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 corporation that stores goods in unaffiliated New York public warehouses using a fulfillment service, and does employees visiting to inspect warehouses and meet customers defeat its Public Law 86-272 protection?
Storing goods in unaffiliated New York public warehouses is the use of a fulfillment service under section 209.2(f), and it does not create nexus. Employees traveling into New York to examine those wa…
Does a foreign corporation become subject to Article 9-A by storing a day's inventory in a New York common-carrier warehouse for just-in-time delivery, or does the fulfillment-services exemption apply?
The storage would otherwise create nexus, but the fulfillment-services exemption applies. A foreign manufacturer's storage of about one day's inventory in a New York common-carrier warehouse for just-…
Do a public warehouse's added services -- contract negotiation, site visits, and quality-control inspections -- change its status as a fulfillment-services provider, and do out-of-state customers get New York nexus by using it?
The added steps do not change the result. Distribution Unlimited's public-warehousing activities -- including the new contract-negotiation, site-evaluation, and periodic inventory and quality-control …
After a mail-order retailer closes its New York stores, does holding over the now-vacant leased store space until the leases can be terminated keep it taxable, or is that property de minimis under Public Law 86-272?
Exempt, with a final return required. After Egghead closed all its New York retail stores, its remaining New York activity is mail-order solicitation (catalogs and a web page, orders approved and ship…
If a mail-order retailer closes all its physical New York stores but keeps selling by catalog and internet, does it still need to collect New York sales tax?
No, once its physical presence ends. A mail-order retailer that closes all its New York retail stores and no longer employs in-state salespeople loses its New York sales tax nexus, even if it continue…
Is an out-of-state electronic health-claims clearinghouse subject to New York franchise tax when it installs equipment and trains customers here, and which of its fees and equipment are subject to sales or use tax?
On franchise tax: once the company acquires New York customers and sends employees in to install computer hardware/software and train customer staff, it is doing business and has property in New York,…
Does a public warehouse that stores and ships customers' inventory provide 'fulfillment services,' and do its out-of-state customers get New York franchise tax or sales tax nexus by using it?
Yes, and the customers get no nexus. Distribution Unlimited's public-warehousing activities -- storing manufacturers' and distributors' inventory and shipping it by common carrier on the owner's instr…
Is a federal S corporation that is a corporate member of an LLC doing business in New York subject to the Article 9-A franchise tax, and is it taxed as a C corporation?
Yes, with the tax computed as a C corporation. An LLC treated as a partnership for federal income tax is a partnership for New York; its corporate members are corporate partners. If the S corporation'…
Is an out-of-state wine wholesaler exempt from the New York Article 9-A franchise tax under Public Law 86-272 when its only New York presence is a home-based sales manager who solicits orders?
Yes. Public Law 86-272 (and 20 NYCRR 1-3.4(b)(9)) exempts an out-of-state seller of tangible personal property from the Article 9-A franchise tax if its New York activities are limited to soliciting o…
Does a manufacturer's backhauling -- using its delivery trucks to pick up products and unrelated goods in New York for return to its home state -- exceed Public Law 86-272 and create franchise-tax nexus?
Yes. Delivering products into New York by the company's own trucks is protected solicitation, but using those trucks to pick up nonconforming products, trim, and scrap (post-delivery backhauling) exce…
Does a foreign corporation that only displays goods at two five-day trade shows a year in New York, without taking orders or selling, become subject to the Article 9-A franchise tax?
No. Coming into New York only to display goods at two five-day trade shows a year (10 days total), without taking orders or making sales and without otherwise doing business, owning property, or maint…
Is an out-of-state corporation that owns a limited partnership interest in a partnership doing business in New York subject to New York franchise tax?
Yes. Under 20 NYCRR 1-3.2(a)(6) a foreign corporation is treated as doing business in New York if it is a limited partner in a partnership (other than a portfolio investment partnership) that does bus…
Does an out-of-state manufacturer have to register and collect New York sales tax if its only New York contact is an occasional trade show demo and orders shipped by mail or common carrier?
