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 charges for writing one-page abstracts that summarize conference speeches subject to New York sales tax?
No — the abstract-writing isn't taxable. One-page abstracts summarizing the speeches and papers from a client's conferences are 'manuscripts,' which count as intangible personal property, so receipts …
Is an investment advisor's telephone consulting service to newsletter subscribers a taxable information service?
No. An investment advisor's telephone consulting service — where sophisticated subscribers call the newsletter's authors with their own highly individualized concerns — is not a taxable information se…
When a retailer buys single-part price tickets to attach to merchandise, is that purchase subject to sales tax or exempt as packaging?
It's taxable. When a retail merchant buys single-part 'price tickets' to attach to merchandise and garments it sells, that purchase is subject to sales tax under Tax Law § 1105(a). The tickets don't q…
If a savings bank reorganization qualifies as a tax-free reorganization under IRC sections 368(a)(1)(A) and 368(a)(2)(D), is it also tax-free for Article 32 banking corporation franchise tax purposes?
Yes -- if the transaction is a tax-free reorganization for federal purposes, it is tax-free for Article 32 too. Columbia Federal Savings Bank's mutual-to-stock reorganization (transferring substantial…
Is an airline's purchase and installation of a custom baggage-conveyor system in a leased airport terminal exempt when title vests in the exempt Port Authority?
It's exempt. Where an airline buys and installs a custom baggage-conveyor system in a terminal it leases from the Port Authority, and the lease provides that title to the installation vests immediatel…
If a mutual savings bank restructures into a mutual holding company and then acquires another savings institution in a multi-step transaction the IRS already ruled tax-free federally, is the whole transaction also tax-free for New York's Article 32 banking franchise tax?
Yes. Independence Savings Bank, a New York mutual savings bank, restructured by forming a new mutual holding company, merging itself into a new stock-form subsidiary bank (a transaction the IRS had al…
Are membership deposits and dues for a developer-run recreational community club taxable as social or athletic club dues?
No. Membership deposits and dues paid to a developer-operated recreational club (ski, golf, tennis, equestrian, fitness, swimming, and social facilities) are not taxable social or athletic club dues u…
Does the rental of a 'yardhorse' yard tractor qualify for the sales-tax exemption for heavy tractor-trailer combinations?
No. The rental of a 'yardhorse' yard tractor used with a trailer weighing over 26,000 pounds does not qualify for the Tax Law § 1115(a)(26) exemption for tractors and trailers. Although the vehicle cr…
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…
Which of a mall cinnamon-roll shop's items are taxable, and does having tables or a food court change the answer?
It depends on the item and how it's sold. At a mall 'Cinnabon' shop: fresh-baked (heated) cinnamon rolls, cups of coffee, soft drinks, and bottled water are taxable whether eaten in or taken out. Pre-…
Are a members-only Fire Island beach club's dues taxable as club dues, and are its furnished unit rentals taxable hotel occupancy?
No to both. A members-only Fire Island beach club is not a taxable 'social or athletic club' under Tax Law § 1105(f)(2): its memberships are sold to the public first-come, first-served, members have n…
Can a retailer buy labeling and hanging services for its resale merchandise tax-free, and is use tax due if the work is done out of state?
No — the labeling and hanging services are taxable. When a clothing retailer hires a company to print and affix labels and put merchandise on hangers, those services are taxable under Tax Law § 1105(c…
Is a nonprofit venture-capital networking group a tax-exempt organization, and are its member dues and the meeting rooms it rents subject to New York sales tax?
Three answers, and the group comes out untaxed on the parts that matter. (1) No — the Western New York Venture Association does not qualify as an exempt organization under Tax Law § 1116(a)(4), even t…
Must a housing co-op charge sales tax on the parking and garage fees it bills tenant-shareholders who own their spaces through allocated shares?
No. A cooperative housing corporation does not have to collect sales tax on the rental fees it charges tenant-shareholders for garage and parking spaces, when those spaces are represented by shares of…
Is a singles newsletter that is mostly directory listings exempt from New York sales tax as a periodical?
No — it's taxable. 'The Matchmaker,' a newsletter for Jewish singles, is not exempt as a periodical under Tax Law § 1115(a)(5), even though it meets all five general requirements for a periodical in R…
Is a manufacturer's sale of ultrasound diagnostic imaging equipment exempt from New York sales tax as production machinery or as medical equipment?
It's not exempt as production equipment, but it is exempt as medical equipment — with a catch. Advanced Technology Laboratories' ultrasound diagnostic imaging systems do not qualify for the § 1115(a)(…
Are the materials a contractor pours into a farm bunker silo's floor and walls exempt from New York sales and use tax as farm-silo property?
