State Tax Rulings
Free state tax letter rulings and advisory opinions with plain-English summaries, full citations, and the original source on every page.
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A bank holding company increased its ownership of a small business investment company (SBIC) subsidiary from 45% to 94.5%. Most of that subsidiary's invested capital goes into stock purchases and large loans that ordinary Article 3 banks aren't legally permitted to make. Can the subsidiary be included in the holding company's Article 32 consolidated banking-corporation tax return?
No. Bankers Trust New York Corporation, a bank holding company, increased its ownership of B.T. Capital Corporation (BTCC), a Delaware-incorporated small business investment company, from 45% to 94.5%…
Is a photographer's separately billed 'rush service' charge — for speeding proofs to the customer for approval — taxable, or is it an excluded delivery charge?
Taxable — the 'rush service' charge is part of the taxable receipt from the sale of the photographs. Under § 1101(b)(3) and 20 NYCRR 526.5(e), all expenses a vendor incurs in making a sale are part of…
A homeowners association will be incorporated as a not-for-profit, non-stock corporation to hold title to a subdivision's common areas and collect monthly assessments for maintenance, exterior upkeep, insurance, and a reserve fund. It qualifies as a 'homeowners association' for federal tax purposes. Does New York's not-for-profit franchise tax exemption apply, or does providing maintenance and upkeep for members count as 'inurement' that defeats the exemption?
Not exempt -- the association is fully subject to Article 9-A tax. Cornhill Commons Homeowners Association, Inc. will be incorporated under the Not-For-Profit Corporation Law to hold title to common a…
When a company sells modular homes, is sales tax figured on the full selling price or only on the cost of the materials used to build them?
On the full selling price — not the cost of the materials. The company sold modular homes wholesale and uninstalled, and had been collecting tax on a base equal to only 62% of the selling price (its p…
Does a manufacturer owe sales tax when it buys a service contract that it passes through, as part of the product's price, to the end user?
No — the manufacturer's purchase of the service contract is not taxable, because it buys the contract for resale. A maintenance or service contract on tangible personal property is itself a taxable pu…
Does the sales tax on club dues apply to a refundable security deposit that a country club requires members to pay to protect it against loss or damage?
Yes — the security deposit is taxable as dues. Lancaster Country Club asked whether the sales tax on club dues applies to a security deposit it collects to protect the club against loss, damage or inj…
Is a service that helps students find college scholarships, grants and loans by running their data through a computer and giving them a printout of funding sources a taxable information service?
Yes — it must collect sales tax. Roger S. Farber (RSF & Associates) ran an academic-guidance service that took a student's profile, ran it through a computer analysis, and produced a printout of the c…
Is the admission charge at a live-music club that also has a bar and serves food in the same room subject to New York sales tax as a cabaret charge?
Yes — the admission charges are taxable. My Father's Place, a live-music venue in Roslyn, presented advertised performers on a stage while a bar operated in the same room and food was available (thoug…
Must a trash-removal company charge sales tax on the landfill 'dumping fee' it pays and passes through to its customer as a separate line item?
Yes — tax the whole bill, including the dumping fee. Livingston Moving & Storage provides trash removal and pays a municipal landfill 'dumping fee' that it passes through to its customers as a separat…
A newly formed company moves property within buildings using carts, including between floors, but doesn't transport goods between locations or on public roads. Is it taxed as a 'transportation company' under sections 183/184, or under the general Article 9-A franchise tax -- and does it owe sales tax on its moving-service receipts?
Article 9-A applies, not the transportation-company taxes, and no sales tax is owed. Buehler Moving Ltd. is a newly formed company that provides in-house moving services using carts to move property w…
What did Texas field examiners check when auditing county motor vehicle tax receipts and transfer affidavits in 1982?
This internal checklist required examiners to account for every serially numbered Form 31 as issued and reported, on hand, issued but unreported, or lost. Issued receipts over 60 days old had to be ad…
Is repaving over trenches that were cut to install new gas lines a nontaxable capital improvement, and does the paving contractor still owe tax on the materials it uses?