No -- a Rhode Island manufacturer with no New York place of business or property, no New York sales staff or agents, only an occasional (once-every-other-year) New York trade show appearance where pro…
Does a Florida training company create New York nexus by sending independent contractors to run free in-state workshops, requiring it to collect use tax on its mail-order home-study program sales to New York students?
Yes -- a Florida-based factoring-training company that hires independent contractors to conduct regular free informational workshops in New York (aimed at enrolling students and promoting its programs…
Does an out-of-state manufacturer that only occasionally demos at a New York trade show and ships to New York customers by mail or common carrier have to collect New York sales tax?
No -- a Rhode Island manufacturer with no New York place of business or property, no employees or agents soliciting business in New York, and only an occasional (no more than once-a-year, two-or-three…
Is a single-member New York LLC subject to New York tax, and does owning it make a foreign corporate sole member taxable in New York?
New York follows the LLC's federal classification. A single-member LLC that is disregarded for federal income tax (the default under the check-the-box rules) is treated as a branch or division of its …
Does a foreign corporation that enters New York only to meet with a prospective accountant, banker, lawyer, or underwriter become subject to the Article 9-A franchise tax?
No. A foreign corporation (XYZ) that enters New York for the limited purpose of meeting with an accountant, banker, lawyer, or securities underwriter it might engage -- and does nothing else in the St…
Is an LLC taxed as a partnership a 'portfolio investment partnership,' and is a foreign corporate member subject to Article 9-A by reason of its membership?
New York follows the LLC's federal classification, so an LLC taxed as a partnership is a partnership for New York tax. An LLC that meets the IRC section 851(b)(2) gross-income requirement and is not a…
Do a foreign commodity trader's New York activities -- soliciting orders plus maintaining coffee-bean inventory in a New York public warehouse for sale to customers -- subject it to Article 9-A tax, or are they protected as minimal property/Public Law 86-272?
Yes, it is taxable. International Coffee solicits orders in New York and, when it takes delivery on coffee-bean futures, holds the physical beans in a New York public warehouse for sale to its custome…
Does a nonprofit that's incorporated under New York law but operates entirely out of Massachusetts have enough nexus with New York to be required to collect New York sales tax on mail-order merchandise shipped to New York customers?
Yes. Because it's a domestic New York corporation -- even though its offices, staff, and operations are entirely in Massachusetts -- and its bylaws require a volunteer secretary who is a New York resi…
Are offshore investors that buy and sell U.S. securities through a New York investment adviser and custodian doing business in New York for Article 9-A, when the discretionary trading decisions are made outside the state?
No, they are not doing business in New York. Under the structure, a foreign subsidiary and a foreign unit trust would invest in U.S. stocks and bonds. The only New York activities are a custodian hold…
Does a foreign manufacturer's in-state technical advice exceed the protection of Public Law 86-272 and subject it to Article 9-A?
It depends on timing. A foreign (out-of-state) manufacturer that ships tangible personal property into New York is protected from the Article 9-A franchise tax by Public Law 86-272 if its New York act…
Is a company whose only district activity beyond solicitation is maintaining an office subject to the metropolitan transportation business tax surcharge?
Yes. A company that maintains an office in the metropolitan commuter transportation district (MCTD) is subject to the metropolitan transportation business tax surcharge under Tax Law section 209-B, ev…
Are payments by a corporation to independent sales corporations excluded from both the numerator and denominator of its Article 9-A payroll factor?
Yes -- payments to genuinely independent sales corporations are left out of the payroll factor entirely. Generra, an out-of-state apparel company with New York nexus, markets through three independent…
Must an out-of-state seller that also has New York stores collect NY sales tax on goods it ships by common carrier from out-of-state warehouses to New York customers?
Yes. A company that maintains offices and retail stores in New York must collect New York State and local sales and use tax on merchandise it sells and ships to New York customers by common carrier fr…
If a corporation with deferred installment-sale gain on New York real estate transfers the remaining notes to an affiliate before the gain is fully recognized, must it accelerate the deferred gain into New York entire net income right away?
