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 a tailor's sales of uniforms to postal employees using a USPS uniform allowance exempt as sales to a federal agency, or must the tailor collect sales tax?
Taxable — the sales don't meet the government-exemption test. Morrell's Tailors and Furriers sells uniforms to U.S. Postal Service employees who use a uniform allowance: the employee arranges the purc…
Are a refuse hauler's purchases of garbage collection trucks exempt from sales tax because the trucks are used only to perform its taxable trash-removal service?
Taxable — the trucks are a retail purchase, and using them to perform a taxable service doesn't exempt them. Browning-Ferris Industries of N.Y. buys trucks that can only be used to collect refuse, and…
Our utility company issued a new series of bonds under a new 1975 trust indenture, and as additional collateral, pledged old first-mortgage bonds that were originally authorized under a pre-existing 1951 mortgage indenture -- but no NEW money was advanced under that old 1951 mortgage. We already paid mortgage recording tax on the new 1975 bonds. Do we owe additional mortgage recording tax on the old first-mortgage bonds pledged as collateral?
No additional tax due. Long Island Lighting Company (Lilco) had issued 26 series of bonds since 1951 under an original mortgage indenture ('the first mortgage') with Citibank as trustee, securing over…
New York Advisory Opinion TSB-A-81(7)I: When a taxpayer who sold a business on an installment basis changes residence from New York to another state partway through the year, must he accrue the entire remaining unrecognized gain to the resident portion of the year, and can he avoid that by filing an affidavit instead of a bond?
Yes, he must accrue the entire remaining gain unless he files an acceptable bond - a signed affidavit is not a legally permitted substitute. Tax Law section 654(c)(1) requires a taxpayer who becomes a…
Is a chemical-waste disposal company's service taxable, are its separately stated transportation charges taxable, and can it buy its equipment tax-free as production machinery?
Taxable on all three points. Cecos International removes, treats and disposes of hazardous chemical waste and calls it 'the manufacture and production of safe waste.' The Department held: (1) the serv…
Does a home-oxygen supplier have to collect sales tax when it rents regulators, humidifiers, ring stands and carts to private patients to dispense medical oxygen at home?
Exempt — no sales tax to collect. Nichols Oxygen Service rents regulators, humidifiers, ring stands and carts that private patients use to dispense medical oxygen at home. The Department held these ar…
For an excavating contractor whose heavy equipment is both rented out and used on its own capital-improvement jobs, what is taxable — the equipment purchases, repairs, parts, and its rentals?
Mostly taxable, with capital-improvement work the exception. A. Tomassi Co., an excavating contractor, owns heavy equipment it both rents to others (about 90% of the use) and uses on its own capital-i…
A New York trucking corporation is changing its principal business from operating trucks (hauling freight) to leasing trucks, some with drivers and some without, including to a related corporation, a subsidiary, and a related individual. Does that shift move the company out of Article 9's trucking/transportation tax (sections 183 and 184) and into the general Article 9-A corporate franchise tax, does it require filing two different tax returns for the same year, and does sales tax apply to the truck rentals to related parties?
It depends on whether the trucks are leased with or without drivers, and yes to both the sales tax question and (potentially) the two-return question. Leasing trucks WITH drivers is itself considered …
New York Advisory Opinion TSB-A-81(8)I: When an employee earns an incentive bonus for work performed in one year but the bonus isn't paid, or its amount known, until the following year, and the employee is a nonresident by the time it's paid, how is the bonus taxed and how should the employer withhold?
The bonus is taxed based on the employee's residence at the time of PAYMENT, not when the underlying services were performed. Because these bonuses and awards weren't fixed or determinable until the y…
Are sales of time-sharing interests in real property — interval ownership, tenancy-in-common, vacation leases and vacation licenses — subject to New York sales tax?
Generally not taxable as real property — but hotel-room occupancy is the exception. Miller, Addison, Steele, Inc. asked whether New York sales tax applies to sales of in-state or out-of-state time-sha…
Does a forage testing lab have to collect sales tax on charges for testing farm feed and reporting the results, or is it exempt personal/individual information?
Not taxable — the reports are exempt personal/individual information. David J. Converse plans to run a forage testing laboratory that tests grain, corn silage and haylage for crude protein, fiber and …
Must a broker who lists and shows used mobile homes but never takes title or possession collect sales tax when buyer and seller close the deal directly?