It's a nontaxable capital improvement — but the contractor owes tax on its materials. Technipaving Corp. repaved trenches that Long Island Lighting Company had cut and filled to install new gas lines,…
If someone buys a boat in New York and takes delivery here but plans to export it to Canada, is the sale still subject to New York sales tax?
Yes — the sale is taxable in New York. Brian A. Ellies, a Canadian resident, bought a boat for non-commercial use in Plattsburgh and took delivery at Rouses Point, New York; the vessel was documented …
Are materials a developer's contractors buy to build and maintain buildings on land owned by a public authority (Battery Park City) exempt from sales tax when title to the materials vests immediately in the authority?
They're exempt — as long as the materials become an integral component part of the buildings or public facilities. Olympia & York Battery Park Co. would lease land at Battery Park City from the Batter…
How do New York's production exemptions and the resale exclusion apply to a maker of lithographic plates and printer supplies — and when does the New York City tax still apply?
Mostly exempt — with a New York City carve-out and item-by-item rules. Polychrome Corporation makes lithographic plates and film and a range of printer supplies. The Department applied New York's prod…
New York Advisory Opinion TSB-A-81(9)I: How does a shareholder of a professional service corporation compute the section 612(b)(7) add-back to New York adjusted gross income when the corporation's retirement plan is a defined benefit plan, rather than a defined contribution plan?
The add-back is the difference between the shareholder's share of the corporation's federal deduction for the contribution and what the shareholder could have deducted for the same benefit level had h…
For a pay-TV programmer, which are taxable — broadcast royalties, film taken only to copy, videotapes reworked in post-production, signal transmission, and post-production done for others?
It depends on the piece — several different answers. Showtime Entertainment, a pay-TV programmer weighing New York post-production, playback and uplink facilities, got a multi-issue ruling. (1) A roya…
New York Advisory Opinion TSB-A-81(11)I: Is a newspaper columnist and freelance writer's income subject to New York's unincorporated business tax under Article 23 of the Tax Law?
No, so long as the writer's income is genuinely personal-service income. The Department held that authorship - including newspaper column and freelance writing - has been consistently treated as the '…
New York Advisory Opinion TSB-A-81(10)I: Can a professional pilot deduct the cost of a flight-school course that qualified him to fly a new type of aircraft, as a New York itemized deduction?
Yes. The Department held that a commercial pilot's course qualifying him to operate a Boeing 727 - a new type of aircraft he wasn't previously licensed to fly - was a deductible business expense becau…
Does a New York jeweler have to collect sales tax on jewelry sold to foreign customers who are only temporarily in the United States?
The in-store sale is taxable — an export exemption applies only if the goods are shipped abroad through a carrier. F. Staal, Inc., a Fifth Avenue jeweler, asked about sales of jewelry to foreign custo…
Is a solar hot-water heating system taxable when it's installed for the property owner, when it's leased, and when it's sold uninstalled?
It depends on how it's provided. American Sunsystems asked about three ways of supplying solar hot-water heating systems. (1) Installing a system for the owner of the real property is a capital improv…
Does a tax-exempt organization have to collect sales tax when it sells books and tapes from a display table at its monthly meetings?
Yes — those sales are taxable. Women's Aglow Fellowship (Elmira Chapter), a § 1116(a)(4) exempt organization, bought books and tapes from its national body and sold them from a display table at its mo…
Is a contractor's charge for temporary electrical service to power a construction site until the permanent system is installed subject to sales tax?
Not taxable — it's part of a capital improvement. Industrial Power and Light Corporation installs 'temporary electrical services' (a temporary fuse box or circuit breakers, fed through a meter) to pow…
A New York savings bank plans to form a single-purpose financing subsidiary -- limited by its charter to buying mortgages from the bank and issuing mortgage-backed bonds against them -- and wants to include that subsidiary in its Article 32 consolidated banking-corporation tax return. Does the subsidiary qualify?
