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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Are receipts for managed IT support services -- monitoring, management, backup, security -- subject to NY sales tax?
It depends what's sold. The integrated IT monitoring and management packages are not taxable (their primary function -- helping a customer operate and manage its IT system -- is an unenumerated servic…
Are sales of an automated speech-application program -- delivered as licensed, hosted, or managed-on-premise -- subject to New York sales and use tax?
Yes. The company's automated speech applications (used by clients to handle phone calls -- routing, self-service, product/warranty support) are sold under three models: licensed for the client's inter…
Are the hourly fees customers pay to sit at a gaming center's computers and play video games subject to New York sales tax?
Yes. The hourly play fees are subject to sales tax under Tax Law § 1105(a). The video games are prewritten computer software, which § 1101(b)(6) deems to be tangible personal property, so charging cus…
Are a web service provider's advertising, listing, support-database, and ASP fees subject to New York sales tax?
It varies by service. Banner ads, web listing/catalogue advertising fees for retailers and for residential leasing agents/owners, and separately stated photo setup fees are nontaxable advertising serv…
Are licenses to use customizable prewritten software taxable, and how is the tax sourced when users are in several states?
Yes, the license fees are taxable sales of prewritten software, taxed to the extent the customer's employees access the software in New York. Prewritten software is tangible personal property regardle…
If my company lets customers access software over the Internet from my own servers (a SaaS model), rather than installing it on their computers, do I still have to charge New York sales tax on it?
Yes. New York taxes a customer's Internet-based access to software hosted on the vendor's own servers the same as a sale of prewritten software, because the customer gains the right to use and control…
If I run a web-based platform that homecare agencies and subcontractors log into to schedule care and track visits, is access to my software taxable, and is training or customization also taxed?
Yes. Charges for accessing a web-based homecare scheduling and time-and-attendance platform are taxable as a sale of prewritten software, sourced to the locations of the agencies and subcontractors wh…
My company licenses customers access to markdown-recommendation software hosted on our own server, with separate charges for implementation, support, and hosting — which of these charges are subject to New York sales tax?
Mostly taxable. Monthly license fees for remotely-accessed, non-downloaded markdown-recommendation software are taxable prewritten computer software because the customer gains the right to use it even…
My company licenses mortgage brokers access to our loan-origination software hosted entirely on our own out-of-state servers, with no download and no code ever touching the subscriber's computer — is our subscription fee subject to New York sales tax, and does the federal Internet Tax Freedom Act protect us?
Taxable. A mortgage-technology company's subscription fees for its "Encompass Anywhere" Internet-hosted loan origination and processing software are subject to New York sales tax as a sale of prewritt…
My platform helps buyers and sellers complete two types of syndicated loan trades over the Internet, sometimes letting the seller input their own data directly instead of us doing it — is either product a taxable information service or software sale in New York?
Split result. Neither of a financial platform's two loan-settlement products is a taxable information service, because converting a subscriber's own data into contract form isn't furnishing new inform…
We built software for one airline, then repurposed it as the base for a licensed product we now customize and sell to many different airlines — is that taxable prewritten software, or exempt custom software?
Taxable. Software originally custom-built for one airline becomes taxable prewritten computer software once it's reused as the base product licensed and re-customized for other airline customers, beca…
We license IT and business-skills e-learning courseware, a searchable reference library, an optional mentoring add-on, and live instructor-led virtual classroom sessions — which of these are subject to New York sales tax, and how do we source tax when our customers' employees are spread across multiple states?
Split result. SkillSoft's hosted e-learning courseware is taxable prewritten software (license fees taxed based on where each licensed user is located, even without any download), its Referenceware se…
We sell interactive online e-learning courses, plus separate add-on charges for a reference library, a live mentoring service, and a course-planning consultation — which of these are subject to New York sales tax?
Mixed result. Highly interactive online e-learning courses are taxable as a sale of prewritten computer software (whether accessed online or downloaded), and a reference-library add-on is a taxable in…
Are downloadable wallpaper, games, ringtones, and ringback tones sold by a mobile phone carrier subject to New York's utility tax, telecommunications excise tax, or sales tax?