No collection duty — the broker isn't a 'vendor.' Mobilehome Marketing, Inc. appraises, lists and shows used mobile homes for their owners, earning a commission under a listing agreement, but it never…
What sales-tax rate applies to kerosene sold for home heating, and what does the seller need from the customer to charge the reduced residential rate?
With the right certificate, only the reduced county tax applies; without it, full State and county tax. Green Bros. Home and Garden sells kerosene for home heating to customers who bring containers (a…
Can a resort hotel skip collecting sales tax when a group shows an out-of-state or other exemption certificate instead of New York's prescribed exempt-organization form?
The hotel must collect tax unless it receives the specific New York-prescribed exemption document. Tee Bar Corporation runs a resort hotel and asked whether it can stop collecting sales tax when organ…
Is the installation of large free-standing liquid propane storage tanks a capital improvement to real property, so the installation is exempt from sales tax?
Yes — the installation is a capital improvement and qualifies for the sales-tax exemption. Morse Chain Division of Borg-Warner had 30,000-gallon liquid propane storage tanks installed on its property.…
Does Playbill qualify as a tax-exempt periodical, so its sale is exempt from New York sales and use tax?
Exempt — Playbill qualifies as a periodical. American Theater Press asked whether Playbill has qualified as a tax-exempt 'periodical' since July 1, 1979. Playbill is printed twelve times a year with a…
Is a manufacturer's cost of having its own manufacturing dies modified subject to sales tax as a processing service?
Taxable — modifying the dies is a taxable processing service. Grant Hardware Company (a Buildex division) owns dies (useful life over four years) that it uses in manufacturing to produce parts; when i…
Does a disability pension or Social Security disability status that is exempt from income tax also exempt the recipient from New York's sales tax and motor fuel tax?
No — income-tax-exempt status doesn't exempt you from sales tax or motor fuel tax. Robert T. McLaughlin receives a New York City police pension granted in lieu of workmen's compensation for a job-rela…
When a rented machine's purchase option is exercised, are the dealer's 'rental service charges' — really interest on the amount financed — taxable as part of the sale price?
Taxable — those charges are part of the sale price, not exempt interest. Ridings Equipment Corp., a heavy-construction-equipment dealer, rents machinery to customers with an option to buy; if the opti…
Are a fulfillment shop's services for a publisher — packing, shipping, invoicing, mail pickup, recordkeeping and storing books — subject to sales tax?
Not taxable — none of the fulfillment services are subject to sales tax. Mary B. Letter Shop performs fulfillment work for a publisher: it packages and ships the publisher's books, invoices the publis…
When an advertising agency sells an ad or promotional piece and bills a separate 'agency service fee,' is that fee subject to sales tax?
Taxable — the agency service fee is part of the sale price of the printed piece. K.A.S. Studios, an advertising agency, bills customers for preparing an ad or sales-promotion piece and breaks the bill…
A corporation's only asset is a natural-gas liquefaction and storage facility that was severely damaged by fire years ago and, due to an inability to obtain rebuilding permits, may never be usable again -- even though its book (depreciated-cost) value doesn't reflect that damage or uncertainty. For computing the Article 9-A business-capital tax base under section 210.1(a)(2), should the asset be valued at its book depreciated cost, or at its actual fair market value?
Fair market value governs, not the depreciated book cost -- and depreciated book cost can only be used as a stand-in when it happens to accurately reflect fair market value. Texas Eastern Cryogenics, …
A California-based stock and bond brokerage firm executes trades on New York exchanges: buying/selling for its own account as an American Stock Exchange specialist, buying/selling as an over-the-counter market-maker, and executing customer buy/sell orders that originated at its out-of-state offices. For Article 9-A receipts-factor purposes, how much of each type of New York-executed income counts as a New York receipt?
It depends on the type of income. Wedbush, Noble, Cooke, Inc., a California-headquartered brokerage with offices in nine western states, was a member of the American, New York, Pacific, and Philadelph…
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…
New York Advisory Opinion TSB-A-81(6)I: If a taxpayer filed a separate federal return in the year she had a net operating loss, but filed a joint federal return with her spouse in the earlier carryback year, can she carry her separate net operating loss back to the couple's joint New York return for that earlier year?
