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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Does the production exemption cover the equipment and supplies a company uses to demolish railroad bridges and cut up the resulting scrap for sale?
No — the equipment and supplies are used predominantly for demolition, which is not production, so the production exemptions do not apply and the purchases and rentals are fully taxable. Sheldon Const…
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…
Is transferring trucks from a dissolved partnership to a corporation owned by the former partners taxable, when no stock or payment changes hands?
No — if the books document it as a genuine contribution to capital with no stock or other consideration, the transfer is not a taxable retail sale. Anacola Trucking Service, Inc. is a refuse-collectio…
Must a village collect sales tax on the sewer user charges it bills residents, when it hires a private firm to run the treatment plants?
No — the village's sewer user charges are exempt, because a municipal instrumentality is not required to collect tax on a service not ordinarily sold by private persons, and hiring a private operator …
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…
Must an exempt organization that sells books through a room with a cash register and by mail collect sales tax, and can it refund tax it already collected to customers?
The organization must collect tax because it is operating a shop or store, and tax it already collected must be paid over to the State — it cannot be refunded to customers by the organization. The C.G…
Are custom-modified computer programs the vendor tailors to each customer's ATM system taxable, or exempt intangible property?
Under the rule in effect at the time, the programs are exempt intangible personal property, because the vendor must analyze each customer's requirements and modify the actual program for that customer…
Is the energy a shopping-mall landlord bills a tenant as 'additional rent' taxable, and is the landlord's 20% administrative markup taxable too?
Yes to both — the energy the mall bills the tenant is taxable even though the lease calls it 'additional rent,' and the landlord's 20% administrative markup is taxable as part of the receipt. The Rich…
Are the common-area maintenance charges a shopping-plaza owner bills tenants as 'additional rent' subject to sales tax?
No — common-area maintenance charges billed to tenants as 'additional rent' are receipts from the rental of real property and are not subject to sales tax. Northtown Inc. owns a shopping plaza and lea…
Is natural gas used to heat a factory's production area exempt as used 'directly and exclusively' in manufacturing, if that heat is also needed for employee comfort?
No — the gas is taxable, because heat the manufacturer would need for employee comfort anyway is not used 'exclusively' in production. MOD-PAC Corp. manufactures packing cartons by cutting, folding, g…
When a lessee exercises an option to buy leased equipment, is the 'finance charge' added at that point taxable, or is it non-taxable interest?
It is taxable — the 'finance charge' is part of the total option purchase price, not exempt interest, because the underlying deal was a lease rather than an extension of credit. L.B. Smith, Inc. sells…
Do a plant's energy-management system, machine-signaling/reporting system, and finished-goods conveyor qualify as production machinery exempt from sales tax under section 1115(a)(12)?
None of the three systems qualifies — all are taxable. Syracuse China Corporation asked whether a Markman Energy Management (MEM) System, a Datacom System, and a Rapistan Conveyor System were machiner…
Does a Computer Aided Drafting (CAD) system used to design and test custom equipment qualify for the sales-tax exemption for property used in research and development under section 1115(a)(10)?
It qualifies only if over 50% of the CAD system's use is testing whether a design meets function and reliability requirements; mere design or redesign does not qualify. Sybron Corporation's Pfaudler D…
Are the services of installing (setting up) and dismantling (breaking down) trade-show exhibits taxable in New York, and does it matter that the setup is temporary?
Installing exhibits is taxable; dismantling them is not taxable, but only if that charge is separately stated. I & D Inc. sets up and breaks down trade-show and convention exhibits — uncrating and bol…
Is energy used to heat 'make-up air' — outside air brought in to replace exhausted contaminated air in a plant ventilation system — exempt from sales tax as used directly in production?
It is taxable — the energy is not used directly in production. Weber-Knapp Company runs a mechanical ventilation system that exhausts toxic, flammable or explosive vapors from the work area and brings…
When equipment is leased under a lease that accounting rules treat as a capital lease, is sales tax based on the full periodic payment, the payment minus interest, or the capitalized asset value?