Mostly no, with one exception. A carrier that separately and reasonably bills for wallpaper, games, ringtones, and ringback tones can exclude them from the section 186-a utility tax, the section 186-e…
I sell access to hosted image-editing software that lets customers upload and manipulate product photos on my servers — no software is ever downloaded to the customer. Do I still owe New York sales tax on the license fees?
Yes, taxable. Adobe Systems Inc.'s annual license fees for its "OnDemand ASP Software" — a hosted product that lets customers upload and manipulate product images on Adobe's own out-of-state servers, …
I run pay-per-minute Internet cafe workstations and offer an optional 'premium' upgrade that lets customers edit documents in real desktop software instead of just viewing them -- is the basic Internet time exempt, and is the premium software upgrade taxable?
Split result. A pay-per-minute Internet cafe's basic Internet access charge is exempt from New York sales tax under the state's Internet access exemption, but its optional 'premium service' upgrade --…
If a company sells point-of-sale equipment and bills staging, software installation, testing, and setup as one lump-sum 'project management' line item, is the whole charge taxable, or can the software-related part be carved out as exempt?
The entire lump-sum charge is taxable, because the normally tax-exempt software installation/modification services were bundled into one line item with the taxable hardware sale and setup rather than …
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…
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,…
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…
Is a company's fee for subscription access to an Internet-filtering system — where the filtering software and a website-category database are downloaded onto the client's own server rather than sold as a disk or physical product — subject to New York sales tax as prewritten software?
Yes. Even though the company describes its offering as a 'filtering service,' the actual work of filtering employees' Internet access is performed entirely by software and a database that are download…
Are a computer company's on-site repair visits, on-site staffing arrangements, service contracts, and telephone technical-support charges subject to New York sales tax?
It depends on whether the work is done on hardware or on software, and whether any nontaxable pieces are separately and reasonably stated on the bill. Repairing or maintaining computer hardware — whet…
Are charges for web site design and development services subject to New York State sales tax?
No. Web site design and development services are not subject to New York sales tax, whether the finished site is delivered by uploading it to a hosted server or by sending the client a CD-ROM, because…
Is a company's licensed equity-trading software, along with its customer support, training, and customization charges, subject to New York sales and use tax?
It depends on whether the software is 'prewritten' or truly custom. If the FLEXTRADE software (or its updates) wasn't designed and developed to each specific customer's own specifications, it's taxabl…
Are a new media company's web site development, design, consulting, and maintenance services subject to New York sales and use tax?
Web site development, design, implementation, consulting, and content maintenance are not subject to sales tax, even when the site is delivered on a CD-ROM. But the company's own purchases of prewritt…
Is a Web site development company's charge for consulting on, designing, and building a client's Web site subject to New York sales tax, and does the developer owe tax on the software it buys or writes in-house to do that work?
Web site development services — consulting, design, and building the site, plus any future hosting fees passed through from an ISP — are not a taxable service in New York and stay untaxed no matter wh…
When a securities broker-dealer spins off its software-development operations into a separate subsidiary and licenses its trading software back, does that reorganization trigger New York sales or use tax on the software?
Generally no, as long as the software stays custom-built for one purchaser's own specifications and isn't resold to third parties. A joint venture's custom-built trading algorithm licensed to the brok…
Does custom-built trading software stay exempt from sales and use tax as 'custom software' after a corporate reorganization moves it into a separate subsidiary and licenses it back, and does giving customers free access to related front-end software trigger tax?
Yes, on every issue raised. Both the trade-execution algorithm software (built by a joint venture to the broker-dealer's specifications) and its own internally developed front-end trading software qua…
Does a financial-risk-analysis firm owe sales tax on the prewritten software it buys and uses to generate its reports, and does it have to charge customers sales tax on its portfolio risk-analysis and stress-test services?
Two different answers for two different things. The prewritten Algorithmics software the company buys and uses internally to help generate its risk reports is a taxable purchase, since it's used in pe…
Is a custom software developer's work for clients subject to New York sales tax, and does it matter whether the software, artwork, or a web site is delivered on disk or transmitted electronically?
It depends on what's actually built and how it's delivered. Genuinely custom software designed to one client's specifications is exempt regardless of delivery method, but software built by modifying o…
Is a bank trade-processing software license taxable as prewritten software even when the vendor must customize hundreds of settings before delivery, and are later custom modifications and support separately taxed?