Yes. Federal regulations (26 CFR 1.172-7(b)) already treat a spouse's separate-year net operating loss as a joint net operating loss when it's carried back to a year for which the couple filed jointly…
New York Advisory Opinion TSB-A-81(5)I: Does a self-employed computer programmer/analyst's income qualify as the practice of a profession, exempt from New York's unincorporated business tax?
No. Even though the taxpayer met the statutory 80%-personal-service and no-material-capital tests under Tax Law section 703(c), the Department held (following the Appellate Division's decision in Matt…
New York Advisory Opinion TSB-A-81(4)I: If the IRS rules that interest on a nonprofit museum foundation's bonds is excludable from federal gross income because the bonds are issued 'on behalf of' New York City, does that interest also escape New York State income tax, New York City income tax, and the unincorporated business tax?
Yes, automatically, IF the IRS actually grants the requested federal exclusion. The Department found that none of the modifications listed in the New York State income tax statute (Tax Law section 612…
Does a fuel-oil dealer have to file monthly sales tax returns based on its taxable receipts, even though rate cuts on home-heating fuel reduced the tax it actually collects?
Yes — the dealer must file monthly, because the test is taxable receipts, not tax collected. Beneficial Oil Company, a retail fuel-oil dealer, argued it should not have to file monthly returns: rising…
Are sales of uninstalled clay field-drainage tile to farmers, for draining their fields, exempt from New York sales tax?
Exempt — with a Farmer's Exemption Certificate. Ralph B. Humphreys asked whether receipts from selling clay field-drainage tile to farmers, on an uninstalled basis, for draining their fields are subje…
Is a harness-racing track program sold at retail exempt from sales tax as a newspaper or periodical?
Taxable — the racing program is not an exempt newspaper or periodical. Five Point Grocery sold copies of Saratoga Harness Racing's publication 'Past Performances' and asked whether the receipts were e…
A parent and its wholly owned subsidiary have filed combined Article 9-A franchise tax reports since 1972 based on their existing unitary cement/aggregates business. The parent is planning a reorganization that will make the two companies even MORE closely integrated (the subsidiary will sell 100% of its output to the parent and transfer its sales force). Will the companies still qualify to file combined after the reorganization -- and can the Department confirm that in advance?
The described post-reorganization facts would satisfy the regulatory tests for combined filing, but the Department could not commit to approval in advance -- permission is discretionary and can only b…
A corporation elected New York optional depreciation on manufacturing-plant assets it bought in 1968, claiming a modest optional-depreciation deduction that year while adding back the (much larger) federal depreciation in later years. Ten years later, it sold the plants as part of a larger installment-sale transaction without separately allocating any of the sale proceeds to the optionally-depreciated property. How should it compute the New York gain or loss on that portion of the sale?
The New York basis of the optionally-depreciated property equals its original federal cost minus only the optional depreciation actually allowed under section 210.3(e)(1) -- not the (much larger) fede…
Is a delivery arrangement a nontaxable transportation service or a taxable rental of vehicles, when the carrier hires the drivers but the written contract shifts ownership-type risks to the shipper?
Taxable — the arrangement was a rental of vehicles, not a transportation service. Adam Meldrum and Anderson Co. had a 1968 agreement with Leaseway Deliveries to move merchandise between its stores and…
Are a coin dealer's sales of rare or collectible coins subject to New York sales tax, or are they exempt as exchanges of 'coin of the realm'?
Taxable — rare and collectible coin sales are subject to sales tax. Web's Coins, a rare-coin dealer, argued that taxing sales of 'coin of the realm' would violate the U.S. Constitution. The Department…
When a motel buys soap, paper cups and bathroom tissue to place in guest rooms, can it buy them tax-free as a purchase for resale or as production materials?
Taxable — the motel must pay sales tax on these supplies. Lanz's Motel asked whether items like plastic or paper cups, bathroom tissue and guest soap that it places in rooms for guests can be bought t…
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 …
A New York subsidiary owes interest-bearing debt to its direct parent. The corporate group restructures: the parent contributes the debt receivable to ITS OWN parent's capital, and a brand-new intermediate holding company is inserted as the subsidiary's new direct (sole) shareholder. After the restructuring, the subsidiary keeps paying interest to the entity that is now its GRANDPARENT (two tiers up) rather than its direct parent. Does Tax Law section 208.9(b)(5) still require the subsidiary to add that interest back to income?