Mostly exempt, with one taxable slice. Materials a contractor incorporates into a farm bunker silo used to make and store silage are exempt from New York sales and use tax under Tax Law § 1115(a)(6) b…
Is a condominium association that only collects common charges and reserve-fund interest -- with no rental or business income -- subject to New York's Article 9-A corporate franchise tax?
It depends on the year. For 1986 through 1988, no -- the Larkfield Professional Center Condo Association, an unincorporated Real Property Law Article 9-B condominium association whose only income was …
If a bank subsidiary revokes its election to be taxed under Article 9-A (switching to Article 32) in the same year it has a big capital loss, can it still carry that loss back to earlier years when it was an Article 9-A taxpayer?
Yes, but conditions apply. FSB-Properties, a wholly owned subsidiary of Flushing Savings Bank, qualifies as a banking corporation but had elected to be taxed under Article 9-A instead of Article 32. F…
When a bank resells repossessed cars and mobile homes and buys credit reports on borrowers, which of those are subject to New York sales tax?
It depends on the item. (1) Yes — a bank that sells repossessed automobiles is a 'vendor' of motor vehicles and must collect sales tax at the time of each sale unless it receives a proper exemption do…
Are single-use artificial kidneys used in dialysis exempt from New York sales tax?
Yes — with the usual carve-out. Sales of artificial kidneys (the single-use dialyzers used in hemodialysis) are exempt from New York sales and use tax as medical equipment and supplies under Tax Law §…
When a service provider bills a customer for travel, hotel, meals, and other expenses, are those reimbursements part of the taxable charge?
Yes — the reimbursed expenses are taxable. When Helmel Engineering bills a customer for installing or servicing machinery and adds its employees' mileage, hotel, auto rental, and meal expenses (plus a…
Must an out-of-state supplier collect New York tax on goods it drop-ships to a New York fabricator for a customer in a third state?
Yes — collect the tax, but a refund route exists. When Teddy & Arthur Edelman (a Connecticut leather supplier) sells leather to an out-of-state customer (e.g., in California) but ships it to a New Yor…
If a payroll-tax-filing service pools client funds meant for the IRS and state/local tax authorities and invests them before the taxes are due, is the investment income taxable New York investment income or ordinary business income?
Mostly yes, it can be investment capital -- with one carve-out. Corporation A ran a payroll and tax-filing service, collecting client funds ahead of payroll-tax due dates and investing the pooled bala…
Is a nonprofit that runs a downtown Business Improvement District a tax-exempt governmental entity under New York sales tax law?
No. The Downtown Utica Development Association — a not-for-profit corporation that administers the Downtown Utica Business Improvement District — is not an agency, instrumentality, public corporation,…
Does a salvage broker owe sales tax on the storage and towing charges it pays to release insurance-owned vehicles headed for resale at auction?
No — with resale certificates. Salvage Management, a broker that tows and stores insurance-owned wrecked vehicles and sells them for resale at dealer wholesale auctions, does not owe sales tax on the …
Are membership dues at a public, management-controlled golf and country club taxable as social or athletic club dues?
No. Membership dues paid to Bluff Point Golf and Country Club are not subject to New York State and local sales tax, because the club is not a 'social or athletic club' under Tax Law § 1105(f)(2). Mem…
Are a company's permanently installed fabric canopies and awnings a nontaxable capital improvement, and what about illuminated awning signs?
It splits. Permanently installed custom canopies and awnings made of durable plastic fabrics (vinyl, polyester, acrylic, or modacrylic) that are welded and bolted to a building qualify as a capital im…
Is a leased CAD/CAM system exempt from New York tax when it's used partly for research and development and partly for product design and manufacturing?
It's mixed, use by use. A manufacturer's leased CAD/CAM system qualifies for exemption only where it meets the 'direct and predominant' tests. Under the research-and-development exemption (Tax Law § 1…
I'm the trustee of a marital trust created for my client's late husband's surviving spouse, who is the sole income and principal beneficiary. I'm planning to terminate the trust and distribute its entire corpus -- including a one-quarter undivided leasehold interest worth well over $1 million -- directly to her, with no payment involved. Does that distribution trigger New York's Real Property Transfer Gains Tax?
No gains tax -- distributing the entire trust corpus, including the real property interest, to the sole beneficiary who already owned 100% of the trust's beneficial interest is an exempt mere change o…
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 medical-records storage-and-retrieval subscription service a taxable information service or a taxable storage service in New York?
