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 installing a bolted-and-wired trash compactor in an apartment building a capital improvement, or a taxable sale and installation of equipment?
It is not a capital improvement. Multi-Pak Sales Corp. manufactures trash compactors and sells them from a catalog, installing them (as New York code requires) under the trash chutes of apartment buil…
Are advertising envelopes used to mail promotional material out of state from a New York post office exempt from sales and use tax?
It depends on the date: taxable for mailings before September 1, 1989, and exempt for out-of-state mailings on or after that date. Garden Way Incorporated used 'promotional covers' — envelopes heavily…
Does a company owe New York tax on parts it buys out of state, receives in New York, then uses to repair cars at out-of-state race tracks?
No — the parts are purchased for resale, so there is no sales or use tax. BRM Motorsports, Ltd. transports race cars to out-of-state tracks and repairs and maintains them there; it buys parts out of s…
When tenants build out their leased space in a tower on land owned by the U.S. Postal Service, are the tenants' construction materials also sales-tax exempt?
Yes. This Modified Advisory Opinion extends the exemption to the developer's space tenants (subtenants): materials that the space tenants and their contractors buy to build and install their tenant im…
When a computer maker uses its own products, is the use tax based on its selling price or its cost, and are service-contract replacement parts bought for resale?
The use-tax basis depends on whether the company made the item or bought it for resale, and its service-contract replacement parts are purchased for resale. Barrister Information Systems manufactures …
Are gastrostomy (stomach) feeding tubes for patients who cannot eat by mouth exempt from New York sales tax?
Yes. Gastrostomy feeding tubes are exempt from New York sales and use tax on two possible grounds. First, a tube that completely or partially replaces the function of a permanently inoperative or perm…
Are construction materials exempt from sales tax when a private developer builds an office tower on land owned in fee by the U.S. Postal Service, so that the finished work becomes Postal Service property?
Yes. Because the materials become an integral component of real property owned in fee by the United States Postal Service — an exempt federal instrumentality under Tax Law § 1116(a)(2) — and title to …
Does a contractor owe sales tax on materials used to rehabilitate privately owned homes, when the work is paid for with state and federal housing-program funds?
Yes. A contractor must pay sales tax on materials it buys to rehabilitate and improve privately owned homes and rental property, even though the work is funded and administered through New York State …
Can a photofinisher buy its film processors and printing equipment tax-exempt as production machinery, when part of the work develops the customer's own film?
It depends on the step. Machinery a photofinisher uses to develop a negative from film the customer already owns is NOT exempt, because that step is a taxable processing service on the customer's prop…
Is machinery sold to the solid-waste industry exempt from sales tax — recycling equipment that turns scrap into materials for sale versus equipment that just compacts trash for a landfill?
It splits by what the machine does. Machinery used to process scrap (metal, wood, paper, cardboard) into usable materials that will be SOLD is exempt production machinery under Tax Law § 1115(a)(12) —…
Can a warranty-repair company buy its equipment tax-exempt as production machinery, when it reconditions defective units and ships them back to the manufacturer for resale?
No. A company that reconditions defective or damaged units and parts and ships them back to the manufacturer for resale is performing repair — not production — so its equipment does NOT qualify for th…
Is a construction management company liable for sales tax on purchases it makes as agent for the project owner, or is only the owner liable?
Ordinarily the owner, not the agent, is liable — but the agent's protection is not absolute. A construction management company that genuinely acts as agent for a disclosed principal (the project owner…
Can a business that brought an out-of-state yacht into New York for chartering pay use tax on the yacht's fair rental value instead of its full purchase price?
No. A company that brought an out-of-state yacht into New York to operate an ongoing charter business owes compensating use tax on the yacht's full purchase price plus renovations — not on its fair re…
Is a license to use prepackaged, off-the-shelf software — and its technical support — subject to New York sales tax?
Yes. A license to use prepackaged software that does not require an analysis of the customer's requirements or adaptation by the vendor is taxable as tangible personal property under Tax Law § 1105(a)…
Are home drinking-water lead-test kits and a faucet-mounted water filtration system exempt from sales tax as medical equipment?