No -- once the restructuring is complete, interest paid to the grandparent corporation is NOT subject to the section 208.9(b)(5) add-back. Hooker Chemical & Plastics Corp. was a wholly owned subsidiar…
A New York shipbuilding subsidiary raises three separate Article 9-A questions tied to its supertanker construction business: (1) can long-outstanding payables to its parent be offset against matching receivables from the same parent in computing business capital; (2) does using an out-of-state independent contractor's plant to process ship modules give the subsidiary a 'regular place of business' outside New York (which would reduce its 100% business allocation percentage); and (3) does interest the subsidiary pays on funds its parent borrowed and re-lent to it escape the section 208.9(b)(5) related-party interest add-back as a mere pass-through?
Three separate answers. (1) The long-outstanding payables to Petitioner's parent could NOT be subtracted from business capital under Tax Law section 208.7, because that provision only excludes liabili…
A subsidiary sweeps its excess cash to its parent each month, and the parent issues a single renewable 'Floating Rate Note' evidencing the cumulative amount owed, canceling and reissuing the note each month as the balance changes. The note has a stated principal, a variable interest rate, and a stated maturity decades away, but has never been sold or traded, isn't part of a series, and isn't supported by a trust indenture. Does this note count as a 'bond' -- and therefore INVESTMENT capital -- under Tax Law section 208.5, or is it business capital?
Business capital, not investment capital -- the note does not qualify as a 'bond or other security' under Tax Law section 208.5, even though it technically fits a broad dictionary definition of 'bond.…
New York Advisory Opinion TSB-A-81(1)I: Is a divorced taxpayer's former spouse liable for part of the unpaid tax on a joint personal income tax return, and can the Department waive interest or penalties because the taxpayer can't currently afford to pay?
Both ex-spouses remain jointly and severally liable for the full unpaid tax, and the Department - not the taxpayer - decides whether to collect from one, the other, or both. The Department has no lega…
Must an out-of-state book publisher with no New York location register and collect New York sales tax when it sells into the state through a sales agent who solicits customers here?
Must register and collect — the in-state soliciting agent creates a duty to collect. Atlantic Flyway/John A. Gambling Enterprises (d/b/a George Mead's) publishes books in Connecticut, has no New York …
Are sales of PBX telephone equipment to businesses exempt as telephone central office equipment, and are the related service contracts taxable?
Taxable — the PBX equipment doesn't qualify for the central-office exemption, and the service contracts are taxable. ITT Communications sells PBX (Private Branch Exchange) telephone equipment to priva…
Is production machinery like a coffee roaster exempt from New York sales tax, and how is the separate installation charge taxed?
The roasting machinery is exempt production equipment (except New York City) with an ST-121 certificate; the installation charge is taxed on a date-based schedule. Duane and Siganoc sells reconditione…
If a finance company collects lease payments that include sales tax and then remits money to the leasing company, does it still owe that sales tax to the state?
Yes — a finance company that comes into possession of money representing state sales tax must remit it to the state, and paying it to the leasing company does not discharge that obligation. Tilden Com…
New York Advisory Opinion TSB-A-81(3)I: When allocating a nonresident employee's wages between New York and other states under the standard working-days formula, are paid holidays, sick leave, and vacation days counted as working days?
No. Under 20 NYCRR 131.16, the standard allocation formula divides New York working days by total working days - and paid nonworking days (weekends, holidays, sick leave, vacation, and other paid leav…
New York Advisory Opinion TSB-A-81(2)I: Is a proposed limited partnership that trades financial commodity futures solely for its own account subject to New York's unincorporated business tax, and are its nonresident limited partners subject to New York personal income tax on their distributive share?
No to both. The Department held that a limited partnership formed solely to buy and sell financial commodity futures contracts for its own account - with no customers and no dealer activity - falls wi…
When a parent company's own payroll employees do maintenance work for its subsidiaries and the subsidiaries reimburse the parent, are those charges taxable services?
Taxable — the parent's maintenance charges to its subsidiaries are taxable services. Chapin & Fagin Division of GCF Inc. carries maintenance employees on its central payroll who perform maintenance fo…
A New York subsidiary borrows from its foreign parent rather than an unrelated bank, because the parent can itself borrow more cheaply and re-lend at rates still better than the subsidiary could get directly. Can the subsidiary's interest deduction escape the section 208.9(b)(5) related-party interest add-back as a mere pass-through, where the first three of a four-part conduit test are clearly met but the fourth (adequate capitalization) has not yet been substantiated?