Likely yes for the actual corporation, but the Department can't pre-commit in an advisory opinion. Corporation X sold New York City real property in 1982 on an installment basis with no gain recognize…
Does a New Jersey printing company that only solicits orders in New York, ships from out of state, and occasionally delivers finished goods through its salesmen owe New York's Article 9-A corporate franchise tax?
No. ROP Color, Inc., a New Jersey computerized typesetting and color-separation business, had no office, property, or capital in New York -- its only in-state activity was salesmen soliciting orders (…
Does an out-of-state corporation that holds a passive limited-partnership interest in a New York cogeneration project owe New York franchise tax, and if so, is it taxed under the general Article 9-A rate or the utility-specific Article 9/section 186 rate?
Yes to nexus, and it may be Article 9 instead of Article 9-A. PEC Fort Drum, Inc., a Florida corporation with no independent New York presence, held an indirect 10% foreign-corporate-limited-partner i…
Does a Virginia temporary-staffing company with no office or property in New York owe Article 9-A franchise tax simply because it places its own temporary employees to work at New York client sites?
Yes. Quantum Resources Corporation, a Virginia-based provider of temporary clerical and technical personnel, had no offices, capital, or property of its own in New York -- all billing, payroll, and co…
Does an out-of-state bank owe New York Article 32 franchise tax just because it makes mortgage loans secured by New York real estate, when the loan closings, appraisers, or construction-loan inspectors variously touch New York?
It depends on the totality of activity -- no single scenario alone was decisive. Bleakley Platt & Schmidt presented a Connecticut bank with no New York office, employees, or agents, making loans to Ne…
Are feeding pumps and tubes prosthetic aids or taxable medical supplies, and must an out-of-state mail-order seller collect New York tax?
The products are medical equipment/supplies (not fully exempt prosthetic aids), and the out-of-state seller must collect New York tax. Biosearch Medical Products, Inc., a New Jersey company, mail-orde…
Does an out-of-state financial trading company create New York nexus by having independent brokers trade commodity futures on the COMEX floor, if it occasionally takes brief warehouse-receipt title to precious metals held in New York vaults?
Likely no nexus, though the Department left the ultimate call to the facts. Cargill Financial Services Corporation, a Delaware trading subsidiary of Cargill, Incorporated with no employees, office, or…
Does a California company that sells computerized movie-theater management systems nationwide, with a New York sales footprint limited to about 4% of revenue and just 13 installation trips over five years, owe New York Article 9-A franchise tax for sending an employee to install and train customers on each system sold there?
Yes, subject to tax for all years at issue. Theatron Data Systems, Inc., a California corporation marketing automated movie-theater management systems nationwide, had no New York office, assets, or ba…
Does an out-of-state bank owe New York banking franchise tax just because it buys installment contracts secured by New York property and, if a borrower defaults, forecloses or sues through a New York attorney?
No. A Connecticut bank that buys the contracts entirely outside New York, has no New York office or employees, and only occasionally enforces a security interest or takes foreclosure title here is not…
If a parent holding company spins off its New York lending business into a new New York subsidiary, keeps a bank account and books here, but is otherwise run entirely from Japan, does the parent still owe New York corporate franchise tax?
No. Once the parent withdraws its authorization to do business in New York, becomes a purely passive investment holding company managed entirely from Japan, and confines its remaining New York contact…
Does hiring a New York lettershop to mail catalogs make an out-of-state mail-order company a New York vendor that must register and collect sales tax?
Hiring the New York lettershop does not, by itself, make the out-of-state company a New York vendor — but its own solicitation of New Yorkers can. Geran Mailing, Inc., a New York direct-mail (lettersh…
Does an out-of-state company owe New York corporate franchise tax just because its employees taught four five-day training courses in New York, even though another state's tax rules would attribute the income to that other state instead?
Yes. Sending employees into New York to teach paid courses is sufficient presence to constitute "doing business" in New York and triggers Article 9-A franchise tax, regardless of whether another state…
A mail-order company distributes catalogs through an airline's on-board program (paying the airline a sales commission) and ships merchandise to New York customers who order from those catalogs — does the company owe New York franchise tax, and does it have to collect New York sales tax?