No. The National Savings Bank of the City of Albany, a New York-chartered Savings Bank governed by Banking Law Article 6, planned to form a subsidiary whose sole authorized purpose (fixed by an unamen…
A foreign holding company owns 100% of two operating subsidiaries based in New York City, but has no employees, office, property, or bank accounts of its own in New York, doesn't lend to or guarantee loans for its subsidiaries, and is run entirely by non-resident directors from abroad. Its only New York-resident officer is an unpaid, powerless secretary, and its books and records happen to be kept in New York City by outside lawyers and accountants. Does any of this create New York franchise tax nexus for the parent holding company itself?
No nexus. Noga Holding (USA), Inc., a Delaware corporation wholly owned by a non-U.S. parent, owns 100% of two other Delaware corporations that are themselves engaged in business in New York City. Nog…
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 on better terms than the subsidiary could get directly. If the parent's own loan came from a genuinely unrelated third-party lender and was re-lent essentially unchanged to the subsidiary, can the subsidiary's interest deduction escape the section 208.9(b)(5) related-party interest add-back as a mere pass-through, even though section 208.9(b)(5) does not spell out any such exception on its face?
Yes, according to this 1981 ruling -- but this answer was formally revoked two years later. The Department told Kowa Realty (America), Ltd. that interest paid to its foreign parent (Kowa Real Estate I…
A parent corporation and two of its subsidiaries are each separately certified (or in the process of being certified) as eligible for the Article 9-A eligible business facilities credit. Can the parent compute and claim that credit on a combined basis across all three corporations, or must each corporation compute its own credit separately using its own certificate?
Each corporation must compute the eligible business facilities credit separately, based on its own certificate of eligibility -- there is no combined-basis computation unless the corporations are actu…
How did New York's production exemptions apply, over time, to a New York City manufacturer's purchases of tools, supplies and welding gases — and did the city tax still apply?
State-exempt (phased in), but always subject to the New York City tax. World Display Fixtures, a New York City manufacturer of store display fixtures, asked how tax applies to its tools, supplies and …
Does Conrail, a private company running MTA commuter lines under contract, owe New York sales and use tax on its purchases for those lines — as the MTA, its agent, or on its own?
Conrail was taxable on those purchases until a federal law exempted it in August 1981 — and even then only from State, not local, tax. Consolidated Rail Corporation (Conrail), a private for-profit com…
A bank holding company plans to relocate its operations to New York and start doing business there, which would otherwise make it subject to New York's general corporate franchise tax. It wholly owns a commercial bank subsidiary that is taxable under Article 32 (the Banking Corporation Franchise Tax). Can the holding company instead get permission to file a single consolidated Article 32 return together with its bank subsidiary?
Yes -- assuming the stated facts hold, the Department committed in advance to grant permission for a consolidated Article 32 return. Natwest Holdings, Inc. planned to relocate to New York and begin do…
When an energy system is installed under a title-retaining lease with a purchase option, are the payments taxable as a lease or exempt as a capital improvement?
The lease payments are taxable; only the eventual buyout is a capital improvement. Hershey Enterprises designs and installs energy-conservation control systems, and under its 'Fuel Savings Participati…
Are a research firm's customized audience-estimate reports a taxable information service, and does it matter whether they reuse the firm's shared survey data?
It splits two ways, based on whether the underlying data is reused. Arbitron, a survey research company, prepares customized (non-syndicated) audience estimates for individual broadcaster and advertis…
Are diagnostic test kits sold to hospitals, labs and physicians exempt as 'drugs and medicines,' even though they're used on body fluids rather than on the body itself?
They're taxable medical supplies when sold to paid medical providers. Pharmacia, Inc., an out-of-state vendor, sold diagnostic kits (chemical solutions such as insulin, digoxin and ragweed extracts, p…
Is a bank taxed on on-line computer services that maintain its own depositor accounts, loans and internal reports?
It shouldn't be taxed — and the bank can claim a refund or credit. Oswego County Savings Bank bought on-line computer services from a service center to maintain its depositors' savings accounts, consu…
Does a nonprofit that sells a fundraising cookbook from a temporary sales table set up regularly during its season have to collect sales tax?