No. Home drinking-water lead-test kits and a faucet-mounted water filtration system are both subject to New York sales and use tax; neither qualifies for the exemption for medical equipment under Tax …
When a printer produces free advertising materials mailed in and out of New York, who owes sales/use tax and on how much?
It depends on who does the mailing. Freed Maxick Sachs and Murphy, P.C. asked how sales/use tax applies when it hires advertising agencies and printers to make promotional materials (ads, catalogs, li…
Does a direct-response advertising firm charge sales tax to its clients, or pay tax on its own purchases?
It pays tax on its own purchases and does NOT collect tax from clients. Names in News/Direct Response Inc. assembles advertisers into a mass card-deck mailing: it takes each client's printing 'mechani…
Are a New York mover's business forms and selling supplies taxable if bought from an out-of-state franchisor and used for interstate moves?
They are taxable. Bay Shore Warehouse, Inc., a New York mover operating under a franchise with an out-of-state van line, must buy the van line's forms and selling supplies (delivered to it in New York…
If my company submeters and bills tenants for the electricity they use, am I a vendor that must collect sales tax — and do I owe tax on electricity I buy but don't resell?
Yes on both. Owners & Tenants Electric Company meters electricity for landlords, bills the tenants, collects the money (net of sales tax), and files sales tax returns for its clients. The Department h…
How is sales or use tax charged when someone buys a mobile home and installs it permanently on New York land — and does living out of state change it?
It turns on new-vs-used, where it's bought, and the buyer's residence. Elsa and Carlos Rosa, New Jersey residents, planned to buy a mobile home and install it permanently on their land in Bethel, New …
Can a broadcaster allocate the sales tax on its production purchases based on where its viewers are, since the audience is in and out of New York?
No. Showtime Entertainment prepares videotape programs for satellite broadcast and asked whether the sales and use tax on its purchases of tangible personal property, editing/dubbing processing servic…
Can a pay-per-view movie company take over the hotel's responsibility to collect and pay the sales tax on in-room movie charges?
No. Spectradyne installs and maintains pay-per-view movie equipment ('Spectravision') in hotels and asked whether it could assume the hotel operator's liability to remit the sales tax collected on in-…
How is a car dealer taxed on vehicles it loans to customers as courtesy cars, especially if it depreciates them as business assets?
It depends on how the dealer holds and uses the cars. Crestview Cadillac loans courtesy cars to customers whose vehicles are being serviced and asked how they are taxed. The Department explained the d…
Are in-flight movie projection systems and the movie films rented to airlines taxable in New York, and where does delivery occur?
The equipment is exempt; the films are taxable based on where delivery occurs. Inflight Services rents airlines light-weight film projectors, screens, and ear sets (and supervises installation) plus a…
Does a carpet retailer collect sales tax on installation — and does it matter what's under the carpet?
It depends on the surface underneath: carpet over a finished floor is a taxable installation, while carpet over a bare subfloor is a tax-exempt capital improvement. Brockport Carpet & Linoleum sells a…
Do the food and supplies a company buys to raise dogs and ferrets for sale qualify for New York's manufacturing or production exemptions from sales tax?
No — the food and supplies are taxable. Marshall Research Animals raises beagles and ferrets in closed breeding colonies and sells them, and it wanted its feed and similar supplies exempt under the pr…
Is the admission charge to play a paintball 'survival game' — including the equipment used — subject to New York sales tax?
The admission charge to participate is not taxable, but separately sold extra supplies are. Charging patrons to play a paintball 'survival game' is an admission to a facility for a sporting activity i…
Is the single admission-and-equipment charge to play a paintball 'survival game' taxable, and what about a free t-shirt given to the winner?
The admission to play is not taxable, and the free winner's t-shirt is not taxed to the player, but the operator pays tax on both the equipment and the shirts. Charging a single fee to play a paintbal…
How is a vehicle lessor taxed on the diesel fuel and the various lease charges when it supplies fuel as part of the rental?
When a vehicle lessor supplies diesel fuel as part of the lease, it is treated as consuming its own fuel, and all its lease charges are taxable receipts. Because the lessor stores and dispenses diesel…
Does a batting-cage operator charge sales tax on batting-practice fees, on bat/helmet rentals, and does it owe tax on the pitching machines?