The company is exempt from Article 9-A franchise tax under federal Public Law 86-272 because its only New York activity is order solicitation followed by shipment from outside the state. But it must s…
Does a corporate insurance general agency owe New York franchise tax merely because it's licensed by the New York Insurance Department, licenses independent agents in New York, reviews insurance applications from New York residents, or has its issuing insurers accept and sell policies in New York?
No. None of those activities — insurance licensing, licensing/appointing independent agents in New York, reviewing applications generated by those agents outside New York, or the issuing insurer selli…
If an out-of-state bank regularly sends its own officer or a New York agent into New York to negotiate purchases of New York mortgage loans, is it 'doing business' in New York and subject to the bank franchise tax, even without a New York office or employees?
Yes -- regularly sending its own chief operating officer into New York, or using a New York agent, to negotiate purchases of New York-secured mortgage loans is doing business under Article 32, regardl…
Does a foreign corporation that isn't otherwise subject to New York franchise tax become taxable merely because it privately purchased a limited partnership interest in a partnership that does business in New York?
No -- the Department abandoned a 1954 Attorney General opinion that had treated limited partners as automatically doing business wherever their partnership does, and held that a genuinely passive fore…
Does a New Jersey corporation holding a small (6-8%), non-controlling limited partnership interest in a New York investment fund become subject to New York franchise tax just because the fund does business here?
No -- following the same reasoning as its companion opinion issued the same day (TSB-A-88(11)C), the Department held that a foreign corporation's passive, non-controlling limited partnership interest …
As a general matter (not tied to one company's specific facts), does a foreign corporation become subject to New York's corporate franchise tax merely by becoming a limited partner in a limited partnership that does business in New York?
No -- addressing this as a general hypothetical rather than one company's specific facts, the Department held that a foreign corporation which is otherwise not subject to Article 9-A does not become d…
Can New York require an out-of-state mail-order subsidiary with no in-state presence to collect sales tax, when its parent solicits New York customers and steers them to the subsidiary?
Yes — on these facts the subsidiary is deemed a New York vendor that must collect sales tax. A CPA asked (as a hypothetical) whether an out-of-state direct-marketing Subsidiary — no NY property or off…
Under three different levels of New York contact -- no NY presence at all, an agency-like arrangement with an unrelated NY bank, and an actual NY office -- when does a mortgage banking company that packages and sells loans as FNMA/GNMA certificates become subject to New York corporate franchise tax, and how is its income sourced?
Under Alternative #1 (no NY office, no NY-originated loans, only a New York bank delivering certificates and collecting payment as agent) there is NO New York nexus; under Alternative #2 (using an unr…
Is an out-of-state fuel distributor subject to New York's corporate franchise tax merely because its New York-based parent company keeps its books and provides a shared officer, when the subsidiary itself has no New York office or employees -- but does take title to petroleum within New York before shipping it out of state?
Having a parent-company officer maintain a New York office, and having the parent's own employees keep the subsidiary's books in New York, are NOT by themselves enough to create nexus -- but the subsi…
Is an out-of-state national bank subject to New York's Article 32 bank franchise tax merely because it serves as trustee for a New York industrial development bond, when all its substantive trustee work is performed at its out-of-state headquarters except for a single one-day trip to sign documents and deliver securities in New York?
No -- a national bank with no New York office, employees, or property, whose only New York contact is signing a trust agreement and hand-delivering bond documents during a single one-day visit (with a…
Does an out-of-state manufacturer that sells only through independent (non-employee) commissioned sales representatives lose the protection of federal P.L. 86-272 -- which shields mere order-solicitation from state income tax -- because it rented a New York showroom for those representatives' convenience for part of the year?
Yes -- P.L. 86-272 protects a company whose ONLY in-state activity is soliciting orders that are approved and filled from outside the state, but renting even a small showroom in New York (here, at the…
Can New York force an out-of-state affiliate to collect sales tax just because its sister company operates in New York?
Possibly yes — if the out-of-state company is really the 'alter ego' of its New York affiliate. Levitz Furniture planned a new New Jersey corporation, owned by the same parent as its existing New York…
Does an out-of-state mail-order subsidiary have to collect New York tax just because a sister company runs stores here?