Yes — those cookbook sales are taxable. The Rochester Philharmonic Orchestra, a § 501(c)(3) organization, planned to sell a volunteer-compiled fundraising cookbook from a temporary sales table set up …
Is a fraternal organization like the Grange exempt from New York sales tax on meals and hotel rooms it buys for its meetings?
No — the Grange must pay the tax. The New York State Grange (Patrons of Husbandry) and its subordinate Granges asked whether they are exempt from sales tax on meals (§ 1105(d)(i)) and hotel rooms (§ 1…
Is a transfer of assets from a subsidiary to its parent company subject to New York sales tax when it is booked as an intercompany account receivable?
Yes — the transfer is taxable. The Augsbury Corporation, a wholly owned subsidiary, transferred fixed assets (primarily a corporate aircraft) to its parent holding company, The Augsbury Organization (…
A manufacturer's representative with its only office in New York earns commissions on sales of a New York manufacturer's goods, some of which are ultimately shipped to customers outside New York. For purposes of the Article 9-A receipts factor, are those commissions allocated entirely to New York, or only allocated based on where the underlying goods end up?
All of the commissions are allocated to New York, regardless of where the sold goods are ultimately shipped. Carroll McIntosh Metro Sales, Inc., a manufacturer's representative whose sole office was i…
Are barges (scows) that carry cargo mostly through other states' waters exempt from New York sales and use tax as commercial vessels engaged in interstate commerce?
Yes — the barges and services on them are exempt. Lone Star Industries planned to have a new subsidiary carry crushed stone and sand by scow (barge) from New York plants on the Hudson to piers in New …
Does a New York precious-metals broker have to collect New York sales tax on bullion it brokers or sells to New York customers, including drop-shipments from an out-of-state supplier?
Yes — as broker or seller, the petitioner must collect the tax unless it holds a valid certificate. Buffalo Refining Associates brokered and sold precious and strategic metals (bullion, coins, ingots)…
Is a manufacturer's computer system exempt from New York sales tax under the production-machinery exemption when it is used mostly to track and route product through the plant?
No — the computer is taxable. Spence Engineering Co., a maker of automatic temperature and pressure regulating valves, bought a computer system it said would be used about 60% to route product through…
Does a caterer owe sales tax on tableware it rents to use in serving meals, even though it collects tax from customers on the full price of the catered meals?
Yes — the caterer owes tax on the rented tableware and must still charge tax on the full meal price. Gates Circle Realty Corp., a caterer, rented plates, cups, glassware, flatware and similar items to…
Is food sold to nursery, kindergarten, elementary or secondary students at a school cafeteria on the premises subject to New York sales tax?
No — the school-cafeteria meals are not taxable. Potsdam Auxiliary and College Educational Services, Inc. runs the food service at the State University College at Potsdam, whose Campus Learning Center…
Can a vehicle-rental company buy parts, repairs and fuel for its rental fleet tax-free with a resale certificate, and what happens if a supplier won't accept the certificate?
The purchases are for resale and tax-free with a resale certificate — but a supplier isn't required to accept the certificate. Migay Trucking Corp. builds, maintains and rents out vehicles, earning in…
How did the Comptroller map its old tax-rule numbers to new Title 34 Texas Administrative Code citations in 1981?
This is a historical rule-number crosswalk, not a taxpayer holding. The Comptroller explained that its old citations were being replaced by Title 34 Texas Administrative Code sections: Chapter 1 for C…
Is the sale of a business's customer list subject to New York sales tax?
Yes — the sale of the customer list is taxable. Troiano Fuel Oil Co., a retail heating-oil distributor, sold a list of the customers it had sold fuel oil to over the prior year, arguing the informatio…
Is a fast-food restaurant a 'manufacturer' entitled to the production exemption on the utilities and equipment it uses to prepare food?