Yes, mostly. The base trade-processing software license is taxable prewritten software even though the vendor must configure over 900 system settings for each customer before delivery, because the sof…
Which computer repair, software, and support charges are taxable in New York, and which are exempt if separately stated?
It depends on what's being worked on: repairing physical computer hardware is always taxable, but installing, servicing, or troubleshooting software is exempt if the charge is reasonable and separatel…
Is software licensing, plus separately stated charges for customization, testing, training, and maintenance, subject to New York sales and use tax?
Yes, the software license itself is taxable -- the modules are prewritten software even though later customized to each customer. But separately stated, reasonable charges for customization, testing, …
Is custom bank-interface software still taxable as "prewritten" if the developer reuses some prewritten subroutines, like a standard print routine, inside an otherwise custom program?
It depends on how the prewritten pieces are used: if the developer's prewritten subroutines (like a standard print routine) are merely incidental to writing an otherwise custom, start-to-finish progra…
Is a graphic-arts firm's charge for a custom 'multi media' computer disk (a client-specific graphical presentation) an exempt sale of custom software, or a taxable sale of tangible personal property?
Taxable. Even though the firm is developing custom software written to each client's specifications, the firm isn't selling the software itself -- it's selling a physical disk containing data, along w…
Across six different electronic-forms-business transactions -- paper-to-digital conversion, resold software, a licensed forms-development system, maintenance contracts, management contracts, and consulting -- which charges does a business forms company owe New York sales tax on?
Conversion services (scanning a form to a disc, or designing one) are taxable as tangible personal property when the company supplies the disc, but a taxable fabrication SERVICE instead when the custo…
When a business-forms company acts as a single 'facilitator' ordering supplies from third-party vendors and drop-shipping them to its own customers, who collects sales tax -- and is the fee for its ordering software and invoicing service itself taxable?
The facilitator buys tax-free for resale from third-party suppliers (using a resale certificate) but must itself separately state and collect the actual sales tax from its customer -- a bundled 'vendo…
Are receipts from selling custom industrial-control software, and from ongoing modification/updating services on that software, subject to New York sales and use tax?
No -- software designed and developed to a specific purchaser's own specifications ('custom' software) stays exempt from sales and use tax after the September 1, 1991 law change, and so do charges to …
Are sales of a licensed software product taxable when the maker embeds each customer's settings and identity into an otherwise standard program?
Yes, and generally the whole charge is taxable. The Fenics option-pricing program is pre-written software that the maker modifies to each purchaser (embedding time zone, base currency, and the custome…
For sales before September 1991, were a firm's custom software, stock-pricing service, and trade-confirmation reports subject to New York sales tax?
It depends on the item. For the audit period (Sept. 1, 1988 to Aug. 31, 1991): custom software written for one customer's specific computer environment was treated as intangible property, so its sale …
Must a real-estate facilities-management firm collect sales tax on the rental-plan books and custom software it delivers to building owners?
Yes, largely. A firm that produces computer-generated rent information and floor-plan graphics for building owners must collect sales tax on its rental-plan books, which are tangible personal property…
Is customized computer software and software maintenance taxable in New York, and how do separately stated charges affect the answer?
It depends on separately stating the charges. Under the software rules effective September 1, 1991, pre-written software that is modified or enhanced to a specific purchaser's specifications is entire…
Is a separately priced software maintenance agreement taxable in New York, and how did the 9/1/1991 law change the answer?
It depends on the date, and on itemization. Before September 1, 1991, custom/modified software was intangible personal property, and maintaining or servicing an intangible was not an enumerated servic…
Which of a printer-mailer's services — personalized mailings, label printing, electronic data processing, and packaged or custom software — are subject to New York sales tax?
Mostly taxable, with specific exemptions. Computerized Transactions Inc. asked about five printing/mailing and software services. (1) Personalizing letterheads/envelopes and giving the client the data…
Is a prewritten tax-preparation program taxable when the vendor personalizes it with the buyer's information to prevent copying?
Yes — the prewritten tax program (and its renewals and updates) is taxable. Lorraine L. Dunn, CPA, buys a tax-processing software program that the vendor personalizes with her name, address, Social Se…
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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.