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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New York Advisory Opinion TSB-H-80(521)I: Does a sole proprietor's real estate management business qualify as the practice of a profession, exempting its income from New York's unincorporated business tax?
No. The Department held that managing real property owned by others - collecting rents, arranging building maintenance, handling landlord-tenant matters, negotiating leases, and keeping income/expense…
New York Advisory Opinion TSB-H-80(520)I: Is income received for a restrictive covenant (non-compete agreement) entered into when selling an unincorporated business subject to New York's unincorporated business tax?
Yes. The Department held that a restrictive covenant given in connection with a business sale is the surrender of an intangible asset or property right directly connected with that sale, and because t…
New York Advisory Opinion TSB-H-80(519)I: How are constructive distributions to shareholder-officers characterized in the recipients' hands if a Department audit disallows claimed business expense deductions across several years with different earnings and profits levels?
It depends on the corporation's earnings and profits in each specific year. For years in which the corporation had no current or accumulated earnings and profits, any constructive distribution is trea…
When a photographer consigns student photos to a nonprofit PTA to sell to parents, who owes and collects the sales tax?
Taxable — the PTA is the photographer's agent and must collect the tax. Irvin Simon Photographers, Inc. 'sells' student photographs to parent-teacher associations on a consignment basis for resale to …
In deciding whether a shopping paper meets the 90%-advertising limit, is the area of inserted advertising supplements counted as part of the printed area?
As originally decided, yes — supplement area was counted (but this was later reversed). The New York State Publishers Association asked whether, in computing the percentage of a shopping paper's print…
In a chain of selling, leasing and using coin-operated lockers, which transactions are taxable and who collects the tax?
The manufacturer's sale is a tax-free resale; the subsidiary taxes its lease receipts. AVM Corporation manufactures coin-operated checking lockers, sells them to a wholly-owned subsidiary, which lease…
Is a SIDS apnea-monitor and resuscitator system exempt medical equipment, and is the intercom bundled with it also exempt?
The monitoring/rescue equipment is exempt; the intercom is taxable. Modern Medical Systems Co. sells or rents an infant apnea-monitor and resuscitator system used to detect and rescue an infant from a…
Is the installed sale of a modular home a taxable sale of goods when the home sits on land leased (not owned) by the buyer?
Taxable — it's a sale of goods, not a capital improvement, because the buyer only leases the land. Greenwood Village Planned Retirement Community, Inc. sells modular homes installed on lots it owns an…
Could a developer use a municipal utility district's exemption when fronting the cost of a fire truck built from components?
Yes, through a documented resale structure. The developer could buy the chassis and cab for resale, issue a resale certificate to the fabricator after obtaining a sales tax permit, and retain title as…
New York Advisory Opinion TSB-H-80(524)I: Can a taxpayer claim New York's personal income tax tuition modification for tuition paid on behalf of his spouse?
No. The Department held that the tuition subtraction under Tax Law section 612(c)(17) applies only to tuition paid on behalf of a 'dependent,' and Article 22 borrows the federal definition of that ter…
New York Advisory Opinion TSB-H-80(523)I: How is a distribution from an Individual Retirement Account taxed when the IRA was funded by a tax-free rollover of a New York State or local government pension?
The portion of the IRA distribution that represents a return of the rolled-over pension principal remains exempt from New York personal income tax, just as the original pension itself was exempt under…
New York Advisory Opinion TSB-H-80(522)I: Can a taxpayer claim a retroactive personal income tax modification for contributions to a qualified higher education fund (PASS account) that didn't exist and received no contributions during the years in question?
No. The Department held that the PASS-account subtraction under Tax Law section 612(c)(16) is available only for amounts actually contributed to a qualified higher education fund during the specific t…
A special-purpose finance company was formed solely to buy and lease nuclear fuel to an out-of-state utility, funded by notes issued to a group of banks that include New York lenders. It has no office or employees of its own anywhere; a New York affiliate handles all its administration, books, and records for a nominal fee, and its loan documents were executed in New York at the lenders' insistence. Does that make it subject to New York's Article 9-A franchise tax, even though the nuclear fuel itself never sits in New York?
Yes. Wolverine Energy Company was a foreign corporation formed solely to take title to nuclear fuel for Consumers Power Company (a Michigan public utility) and to finance the purchase of additional fu…
Was providing advertising on a sign trailer a taxable rental, and how were the trailer and sign taxed when bought or sold?
