose New York salespeople solicit free-publication subscriptions and sales of advertising space?
No. Public Law 86-272 only protects soliciting orders for sales of tangible personal property. The company gives its publications away free (no sale, no receipts) and earns its money selling advertisi…
Is an out-of-state company that hires New York subcontractors to do janitorial work, with no office or employees here, doing business in New York?
No, if the subcontractors are genuine independent contractors. A foreign corporation with no office, employees, representatives, or inventory in New York that merely hires New York subcontractors as i…
Is Subpart F income and section 956 inclusions from a controlled foreign corporation treated as income from subsidiary capital excluded from entire net income?
Yes. A taxpayer's pro rata Subpart F income under IRC section 951(a)(1)(A) and its section 956 investment-in-U.S.-property inclusions under section 951(a)(1)(B) from a wholly owned controlled foreign …
How is a general partner in an independent power producer taxed, and are PSC-mandated contract termination payments taxable utility income?
An IPP general partner is taxed under Article 9-A for years beginning on or after January 1, 2000 (after section 186 was repealed); for earlier years it fell under section 186 only if it was actively,…
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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.