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 New York corporation that was dissolved by proclamation in 1926 -- before the law that would have taxed it for holding property -- still liable for franchise tax or subject to a tax lien on real estate it still holds title to?
No, and yes to the lien release. 20th Century Realty Company was dissolved by Proclamation of the Secretary of State on March 13, 1926 -- 47 days before an April 29, 1926 amendment to former Tax Law s…
Metro-North Commuter Railroad operates commuter trains in both New York and Connecticut and employs workers - on trains, in offices, and along its right-of-way - who perform duties in both states. How does section 7 of the Amtrak Reauthorization and Improvement Act of 1990, which bars a state other than an employee's residence state from taxing a rail employee's compensation if the employee performs 'regularly assigned duties... on a railroad in more than one State,' apply to Metro-North's four categories of employees, and what does 'regularly assigned' mean?
It depends on whether the employee's multi-state work is systematic or random. A New York nonresident employee whose job description requires performing duties in New York and Connecticut on a systema…
Is a toll-free 800 'call before you dig' message-relay answering service subject to New York sales tax?
Not taxable, on these facts. One Call Systems runs a toll-free 800 line that lets contractors, utilities, and the public report their intent to disturb the earth; the message is relayed to member util…
Are membership fees for a dating referral service, where members browse a library of other members' profiles, taxable as an information service?
Yes. People Resources runs a singles service where each member writes a biography and provides photos and a video, and all of that is placed in a library — separated by men, women and sexual preferenc…
We entered a purchase-and-assumption agreement with the Resolution Trust Corporation, acting as receiver for a failed savings bank, giving us options to acquire the failed bank's leased and owned New York real estate. Since the RTC is a federal agency handling a bank failure, are its transfers of that real estate to us exempt from New York's Real Property Transfer Gains Tax?
Yes, exempt -- because the Resolution Trust Corporation is a federal agency and instrumentality of the United States, any transfer of real property interests it makes as receiver is exempt from New Yo…
Is a proposed New York investment subsidiary of Chase Manhattan Corporation -- organized under the federal Bank Holding Company Act's section 4(c)(7) to invest in equity and debt securities for its own account -- taxed as a banking corporation under Article 32, or under the general Article 9-A franchise tax?
It depends on facts determined at year end, not on how the subsidiary is organized. Chase Manhattan Corporation ('CMC') proposed to form a New York investment company (the 'Company'), organized under …
Does a tax-exempt nonprofit have to collect sales tax on items sold at its annual charity auction held at a commercial auction house?
No. A New York not-for-profit corporation with an Exempt Organization Certificate wanted to run a charity auction of donated property to raise funds, held either at a public school or a commercial auc…
When a company buys taxable information reports delivered to offices both inside and outside New York, how much sales tax applies?
Only the New York-delivered portion is taxed, allocated by where delivery occurs. Revlon, Inc. buys taxable information-service reports (research and marketing) delivered to its offices across the U.S…
Are tickets to a dinner-theater performance taxable as cabaret charges, or exempt because the food was merely incidental to the show?
Taxable. Tamara NY, NY Limited Partnership staged the live play 'Tamara' at the New York Armory, where audience members were treated as guests and served a lavish banquet — a Le Cirque buffet designed…
Are cranes and equipment a contractor buys to install a gas pipeline and electric distribution grid for a utility exempt from New York sales tax as production machinery?
No. Bancker Construction Corp. bought heavy cranes to help install a gas pipeline and an electrical distribution grid for Long Island Lighting Company (LILCO). It asked whether that equipment qualifie…
Are materials and rented tools a tenant's contractors use to build out leased space at 7 World Trade Center exempt from New York sales and use tax?
Partly. Insurance Services Office, Inc. leased space at 7 World Trade Center and asked whether its contractors' purchases were exempt. Because legal title to the building's construction, improvements …
When performers set and collect their own cover charges at a tavern's door, must the tavern collect sales tax on those cover charges?
The cover charges are taxable, but on these facts the performers — not the tavern — must collect the tax. 89 Cragg Road Inc. (DBA Island Cottage) runs a Rochester tavern and lets performers entertain …
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…
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 company that leases furnished New York City apartments to tenants for a month or more a taxable 'hotel,' and which of its extra charges are taxable?
Not a hotel — the rent is exempt, but several add-on charges are taxable. KPMG Peat Marwick asked whether 'XYZ,' which leases furnished New York City apartments to residents for terms of one month to …
Does the 5% special tax on passenger-car rentals apply when a taxi company leases cabs to drivers by the shift?