It's taxable — as a storage service, not an information service. Immediate Medical Records' subscription service (organizing, computer-storing, and on request transmitting a client's medical records t…
Is a telephone sales-lead generation service a taxable information service in New York, and does handing over written lead reports change that?
No. Alan/Anthony's telephone sales-solicitation service — calling potential buyers with a client-approved script to generate qualified sales leads and reporting them to the client in writing — is not …
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…
For New York's corporate payroll-factor computation, are payments to independent corporate sales representatives (rather than employees) excluded from both the numerator and denominator of the payroll factor?
Yes. The taxpayer, an out-of-state apparel designer/distributor, sold through three independent corporate sales representatives whose own employees (salespersons) worked in New York and nearby states,…
Are individualized investment-evaluation and consulting reports a firm prepares for pension plan sponsors and money managers taxable information services?
No. SEI's investment-evaluation and consulting services for pension plan sponsors and money managers are not taxable. The reports it prepares — Investment Policy Planning, Asset Allocation, Investment…
Is asbestos removal taxable in New York when it is done as part of a capital improvement, such as reinsulating pipes and boilers?
No — not on these facts. Asbestos removal by itself is a taxable service (maintaining/repairing real property under Tax Law § 1105(c)(5)). But when the removal is a constituent part of a capital impro…
When an out-of-state seller drop-ships goods to a New York third party at an out-of-state customer's request, must the seller collect New York sales tax, and on what amount?
Yes. When Crescent Metal Products, an Ohio manufacturer registered as a New York vendor, drop-ships goods to a third party in New York at the request of its out-of-state customer, it must collect New …
Must a large housing cooperative collect New York sales tax on the fees it charges tenant-shareholders for parking spaces and garages?
Yes. United Veterans Mutual Housing Company, an 850-apartment cooperative in Queens, must collect New York sales tax on the fees it charges for parking spaces and garages. Providing parking, garaging,…
Is a toll-free 'call before you dig' service that takes callers' messages and relays them to member utilities a taxable telephone answering service in New York?
Yes. One Call Systems runs a toll-free 800 'call before you dig' center where contractors, utilities, and the public report an intent to disturb the earth, and it transmits those messages to the membe…
When a cabinet maker installs its own cabinets in custom-kitchen jobs, are those cabinets 'items of the same kind' it sells, so use tax is based on its selling price?
They are items of the same kind. Triangle Pacific manufactures kitchen-cabinet boxes and sells them to stores and contractors, and also installs them in custom kitchens. The Department held the cabine…
My elderly client holds a 40% interest in a partnership that owns New York real estate and wants to transfer her entire interest into her own revocable living trust for estate planning. Separately, and completely unrelated to her, the estate of another 40%-owning partner may soon sell or distribute its interest. Will my client's trust transfer be aggregated with that unrelated transfer to trigger the 50%-or-more 'controlling interest' threshold under New York's Real Property Transfer Gains Tax?
No aggregation -- the client's transfer of her 40% partnership interest into her own revocable trust will NOT be combined with the unrelated estate's separate, independent transfer of its own 40% inte…
If a tax-exempt 'lower tier' mutual fund pays exempt-interest dividends up to other 'upper tier' mutual funds that hold its shares, and those upper tier funds then pay their own exempt-interest dividends down to individual shareholders, does the New York and U.S. territory tax-exempt character of the underlying municipal bond interest survive that two-tier fund-of-funds structure, or does it become ordinary taxable dividend income by the time it reaches the shareholder?
Yes - the tax exemption survives even through a two-tier fund-of-funds structure, as long as each fund independently qualifies as a regulated investment company (RIC) paying exempt-interest dividends …
Are a stock-footage library's charges to customers taxable when it grants the right to reproduce movie footage and delivers workprints and master copies?
It splits. Sherman Grinberg Film Libraries catalogues and licenses studio-owned 'stock' footage. Its arrangements with the studios are not taxable: it only takes temporary possession of the original n…
Mae LaBue, a longtime New Jersey resident and homeowner, was admitted to a nursing home in the Bronx, New York on her physician's advice due to a stroke, severe paralysis, and hypertension, and is expected to remain there for the rest of her life. Does this involuntary, medically-necessitated placement make her a New York resident for 1991 or any future tax year?
No. The Department ruled that LaBue remains a New Jersey domiciliary and a New York nonresident for as long as she stays in the nursing home. Because her presence in New York resulted from physical an…
Does a microwave carrier collect New York sales tax on local vs. interstate telecom service, and is its transmission equipment exempt?