Sales tax is based on each full lease payment — not the payment minus interest, and not the capitalized asset value. Joy Manufacturing Company leases equipment under an agreement that, for accounting …
Are employer-owned country clubs open only to a company's employees 'social or athletic clubs' whose dues are taxable, even though the members have no ownership stake?
Yes — they are social or athletic clubs, and if any member's dues exceed $10 a year, all members' dues are taxable. IBM owns and operates three New York country clubs with golf courses, tennis/basketb…
Does a CAD/CAM computer used to design machine parts and to experiment with new designs qualify for the sales-tax exemption for production machinery or for research-and-development property?
The CAD/CAM computer is not exempt production machinery, but it qualifies for the research-and-development exemption if over 50% of its use is experimental design testing. Houdaille Industries uses a …
Is a records-storage company's charge a taxable storage service, or a nontaxable lease of real property?
It is a taxable storage service, not a nontaxable real-property lease. Record Retention Center Corporation stores customers' financial records in an open warehouse, assigning each customer an unsecure…
Does temporarily handing artwork or mechanicals to a client's printer for reproduction turn a designer's exempt service into a taxable sale of tangible personal property?
No — the temporary transfer for reproduction only does not turn the exempt design service into a taxable sale. Chermayeff and Geismar Associates, a New York design partnership, develops design concept…
Is a marina's charge for off-season land storage of boats a taxable storage service or a nontaxable lease of real property?
It is a taxable storage service. Genesee Marina, doing business as Riverview Yacht Basin, rents land space for off-season storage of boats. Its space-rental agreement puts the boat at the owner's risk…
Is a computer system used partly for medical research and education, and partly for billing and other tasks, exempt from sales tax as research-and-development property?
The computer is exempt only if over 50% of its use is directly in qualifying research and development. Doctors Aquavella and Jackson bought a large computer system they said was used predominantly for…
Is a utility's payment to relocate underground gas mains and repave the street — forced by city construction — a taxable repair of real property or a nontaxable capital improvement?
It is a nontaxable capital improvement, not a taxable repair. Brooklyn Union Gas relocates its underground mains when New York City construction projects would interfere with them, excavating and layi…
Are a building designer's services and the illustrations he sells taxable, and can he buy the underlying materials tax-free for resale?
It depends on the end result: design work that culminates in completed, engineer-sealed working drawings under one contract is a nontaxable service, but selling a standalone drawing or illustration is…
Which items in a contractor's construction jobs are nontaxable capital improvements, and how is tax handled when one job mixes capital improvement work with a taxable installation?
Work that permanently improves the building is a nontaxable capital improvement, but a job that mixes capital-improvement work with a taxable installation is taxable in full unless the taxable part is…
Is a vending operator's purchase of a video game machine a nontaxable purchase for resale because he later 'contributes' it to a partnership with the location owner?
The purchase is taxable — it is a purchase for use, not a purchase for resale, and later contributing the machine to a partnership doesn't change that. Folz Amusement & Game Co. buys a video game mach…
Are a bottle-bill container handler's charges for collecting, transporting, processing, and accounting for empty deposit containers, and its sale of the processed materials, subject to sales tax?
None of the charges are taxable. Western New York Beverage Industry Collection and Sorting picks up empty non-refillable deposit containers from dealers, transports them, sorts and processes them into…
Is the lease of a relocatable modular office building subject to sales tax, even though it is classified as real property for real-property-tax purposes?
The lease is taxable as a rental of tangible personal property; the modular building is not a capital improvement even though it is taxed as real property for real-property-tax purposes. Hudson River …
Can a charter fishing boat operator buy its boats, fuel, and supplies exempt as commercial fishing, and are its charter fees taxable admissions?
The operator's boats, fuel, and supplies are taxable because charter sport fishing does not qualify for any commercial-fishing exemption; but the charter fees it charges customers are exempt as partic…
When a waterproofing contractor repoints mortar, recaulks joints, and reroofs a building, which parts are taxable repairs and which are tax-exempt capital improvements?