Yes. BEJ Taxi Corp. leases cabs to drivers in Albany County on a shift basis (6-12 hours) and pays the registration, insurance and other nontaxable charges. The Department held the 5% special tax on p…
Is rent for leasing an entire parking garage taxable, and can a building owner who leases the garage to serve tenants treat that rent as a nontaxable purchase for resale?
Taxable, with only a partial resale credit. A building owner wanted to lease an entire adjoining parking garage — with the garage owner continuing to operate and maintain it — to provide parking for i…
Is J.P. Morgan's proposed new New York investment subsidiary -- formed under the federal Bank Holding Company Act's section 4(c)(7) to make leveraged-buyout and venture-capital securities investments -- taxed as an Article 32 banking corporation, or under general Article 9-A?
It depends on year-end facts, not the federal charter. J.P. Morgan & Co. Incorporated ('JPM'), which owns 100% of Morgan Guaranty Trust Company of New York ('MGT') and files combined Article 32 return…
Buffalo Brass Company, Inc., a foreign corporation that elected both federal and New York S-corporation status, asks whether its shareholders must add back to their New York adjusted gross income their pro rata share of the deduction Buffalo Brass took on its federal return for the new corporate-level franchise tax and surtax that Chapter 190 of the Laws of 1990 imposed on New York S corporations.
No add-back is required. The Department ruled that the new corporate-level tax and temporary surtax that Chapter 190 of the Laws of 1990 imposed on New York S corporations under Article 9-A are 'franc…
Lionel E. and Maxine Gordon, Florida residents who sold a Long Island telephone-answering business, ask whether payments Lionel Gordon received from the buyer under a noncompetition agreement are New York source income to him as a nonresident, even though he receives them in monthly installments long after the sale.
Yes. Restrictive-covenant payments tied to the sale of a New York business are New York-source income to a nonresident seller, taxable as received even years after the sale. Because the covenant's val…
Must a title-holding company that sells club-membership stock register as a vendor, and does the assessment statute of limitations run if it never filed sales-tax returns?
It must register, and no time limit protects it. St. George Operating and Improvement Co. is a title-holding company whose golf course is leased to the St. George Country Club; new members must buy st…
Does a bookstore have to charge New York sales tax on the sale of bibles?
Yes. Lauriat's, Inc., which operates a chain of retail bookstores in New York, asked whether selling bibles is taxable. The Department held that bibles, like any other books, are tangible personal pro…
Is renting a self-service mini-storage unit taxable as a storage service, or exempt as a rental of real property?
Not taxable. Elbridge Mini Storage rents self-service mini-storage rooms — each a specific, enclosed unit identified by number, dimensions and square footage, rented month-to-month with the tenant put…
Is a monthly minimum charge for credit information taxable even when few or no reports are actually issued, and does it matter if the reports are oral or written?
Yes, the minimum charge is taxable. CCB Management of Texas provides credit-information services and imposes a monthly minimum: if a subscriber orders less than $30 of reports in a month, it bills the…
When a second-tier subsidiary's dividend is paid directly to the ultimate parent (skipping the middle-tier parent's books by oversight), can the ultimate parent still exclude it from New York entire net income as income from subsidiary capital?
Yes, once properly recharacterized. Corporation S (wholly owned by D) declared a dividend to D, its shareholder of record, but with D's informal agreement the cash was paid directly to D's parent P --…
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…
As sole shareholder of the company that owns and operates my newspaper, I plan to contribute the newspaper's real estate (still subject to a $25 million mortgage) into the company for no additional consideration, to help stabilize the business -- and separately, we're planning to set up an employee stock ownership plan that will eventually hold 20% of the company's stock. Does either step trigger New York's Real Property Transfer Gains Tax?
Neither step triggers the gains tax -- the real estate contribution is an exempt mere change of identity, and the 20% ESOP stock issuance never reaches the 50% controlling-interest threshold in the fi…
When out-of-state vendors sell merchandise through airport video-terminal kiosks that ship goods to New York customers, do the vendors have to collect New York sales tax, is the kiosk operator liable as a co-vendor, and do the vendors owe New York income or corporate franchise tax?
Mixed answer across three taxes. Mitchell Sorkin's client planned computerized advertising video terminals at airports (within and outside New York) letting travelers direct-dial out-of-state vendors'…
For gas producers, are meter-maintenance and meter-installation fees taxable, and are chart-integration services (personalized well analyses) taxable?
The meters qualify for the production exemption, and the well reports are a nontaxable personal information service. The Independent Oil & Gas Association of New York asked about three charges its mem…
When a company buys taxable information reports delivered to offices both inside and outside New York, how much sales tax applies?
Only the New York-delivered portion is taxed, allocated by where delivery occurs. Pfizer, Inc. buys taxable information-service reports (professional research and marketing advice) delivered to its of…
When a company buys taxable information reports delivered to offices both inside and outside New York, how much sales tax applies?