Conditionally yes -- three of the four required conditions were already satisfied on the facts presented, but the taxpayer still had to substantiate the fourth (adequate capitalization) with its retur…
Are the membership charges for a medical-records service taxable when what the member receives is a medical-data booklet and a microfilm history?
Taxable — the membership charges are receipts from the sale of tangible personal property. Dalmed Corporation runs a medical and emergency data and records organization and asked whether its membershi…
A partnership (not a corporation) provides both interstate and intrastate trucking and transportation services. Is it subject to New York's Article 9 franchise tax on trucking/transportation businesses under sections 183 and 184 of the Tax Law?
No -- sections 183 and 184 apply only to corporations, not partnerships, regardless of the nature of the business. Tax Law § 183 imposes a franchise tax on corporations formed for or principally engag…
Does a photographer who documents customers' belongings for insurance and identification have to collect sales tax on the charge?
Taxable — the photographer must collect sales tax on the full charge. James P. Nastasi runs an inventory-documentation service: he photographs customers' personal possessions and household goods to pr…
Are a social club's membership dues taxable when the club is incorporated in New York and meets in New York City but lists an out-of-state address?
Taxable — dues and initiation fees over $10 are subject to the combined 8% State and New York City sales tax. The New York SKAL Club, a strictly social club incorporated under New York law in 1939 (wi…
How is New York sales tax applied when a railroad buys cross ties in New York for various uses — shipped out of state, used on government contracts, used on its own in-state projects, or held as inventory for a supplier to reclaim?
It depends on how each batch of ties is used — delivery in New York is taxable, but several refunds, exemptions and resale rules apply. Conrail buys treated railroad cross ties from GCL, delivered FOB…
Does a company owe sales tax when it rents equipment only to re-rent it to others, rather than using it itself?
Not taxable — it's a purchase for resale, so no tax is due if a resale certificate is given. People's Oil Co. rents credit-card imprinters from Mobil Oil and does not use them itself; instead it re-re…
An out-of-state manufacturer has no New York office and owns or rents no New York property. Its only in-state activity is salesmen soliciting orders for valves and truck parts, with all orders sent out of state for approval and, if approved, filled and shipped from outside New York. Is the manufacturer subject to New York's Article 9-A corporate franchise tax?
No -- Petitioner was exempt from the Article 9-A franchise tax under federal Public Law 86-272, as incorporated into 20 NYCRR § 1-3.4(b)(9). Geosource, Inc., a Delaware corporation with no New York of…
Are industrial gases used in manufacturing exempt from sales tax, and does the buyer need an exempt use certificate to purchase them tax-free?
Exempt — production gases are exempt, but a properly completed Exempt Use Certificate is required to buy them tax-free. Airweld asked (1) whether gases such as nitrogen, argon, oxygen and acetylene us…
Is an electronic message-transmission system for securities traders taxed as a telegraph service, and does the interstate exclusion apply?
Taxable as telegraph service under § 1105(b), but only for communications where both customers are in New York — interstate traffic is excluded. Xerox's Autex division runs communication services lett…
New York Advisory Opinion TSB-H-81(58)I: Is an accumulation distribution from a trust to a nonresident individual, consisting entirely of interest on bank accounts, subject to New York State personal income tax or New York City taxes?
No. The Department held that because the accumulation distribution consisted entirely of bank interest - not income from property employed in a New York business, trade, or profession - it wasn't incl…
New York Advisory Opinion TSB-H-81(57)I: Does the New York personal income tax investment credit apply to electronic equipment purchased to produce educational video tapes?
Yes. The Department held that producing educational video tapes - taking blank tape and using cameras, editing recorders, mixing consoles, and related equipment to record, edit, and duplicate visual a…
New York Advisory Opinion TSB-H-81(56)I: Is a partnership that trades spot commodities and commodity futures solely for its own account subject to New York's unincorporated business tax, and is a nonresident member's distributive share subject to New York personal income tax?
No to both. The Department held that a partnership trading commodities and commodity futures purely for its own account - not as a dealer, with no customers - falls within the Tax Law's own-account tr…
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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.