No — preparing restaurant food isn't manufacturing, so most of the utilities and equipment are taxable, but bulk ice cream is a carve-out. Tri City Desserts runs a fast-food operation: it makes soft-s…
Does a local-transit bus company owe sales tax on the buses, radios, fuel and parts it buys under a county transit contract — or is it exempt?
The bus company isn't exempt, but it can claim a § 1119(b) refund or credit scaled to its local-transit mileage. Louis A. Fuoco Bus Line, a local transit operator, asked about sales tax on five mini-b…
If a contractor accepts a customer's exemption certificate in good faith, can New York later recover the uncollected sales tax from the contractor?
No — a good-faith certificate protects the contractor from the uncollected tax, but two big caveats remain. Harron's Electric Service, an electrical contractor, accepted from customers, in good faith,…
Are a foundry's machines that make its own sand molds and cores — and the energy to run them — exempt from New York sales tax as production equipment?
Yes — the mold-making machines and their energy are exempt (except in New York City). Frazer & Jones Co. manufactures mine roof (expansion) supports by pouring molten metal into sand molds, and makes …
My New York corporation is being acquired: 85% of the stock is being sold directly to the acquirer under separate stock purchase agreements (with some signing and delivery steps happening in New York and some out of state), and the remaining shares will be cashed out in a follow-on merger through paying agents, one in California and one in New York/New Jersey. Which of these steps trigger New York's Stock Transfer Tax, and does it matter where each individual step in the transaction physically happens?
It depends on where each specific step physically happens -- New York's Stock Transfer Tax attaches if ANY ONE of several taxable events (the sale, the agreement to sell, the delivery of certificates,…
Are installed wood/coal stoves, fireplace inserts, boilers and solar energy systems capital improvements that escape New York sales tax?
It depends on what's installed: free-standing stoves and inserts are taxable, while a permanently connected boiler or solar system is a capital improvement. M & C Stove World sells fireplace inserts, …
Which of a photographer's purchases and charges — film, chemicals, equipment, printing, framing, sitting fees — are subject to New York sales tax?
It splits by activity: printing is taxable production, but production equipment can be exempt and the materials resold with the photos can be bought for resale. Victor LaSala, a photographer and photo…
Are adjustable beds bought with a doctor's prescription exempt from New York sales tax as medical equipment?
No — the beds are taxable even with a prescription; only the specialized medical attachments are exempt. Craftmatic Comfort Manufacturing asked whether its adjustable beds sold March 1, 1978–February …
Can a contractor buy dynamite tax-free because it's used to blast a construction site for a tax-exempt organization's project?
No — the dynamite is taxable. F.G. Compagni Construction, which performs capital-improvement contracts for exempt organizations, argued that dynamite and caps used for site-preparation blasting are co…
Does the owner of school buses have to collect sales tax when leasing them to a transportation company that will use them to serve exempt schools?
Yes — the owner must collect sales tax on the lease. Barry Arnold owns school buses and wanted to lease them to a New York transportation corporation that would use them to serve New York City schools…
Could county tax officials notarize motor vehicle transfer affidavits after former article 7246A was repealed?
No statutory authority remained solely by virtue of county office after article 7246A's repeal became effective January 1, 1982. The research found that article 6675a did not require tax officials to …
In a multi-party drop-shipment, must a registered manufacturer collect New York sales tax when it ships goods to a New York customer at another party's direction?
Yes — the manufacturer must collect the tax because it delivered the goods in New York and got no certificate. Sterling Electric, a California electric-motor maker registered to collect New York sales…
Does a company owe New York sales tax on an information service sold to a New York customer but delivered out of state to a third party the customer designates?
No — because the service is delivered outside New York, no New York tax is due. Hooper Holmes, a New Jersey company, processes information for 'B', a New York corporation — a service that would be tax…
Does a manufacturer have to collect New York sales tax when it fills an out-of-state company's order by shipping the goods to that company's customer in New York?
Yes — the manufacturer must collect the tax because delivery is in New York and it holds no certificate. Ketchum Manufacturing receives a purchase order from an out-of-state company, fills it, and shi…
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