Only the New York-delivered portion is taxed, allocated by where delivery occurs. Bristol-Myers Squibb Company buys taxable information-service reports (professional research and marketing advice) del…
When a company buys taxable information reports delivered to offices both inside and outside New York, how much sales tax applies?
Only the New York-delivered portion is taxed, allocated by where delivery occurs. Kraft General Foods, Inc. buys taxable information-service reports (professional research and marketing advice) delive…
Is application software that a vendor analyzes and adapts to a customer's system taxable in New York, and are the software maintenance charges taxable?
No — neither the software nor the maintenance is taxable. Answer Systems, Inc., an application-software maker, analyzes each customer's requirements and modifies its software to fit the customer's env…
When a company rents out cranes and other self-propelled construction machinery, can it use the reduced motor-vehicle rental tax computation?
Only partly, and only if you separate the charges. Clark Rigging & Rental Corp. rents self-propelled construction machinery — truck cranes, boom trucks, tractor-trailers, trailers, and pick-ups — and …
When a company buys taxable information reports delivered to offices both inside and outside New York, how much sales tax applies?
Only the New York-delivered portion is taxed, allocated by where delivery occurs. American Home Products Corporation buys taxable information-service reports (professional research and marketing advic…
When a company buys taxable information reports delivered to offices both inside and outside New York, how much sales tax applies?
Only the New York-delivered portion is taxed, allocated by where delivery occurs. American Home Food Products, Inc. buys taxable information-service reports (professional research and marketing advice…
When a company buys taxable information reports delivered to offices both inside and outside New York, how much sales tax applies?
Only the New York-delivered portion is taxed, allocated by where delivery occurs. Colgate-Palmolive Company buys taxable information-service reports (professional research and marketing advice) delive…
When a company buys taxable information reports delivered to offices both inside and outside New York, how much sales tax applies?
Only the New York-delivered portion is taxed, allocated by where delivery occurs. Sterling Drug, Inc. buys taxable information-service reports (professional research and marketing advice) delivered to…
When a company buys taxable information reports delivered to offices both inside and outside New York, how much sales tax applies?
Only the New York-delivered portion is taxed, allocated by where delivery occurs. Conopco, Inc. buys taxable information-service reports (professional research and marketing advice) delivered to its o…
When a company buys taxable information reports delivered to offices both inside and outside New York, how much sales tax applies?
Only the New York-delivered portion is taxed, allocated by where delivery occurs. Carter-Wallace, Inc. buys taxable information-service reports (professional research and marketing advice) delivered t…
Does machinery a recycler uses to process construction debris into new products qualify for New York's production exemption?
Only the machinery used mostly to make products that are actually sold qualifies. Vigliotti Recycling Corp. accepts mixed construction and demolition debris for a fee and converts it into wood chips, …
If a club makes new members buy stock and bonds in a related land-holding company, must that company register and collect sales tax on the sales?
Yes — the company must register and collect the tax, with no time limit on assessment. St. George Operating and Improvement Co. is a title-holding company that owns a golf course leased to the St. Geo…
For a foreign bank's New York branch, are transactions between its New York international banking facility (IBF) and its own foreign branches counted as 'total assets' when computing the Article 32 asset-based alternative minimum tax?
Excluded, for all years at issue. Bank Hapoalim B.M., an Israeli bank operating New York City branches plus a New York international banking facility (IBF), asked whether interbranch transactions betw…
Do long-term rehabilitation and psychiatric care facilities get New York's reduced 0% energy tax rate, and can they claim a refund?
It depends on whether the facility is 'residential in nature' — and even then only the state portion is zero-rated. Dianne Germany asked whether long-term rehabilitation centers and long-term psychiat…
If a country club makes members buy bonds to fund capital improvements, are those bond payments taxable club dues?
Yes — the mandatory bonds are taxable dues. Nassau Country Club, a not-for-profit social/athletic club, required each member to buy a non-interest-bearing bond (up to $1,000) as a condition of continu…
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…
How does New York tax a utility's IRC section 468A nuclear decommissioning trust -- as a corporation itself, as a grantor trust attributed to the utility, and what happens to the utility's own franchise and gross-receipts taxes when the trust's accumulated earnings are finally distributed decades later?
The Master Trust itself owes neither Article 9-A corporate franchise tax nor Article 22/30 personal income tax, but Con Edison will owe gross-receipts tax on the eventual profit when it's distributed.…
Robert Spielman was the sole shareholder of a New York S corporation that did business and paid tax in two other states. One of those states called its corporate levy a 'franchise' or 'privilege' tax rather than an 'income' tax, even though the tax was actually computed based on net income. Can Spielman still claim New York's resident tax credit under Tax Law § 620(a) for the tax his S corporation paid to that state, despite the 'franchise' label?