Local yes, interstate no, and the equipment can be exempt. Local Area Telecommunications, a microwave common carrier, must collect New York sales tax on charges to customers for local (intrastate) tel…
Can an interior design and space-planning service qualify for the capital-improvement exclusion from New York sales tax?
No. Hafner Associates' interior design and space-planning services — layouts, lighting design, millwork elevations, finishes and furnishings specifications, and project management presented on bluepri…
New York Advisory Opinion TSB-A-91(9)I: May Federal Trust Fund, a regulated investment company, and its shareholders treat the fund's 'Exempt Obligations' - federal government obligations whose interest is subject to federal tax but exempt from New York State tax - as 'obligations of the United States' for purposes of the Tax Law § 612(c)(1) subtraction, and, provided the asset and notice requirements are met, may shareholders subtract the portion of their dividends attributable to interest on those obligations from their New York taxable income?
Yes to both questions. The Department ruled that Federal Trust Fund's 'Exempt Obligations' - obligations of the federal government or its agencies/instrumentalities whose interest is taxable federally…
Is the fee to cancel a computer-equipment lease subject to New York sales tax, and does a later reimbursement of that fee change the answer?
Yes, it's taxable. Omori & Associates paid a termination fee to end a five-year computer-equipment lease early (to upgrade to new IBM equipment). Because a lease of tangible personal property is a tax…
Are a contractor's cable-TV installation and testing charges to a cable company taxable, and when do resale, capital-improvement, or exempt-organization rules apply?
Generally taxable, with several carve-outs. A contractor's charges to a cable-TV company for the 13 listed services (testing, splicing, wiring, trenching, drop-cable installs, pole transfers, etc.) ar…
When software is sold as one unit combining a taxable insurance-rating database and nontaxable custom software, is the whole price taxable?
The whole price is taxable when sold as one unit. Insurance Automation Systems sold a two-part insurance-quoting system (June 1988-May 1991): (1) a database of New York insurance companies' rating fac…
Are hemodialysis kidney machines and their single-use disposable supplies exempt from New York sales tax, and as what kind of exempt item?
Exempt as medical equipment — with a carve-out. Althin CD Medical's hemodialysis kidney machines and the single-use disposable supplies (needles, tubing, filters) used with them are medical equipment,…
Before a proposed reorganization is even completed, can the Tax Department confirm in advance whether a holding company and its operating subsidiary will be allowed to file a combined New York franchise tax report?
No, not in advance. An S-corporation client (OLDCO) planned to have its sole shareholder contribute OLDCO stock to a new holding company (NEWCO) in a tax-free IRC section 351 exchange, after which NEW…
If an out-of-state parent corporation is mistakenly listed as the record owner of New York real property that its subsidiary actually purchased, operates, and pays taxes on, does the parent become subject to New York franchise tax merely because of that clerical title error?
No. Petitioner, a Michigan corporation not authorized to do business in New York, had no involvement with New York operations -- its wholly owned New York-qualified subsidiary (PVS-NY) purchased, oper…
Which of a telecom carrier's transmission assets qualify for New York's central-office-equipment sales-tax exemption?
Only the equipment that directly and predominantly (more than 50%) switches, initiates, or receives telephone communication at its destination qualifies. For MCI and the related carriers, assets that …
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…
Are honey-roasted peanuts taxable in New York, or are they exempt food?
Yes, they're taxable. Planters Honey Roasted Peanuts are dry-roasted peanuts with a light honey glaze encrusted with sugar (the principal ingredients after peanuts are sugar and honey). Under regulati…
Is an unincorporated, nonprofit residential condominium that earns income from common laundry and garage facilities subject to New York's Article 9-A franchise tax for years before 1989, when the definition of 'corporation' required actually conducting business?
Yes. This unincorporated, nonprofit residential condominium, organized under Real Property Law Article 9-B, derives revenue from common-charge assessments, reserve-fund interest, and common laundry an…
If a corporation voluntarily dissolved decades ago but keeps title to and rents out the same real property, does it still owe New York franchise tax, and can it elect New York S corporation status?
Yes, it remains taxable, and yes, it can elect S status if otherwise eligible. Judsu Realty Corp. voluntarily dissolved in 1965 but has continued ever since to hold fee title to, and operate the renta…
Are the management fee and cost reimbursements paid to a food-service contractor to run a subsidized cafeteria subject to New York sales tax?
Yes. ARA Services would run a for-profit cafeteria open to the general public in a building whose landlord pays it a management fee plus cost reimbursements. Pure management of a for-profit cafeteria …
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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.