Most waterproofing work — repointing mortar, recaulking joints, and rebuilding masonry — is a taxable repair of real property, but re-covering and insulating a complete roof is a tax-exempt capital im…
Is the electricity a manufacturer uses to light its production facility exempt from sales tax under the production exemption?
Electricity used to light a manufacturing plant is taxable — it is not used 'directly and exclusively' in production, so it fails the § 1115(c) exemption that covers power running the production machi…
How does a registered motor-fuel distributor that sells gasoline through its own stations compute the sales tax, and when is the tax due?
A registered motor-fuel distributor that sells gasoline through its own retail outlets must compute sales tax on the statutory selling-price base — not on its own purchase price — and the tax becomes …
Which pieces of a computer system that produces NC control tapes for exempt factory machines qualify for New York's production-machinery exemption?
Of a five-machine computer system that produces NC control tapes, only the tape punch unit — used exclusively to punch the tapes — is exempt production machinery; the computer, disc drive, plotter, an…
When an advertising supplement is inserted into a shopping paper, is the supplement's area counted in the percentage of the publication devoted to advertising?
When an advertising supplement is included as part of a shopping paper, the area of that supplement is not counted in computing the percentage of the publication's printed area devoted to advertising …
Is reconditioning already-installed kitchen cabinets — new doors, drawer fronts, hinges, pulls, and veneers — a taxable repair service or a tax-exempt capital improvement?
Reconditioning already-installed kitchen cabinets is a taxable repair/servicing of real property, not a tax-exempt capital improvement, so the contractor must charge sales tax on the whole job. Nu*Loo…
Are charges to pick up containers of chemical waste from a plant and deliver them to a treatment/disposal company subject to sales tax?
Charges to pick up filled chemical-waste containers from a plant and haul them away are taxable trash removal — a service to real property under § 1105(c)(5) — even though the separate treatment and d…
Is a common carrier's satellite up-linking and down-linking of television signals taxable telephony/telegraphy, and is its transmission equipment exempt?
A common carrier's satellite up-linking and down-linking of television signals is taxable 'telephony and telegraphy' under § 1105(b) — not exempt cable-TV entertainment — but the receipts are exempt w…
Are a telephone company's charges for installing and repairing telephone systems subject to sales tax, and does it matter whether repair equipment is used?
Charges for installing and repairing telephone equipment are taxable, and repair charges are taxable whether or not repair equipment is used; the only relief is where equipment is sold installed as a …
Is a general contractor's payment to an excavation subcontractor a taxable equipment rental, or an exempt service that's part of a capital improvement?
A general contractor's payment to an excavation subcontractor is a nontaxable service, not a taxable equipment rental, because the contractor has no right to direct and control the equipment or operat…
In a car lease where the customer trades in a vehicle, is the trade-in allowance included in the sales tax base or excluded?
A trade-in vehicle accepted in part payment and intended for resale is excluded from the sales tax base even in a lease, so tax is measured only by the cash portion — here $14,000, not the full $18,00…
Does an advertising agency's purchase order disclose principal-agent status clearly enough to buy materials as its client's agent for sales tax purposes?
An advertising agency's purchase order that says it is 'an accredited advertising agency and as such' acting as agent for its client does not clearly disclose principal-agent status, so the agency is …
Is installing new linoleum over an entire room's floor a tax-exempt capital improvement, no matter what surface it's glued over?
Installing new linoleum over the floor of an entire room by cementing it down is a tax-exempt capital improvement, regardless of what surface it's glued over — so the homeowner was wrongly charged tax…
Are computer-generated financial reports, like loan amortization printouts made from a client's figures, a taxable information service or exempt personal information?
Computer-generated financial reports, such as loan amortization printouts produced from a client's figures, are a taxable information service, because the exemption for personal information requires t…
Is a company-owned country club a taxable 'social or athletic club,' and are its storage and restaurant charges taxable?
A company-owned country club whose members have no proprietary interest, no control over management or activities, and open first-come-first-served membership is not a taxable 'social or athletic club…
When a data processor maintains and prints a client's membership list, is it selling a taxable printed product or an exempt information service?