Yes. What matters for the New York resident tax credit under Tax Law § 620(a) is how a state's corporate tax is actually computed - on a net income base - not what the state chooses to call it. Follow…
Two partners bought real estate through their partnership, later sold a one-third interest to a third partner, and now want to buy that interest back at a higher price before selling everything (or their whole partnership interest) to a new buyer. Depending on WHEN each of these steps happens relative to a mid-transaction regulatory change, what 'original purchase price' can the original two partners use to calculate their gain for New York's Real Property Transfer Gains Tax?
The answer turns entirely on precise timing relative to a November 7, 1990 regulatory amendment -- but under every timing scenario the Department analyzed, A and B's original purchase price on a sale …
Is the finance charge a country club adds for a member's overdue account balance subject to sales tax?
Yes — the late-payment finance charge is taxable as club dues. St. George's Golf & Country Club, a 501(c)(7) social and athletic club, bills members a 1½%-per-month finance charge on account balances …
Does a domestic bank need to make a special adjustment to its federal taxable income to account for its International Banking Facility (IBF) interbranch income and expenses, the way an alien (foreign) bank does?
No. A domestic bank that uses the IBF modification already properly and accurately reflects its New York entire net income through the standard statutory computation, so — unlike an alien bank — it do…
Did the Department's original 1988 ruling requiring an alien bank to restore interbranch IBF income before applying the IBF modification also rest on the Commissioner's separate discretionary anti-distortion power?
Yes -- this brief modification appends a notation to the original 1988 opinion stating that, for taxable years beginning on or after January 1, 1985, the same conclusion was independently supported by…
Can a petroleum distributor claim a credit or refund of the petroleum business tax, motor fuel excise tax, or prepaid sales tax it already paid on fuel, when the customer who bought that fuel on credit never pays and the debt is written off as uncollectible?
No refund or credit for any of the three taxes. Northeast Petroleum, a Massachusetts-headquartered division of Cargill, Incorporated marketing home heating oil, industrial fuel oil, and gasoline in Ne…
Our company is buying substantially all the assets of a bankrupt railroad, with the sale authorized by the federal bankruptcy court, and financing part of the purchase with a note secured by a mortgage to the Federal Railroad Administration acting as trustee for the United States. Does the asset conveyance owe Real Estate Transfer Tax, and does the mortgage owe Mortgage Recording Tax?
Both exempt. D & H Corporation, an indirect subsidiary of Canadian Pacific Limited, purchased substantially all the assets of the bankrupt Delaware and Hudson Railway Company pursuant to a sale author…
Our bank needs to reclassify all our non-voting preferred stock into voting common stock to satisfy new federal regulatory capital requirements. After the reclassification, the group of former preferred stockholders as a whole will end up owning more than 50% of our voting stock, even though no single stockholder crosses that line and none of us are acting together as a group. Does this trigger New York's controlling-interest transfer tax or gains tax rules?
Not taxable. CrossLand Savings, FSB needed to reclassify its Series A and Series B Preferred Stock into voting Common Stock to satisfy new federal regulatory capital requirements imposed by FIRREA. Af…
Is a cash-processing and armored-car money service taxable, and does bundling the charges make all of it taxable?
The armored-car transport is taxable; the cash-room processing is not — but bundling them into one price makes the whole charge taxable. Paul J. Carucci asked about a client that moves a customer's mo…
A developer builds subdivision roads it must later deed to the town — are the construction materials exempt from sales tax?
Taxable — unless the land is already owned by the exempt municipality when the materials go in. The Michaels Group, a residential developer, must build subdivision roads and, as a condition of subdivi…
Can an IDA developer's construction company buy materials and rent equipment tax-free as the IDA's subagent?
In principle yes, but this taxpayer couldn't prove it. Farash Corporation, Max Farash's wholly owned construction company, built IDA-financed facilities (Corporate Place) that the County of Monroe Ind…
Is installing dry-cleaning equipment in leased space a tax-free capital improvement, and can a contractor accept a capital-improvement certificate after already billing tax?
It is taxable, not a capital improvement — but a good-faith certificate within 90 days still shifts the liability. Allied Steam Corp. installed dry-cleaning equipment (bolted to the floor and piped in…
A store buys dog food from a veterinarian to resell — can it claim a credit for the sales tax shown on the vet's invoice?
No — the store cannot claim that credit. J. Leon Lascoff & Son, Inc., a pharmacy, buys dog food from a veterinarian to resell at retail; the veterinarian just passes along a copy of its own supplier's…
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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.