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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Is a manufacturer's chip-filtration and cooling system exempt from New York sales tax as production equipment?
Yes — the filter system is exempt production equipment. Cummins Engine Co. manufactures diesel engines and uses a central filtration and cooling system with its machining equipment. The Department hel…
Does a customer's letter saying it doesn't want to be charged sales tax relieve a vendor of collecting the tax?
No — a customer's letter doesn't relieve the vendor; only a proper certificate does. Mohawk Dental Supply Company sells taxable and non-taxable items to dental laboratories. Some labs sent letters say…
Are a lease's cancellation fee and transportation charges taxable when the leased property was damaged en route and never entered New York?
No — because the property never entered New York, no tax is due, including on the cancellation fee and transportation charges. Airway Services agreed to lease a mobile passenger lounge (a large non-hi…
I sold a mixed-use building (a tavern with apartments upstairs, six units total or fewer with separate kitchens) and took back a purchase money mortgage from the buyers. Do I, as the seller/mortgagee, or the buyers, as the mortgagors, owe the special additional mortgage recording tax?
The mortgagee (seller) is liable. Lawrence Harper sold a building in the village of Greene, Chenango County -- a structure with a tavern, dining and pool-table rooms, a kitchen, a one-car garage, and …
Can a soft ice cream stand claim the production exemption on the electricity used to make and store its ice cream?
Mostly no — electricity for cones, sundaes and shakes is taxable; only the power used to make bulk ice cream qualifies. A soft ice cream stand (through its CPA, Herman H. Gerstman) asked whether elect…
Is sales tax due on the artwork, printing and mailing services for a free company magazine, and does it matter whether copies are mailed by the printer or distributed by the company itself?
Yes, it's taxable — but the tax follows where the copies go. Carrier Corporation asked how sales tax applies to the art, printing and distribution services for 'Carrier World,' a magazine it planned t…
Does laboratory testing and quality-control equipment used during steel production qualify for New York's manufacturing exemption, even if it sits in off-line labs?
Yes — the testing equipment qualifies for the production exemption. Al Tech Specialty Steel Corporation uses laboratory equipment at its two plants, more than 50% of the time, to chemically analyze mo…
Can a monument and memorial maker buy its tools, parts and supplies tax-exempt under the manufacturing exemption, and does it matter whether it also installs the monuments?
It depends on what the monument builder mainly does. The New York State Monument Builders Association asked whether the parts, tools, equipment and supplies used to produce monuments and memorials are…
How did Texas distinguish a vehicle lease from a conditional sale and treat out-of-state sales and trade-ins in 1981?
A lease required exclusive use for more than 180 days; a must-purchase clause or below-market purchase option made the arrangement a conditional sale. In a true lease, the dealer paid tax on its purch…
Is a hospital linen-supply company's service an exempt laundering service, so that it owes sales tax on the linens it buys to furnish that service?
Yes — the service is exempt laundering, so the company pays sales tax on the linens it buys. Linen Systems for Hospitals furnishes and regularly launders bed, surgical, infant, apparel and kitchen lin…
Are the replacement parts for a ready-mix concrete mixing unit exempt from sales tax, and is the rental of trucks hired to deliver the concrete taxable?
Partly — the mixing unit is exempt, but the truck under it isn't. Gilford Construction Corporation makes ready-mix concrete in mixing units mounted on truck chassis and asked about (1) replacement par…
Must an out-of-state mail-order business with no offices, employees or agents in New York — soliciting only by catalog — register as a vendor and collect New York sales tax?
No — on these 1981 facts, the out-of-state mail-order company had no duty to collect New York tax, but that rule has since changed. Spiegel, Inc., an Illinois mail-order retailer, had no place of busi…
Are a contractor's charges for hauling away debris from demolition and construction sites subject to New York sales tax?
Yes — construction debris removal is a taxable service. Young Contracting Corp. had been collecting sales tax on charges for removing debris from demolition and alteration sites, then heard from custo…
Is the sale and installation of energy-saving 'window quilts' a tax-exempt capital improvement, or is the full installed charge taxable?
Yes — the entire installed charge is taxable. David W. Sprague sells and installs 'window quilts,' custom-cut insulating window coverings attached with nails, screws or glue, with a 15-year life and e…
How does New York's compensating use tax apply to the equipment, supplies, component materials and packaging a rubber printing-plate manufacturer uses?
Mostly exempt — only the billing invoices are taxable. Colby Engraving and Rubber Plate Corp. makes rubber printing plates to customer specifications and asked how the compensating (use) tax applies t…
Can a keypunch service rent its keypunch machines and buy its keypunch cards without paying sales tax, when the finished cards are delivered to customers?
Yes to both — the machines and the cards can be obtained tax-free. Benjamin Swartz runs a keypunch service that predominantly uses keypunch machines to produce keypunched cards, which it delivers to i…
Are receipts from renting movies taxable, and is a membership fee that only buys the right to rent at a discount subject to sales tax?
Movie rentals are taxable; the membership fee was held not taxable in 1981 — but that second holding was later reversed. Norman Eiger planned a movie-rental store where customers paying a membership f…
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…
How long did Texas require county motor vehicle tax reports and Form 31 receipts to be kept after S.B. 371?
S.B. 371 reduced the historical limitations period from seven years to four. Beginning September 1, 1981, monthly motor vehicle sales tax reports and Form 31 receipts older than four years could be de…
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…
When could a Texas motor vehicle rental taxpayer switch from monthly to quarterly reporting under H.B. 888?
H.B. 888 raised the historical monthly-filing criterion from $750 to $1,500 of tax due per month. Based on the recipient's records, the Comptroller allowed quarterly filing. The last monthly return co…
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 …
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