A data processor that maintains a client's membership list and delivers updated printed lists is selling taxable tangible personal property, not an exempt information service, because the essence of t…
Does a sale-and-leaseback of leased vehicles trigger sales tax, or is it exempt as a purchase for resale?
A sale-and-leaseback of vehicles that stay in a leasing business is made solely for resale, so neither leg is subject to sales tax. Key Capital, an auto-leasing company, proposed to sell its already-l…
Is the gas and electricity that runs coin-operated washers and dryers in an apartment building exempt as residential energy use?
Gas and electricity that power coin-operated washers and dryers in a residential apartment building are used in a trade or business, not for residential purposes, so they are taxable and don't qualify…
If an owner buys a recreational vehicle to rent out but also for some personal use, can the purchase be tax-free as a purchase for resale?
A vehicle bought both to rent out and for the owner's own use is not purchased exclusively for resale, so the purchase is a taxable retail sale — the resale exclusion doesn't apply. May Associates ren…
If an owner buys a vehicle to rent out but also uses it personally, is the purchase tax-free as a purchase for resale?
A vehicle bought both to rent out and for the owner's own use is not purchased exclusively for resale, so the purchase is a taxable retail sale — the resale exclusion doesn't apply. May Associates lea…
Does a tax-exempt nonprofit have to collect sales tax on casual door-to-door product sales run by its student program?
A qualifying exempt organization's casual door-to-door product sales are not taxable, because they aren't made through a shop, store, or restaurant the organization operates. Junior Achievement of Wes…
Are charges to modify or repair a customer's foundry patterns taxable, and when can a resale certificate or the manufacturing exemption apply?
Charges to modify a customer's foundry patterns are taxable fabricating/processing services (§ 1105(c)(2)), and charges to repair them are taxable repair services (§ 1105(c)(3)) — unless the service i…
Does a caterer owe tax on floral centerpieces it buys for customers, and are its leasehold improvements exempt as capital improvements?
A caterer's floral centerpieces are taxable, and its leasehold marble floor and new ceiling are capital improvements, but its disco lights are taxable trade fixtures. Bayshore Catering buys standard f…
Can a seller exclude a flat separately stated shipping-and-handling charge from taxable receipts?
A flat, separately stated shipping-and-handling charge that bears no relation to actual transportation cost — and that doesn't separate the shipping portion from the handling portion — cannot be exclu…
Is the electricity that powers a deli's coolers exempt as used in production, when the food is both sliced for sale and made into ready-to-eat items?
A deli's cooler electricity is exempt from sales tax only for the portion used to cool food that is later sliced and sold by weight as tangible personal property — not for food used to make ready-to-e…
Would a college meal plan lose its sales-tax exclusion if it started refunding students for unused meal points?
A college meal plan keeps its sales-tax exclusion when unused points are not refunded, but loses it if the plan is changed to refund unused points — because the points then act like taxable scrip. Stu…
Are a country club's membership fees and dues taxable when members have no control or ownership and membership is open to the public?
A country club's membership fees and dues are not taxable where members have no proprietary interest and no control over the club's activities or management, and membership is open to the public on a …
Can a seller exclude a flat separately stated shipping-and-handling charge from taxable receipts?
A flat, separately stated shipping-and-handling charge that bears no relation to actual transportation cost — and that doesn't separate the shipping portion from the handling portion — cannot be exclu…
Is renting a trailer that only hauls a manufacturer's industrial waste to a treatment center exempt as production equipment?
Renting a trailer used only to transport a manufacturer's industrial waste to pollution-control centers is taxable — the trailer is not machinery or equipment used directly and predominantly in produc…
Does a college owe sales tax when a graduating student forfeits a deposit to keep an assigned computer instead of returning it?
A college owes no sales tax when a graduating student forfeits a $200 maintenance deposit to keep an assigned computer instead of returning it for a refund — because the sale isn't made through a shop…
Are a swim club's seasonal membership charges taxable dues when members have no control or ownership and membership is open?
A swim club's membership payments are not taxable dues where members have no proprietary interest and no control over the club's activities or management, and membership is sold on a first-come, first…
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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.