No — on these facts the mail-order company isn't the alter ego of its New York affiliate, so it has no nexus and needn't collect New York tax. Spencer Gifts planned to reorganize into a New Jersey 'Ma…
Can New York force out-of-state fur subsidiaries to collect tax when they share a brand and owners with New York stores?
Yes — here the New Jersey subsidiaries are the alter egos of their New York affiliate and parent, so they have nexus and must collect New York tax. Harfred / The Fur Vault planned to move their New Je…
An out-of-state company leases trucks WITHOUT drivers and merely drives them through New York on the highways (paying highway use tax) -- does that make it a 'transportation business' subject to New York's Article 9 franchise tax on trucking companies, or could it instead owe Article 9-A tax if it also leases trucks TO New York customers?
No -- a company principally engaged in leasing trucks WITHOUT drivers (as opposed to leasing vehicles WITH drivers, which does count as a transportation business under prior case law) is NOT 'principa…
Must an out-of-state catalog seller that has retailers, employee visits, and trade-show activity in New York collect New York sales tax on its mail-order sales here?
Yes — the out-of-state catalog seller has nexus with New York and must collect New York sales and use tax on its retail mail-order sales to New York customers. The Orvis Company, a Vermont seller of h…
If I drop-ship goods into New York for an out-of-state buyer who can't give a New York resale certificate, do I have to collect New York sales tax?
Yes — the vendor must collect New York sales tax on a drop-shipment delivered into the state. Touche Ross asked about an importer (X Company, a registered New York vendor) that sells goods in Californ…
Can an out-of-state seller with no New York presence cancel a sales tax registration it took on voluntarily?
Yes — the out-of-state seller may cancel its voluntary registration, because it is not otherwise required to collect New York tax. V. H. Blackington & Co., a Massachusetts manufacturer of uniform insi…
Must an out-of-state catalog seller with New York retailers and employee visits collect New York sales tax on its mail-order sales here?
Yes — the out-of-state catalog seller has nexus with New York and is a vendor that must collect New York sales and use tax on its retail mail-order sales to New York customers. The Orvis Company, a Ve…
A U.S. sales-agent company maintains a New York showroom-sales office exclusively for a related foreign manufacturer -- displaying/selling samples, soliciting orders that are filled entirely from the manufacturer's own out-of-state plant -- but the manufacturer keeps tight control over the office (approving its design, setting all sale terms, controlling hiring/firing). Does maintaining that showroom keep the manufacturer within P.L. 86-272's protected 'mere solicitation' safe harbor, or does it cross the line into taxable New York activity? And is the U.S. sales-agent company itself taxable for providing that agency service?
The related alien manufacturer (Hauserman, Ltd.) IS subject to New York franchise tax -- maintaining the New York showroom-sales office exceeds P.L. 86-272's protected solicitation activities, since t…
Must an out-of-state computer seller with no office, employees, salespeople, or advertising in New York collect New York sales tax on computers shipped to New York buyers?
No — as described, the out-of-state seller has no obligation to collect New York sales tax, because it neither maintains a place of business nor solicits business in New York; but its New York custome…
An out-of-state typesetting company's New York salesmen solicit orders, pick up customer manuscripts for delivery to the out-of-state plant, and deliver the finished typeset negatives back to New York customers. Does that combination of activities stay within Public Law 86-272's protected 'solicitation' safe harbor, or does it create New York franchise tax nexus?
The corporation remains exempt from New York's Article 9-A franchise tax -- its New York activities fall entirely within Public Law 86-272's protected safe harbor. The out-of-state typesetting company…
Before it opened a formal New York sales office, a Florida homebuilder advertised in New York papers using an officer's home telephone number, and that officer met with prospective customers at his Long Island home. Did that activity amount to 'maintaining an office' in New York, subjecting the company to New York franchise tax even before the formal office opened?
Yes -- Gulf Homes, Inc. was subject to New York's Article 9-A franchise tax even before it opened its formal Massapequa sales office in August 1980. Starting in 1978, Petitioner (a Florida real estate…
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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.