Batting-practice fees are exempt, but equipment rentals are taxable and the operator owes tax on its machines. Charging customers to use pitching machines for batting practice is a charge for a partic…
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…
Can a company claim the resale exemption on aircraft it also used to fly its own personnel before reselling them?
No — because the company used the aircraft to transport its own personnel before reselling them, the resale exemption is lost, and both planes are taxable. John B. Pike and Son, Inc. bought a Rockwell…
Are a trucking company's vehicles exempt from sales/use tax as interstate commerce when its NY-to-NY trips merely pass through other states?
No — trips that begin and end in New York are intrastate even if they pass through other states, so the trucks are not used in interstate commerce and are subject to sales and use tax. S.T.L. Transpor…
Are a gas driller's site-prep and well-service vehicles taxable, and does use tax apply to a copy machine bought in Louisiana and moved to New York?
A gas driller's four-wheel-drive site-preparation vehicles and its equipment-carrying pickup trucks were taxable before an August 26, 1981 law change and exempt after, and a copy machine bought in Lou…
When a supplier places coin-op video games in a store and splits the money, who owes sales tax — the store owner, the supplier, or on the game play?
When a video-game supplier places coin-operated machines in a store, maintains them, and each month splits the receipts 50/50 with the store owner: (1) the game-play receipts are not subject to sales …
Are advertising-printed envelopes used to mail promotional material out of state, but mailed from New York, subject to New York sales or use tax?
Envelopes used to mail promotional material to out-of-state recipients are subject to New York sales or use tax when they are mailed from a New York location. The envelopes are 'used' in New York the …
When a corporation buys a boat to bareboat-charter it, when can it buy tax-free, and can it shift the tax to the charterer's use tax?
A corporation can buy a vessel tax-free for resale only if the bareboat charter is a true arm's-length rental — the charter fee must be reasonable versus comparable vessels and fairly reflect acquisit…
Are an ad agency's purchases of photography and artwork taxable when the agency incorporates them into camera-ready mechanicals it sells to its clients?
No — the photography and artwork are not taxable, and no use tax applies. The ad agency buys artwork and photography and incorporates it into camera-ready mechanicals that it sells to its clients. In …
How does New York's compensating use tax apply to the equipment, supplies, component materials and packaging a rubber printing-plate manufacturer uses?
Mostly exempt — only the billing invoices are taxable. Colby Engraving and Rubber Plate Corp. makes rubber printing plates to customer specifications and asked how the compensating (use) tax applies t…
Does a display maker owe sales or use tax on artwork it buys from suppliers, and does the resale exclusion or the production exemption apply?
It depends on how the artwork is used — resale is tax-free, and artwork consumed to produce a display for sale is exempt except for New York City tax. Ledan, Inc. designs and sells displays and orders…
A home-party seller paid use tax on the gifts and supplies she bought — can she get a refund, and does the packaging she passes on to customers qualify for an exemption?
Mostly no refund — the use tax was properly due — except for packaging materials she passes on to customers. Marilyn Rieland runs home sales 'parties' for Home Interiors and Gifts and awards 'hostess …
Do buyers of fractional interests in a racehorse owe New York sales or use tax when the seller keeps racing the horse in New York before title actually passes to them?
No. Buyers of undivided one-fortieth interests in the thoroughbred stallion Spectacular Bid, under a syndication agreement, do not incur New York sales or use tax when the seller (Hawksworth Farm Asso…
Does a cable-TV operator owe sales and use tax on the materials it builds into its system and on the tools, vehicles, and equipment it uses to operate?
Yes. Seneca Cable TV owes New York State and local sales and use tax on both (1) the materials it assembles or builds into its buildings, head end, trunk distribution system, and test equipment, and (…
Is the New York Insurance Exchange exempt from New York State and local sales and use tax?
No. The New York Insurance Exchange, a not-for-profit corporation created under Insurance Law § 425-a to provide a facility for reinsurance and certain other underwriting, is not exempt from New York …
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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.