Providing advertising on a trailer was a service, not a rental, because customers lacked exclusive use or control; the provider collected neither rental-receipts tax nor limited sales tax on the servi…
A New York-based finance conduit borrows money by selling short-term commercial paper (or drawing on a bank credit line) and relends the proceeds to an out-of-state utility subsidiary to finance fuel purchases, earning only a nominal fee. Is that enough to make it subject to New York's Article 9-A franchise tax, and if so, can its short-term borrowings be deducted from its assets in figuring its taxable business capital?
Yes to both questions. Clipper Oil Corporation, a foreign corporation authorized to do business in New York, existed solely to (1) borrow money by selling commercial paper notes (270 days or less) or …
Our company is technically incorporated in New York, but we have no office, sales representatives, or any physical connection to the state at all -- we operate entirely out of New Jersey and just ship products to customers nationwide, including some in New York. Are we stuck paying only the $250 minimum Article 9-A tax, or could our New York shipments push us above that?
It may owe more than the $250 minimum. Victor Hasselblad, Inc. was a New York corporation that sat completely inactive from its 1956 formation through 1979. In January 1980, its Swedish camera-manufac…
Industrial development bonds issued under Article 18-A of the General Municipal Law are, by their own statute, exempt from taxation. Does that exemption mean interest earned on those bonds can be left out of a corporation's 'entire net income' when computing New York's Article 9-A or Article 32 franchise tax?
No -- despite the bonds' own tax-exempt status, the interest must be added back into entire net income for both Article 9-A and Article 32 purposes. General Municipal Law §§ 874(2) and 876 exempt indu…
Our 'Edge Act' international banking subsidiary has only ever operated out of a single New York office and reported all of its income as New York income. Now that federal rules let us open branches in other states without adding capital, how do we apportion interest expense between the New York home office and the new out-of-state branches for New York tax purposes?
It depends on whether the bank's own books and accounts actually reflect the true net income of each branch. United California Bank International was a wholly owned 'Edge Act' banking subsidiary of Un…
Is raising dogs and ferrets for labs and pets 'farming,' and is the feed a tax-free purchase for resale as part of the animals?
Taxable — it's not farming, and metabolized feed isn't bought for resale. Marshall Research Animals, Inc. commercially raises and feeds dogs and ferrets for sale to laboratories and as pets. It argued…
How did Texas historically classify mobile homes and trailers for tax before and after July 1, 1971?
Before April 1, 1970, mobile homes were taxed as motor vehicles. From April 1, 1970 through June 30, 1971, units wider than eight feet or longer than 36 feet were taxed under the Limited Sales, Excise…
When a store doubles a manufacturer's coupon, what amount is subject to sales tax?
Tax is due on the price paid plus the manufacturer's coupon value — the store's doubling is not taxed. Robert J. Seid asked what counts as taxable 'receipts' when a merchant redeems a manufacturer's c…
Is a company's sale and installation of a private telephone interconnect system on a customer's property a tax-exempt capital improvement, and must the installer collect a Certificate of Capital Improvement (ST-124)?
Yes — installing a private telephone interconnect system on the customer's own property is a capital improvement, so the charge is not taxed, and no ST-124 certificate is required. U.T.C. Group Inc. a…
Is the sale and installation of lockers bolted into wall alcoves a tax-exempt capital improvement, or a taxable sale and installation of tangible personal property?
The lockers are taxable — because they can be unbolted and removed without material damage, installing them is not a capital improvement, so both the sale and the installation are subject to sales tax…
Is sales tax due on a member-owned golf club's Certificate of Membership and a required Subordinate Debenture Bond, and is the tax refundable when the member later leaves and redeems the bond?
Both are taxable, and there's no refund. A member-owned golf club's Certificate of Membership and a required (even refundable) Subordinate Debenture Bond are both taxed as initiation fees, and later c…
Does a monthly consumer newsletter listing manufacturer refund offers qualify as a tax-exempt periodical, so its sales aren't subject to sales tax?
It's exempt — the monthly 'Consumer's Bulletin' meets the five-part test for a periodical, so its sales aren't taxed. Rose Marie Thompson asked whether she must collect sales tax on sales of her publi…
When an out-of-state seller registered in New York ships goods to a New York customer of its out-of-state buyer (a drop shipment), and no exemption certificate is given, is New York sales tax due?
Yes — because the goods were delivered in New York and no exemption certificate was provided, New York State and local sales tax is due. Banner Metals (a Pennsylvania company registered to collect New…
When did Texas tax a leased vehicle under the historical long-term lease rules, and were lease payments taxable?
A vehicle bought in Texas for lease drew sales tax, while one bought outside Texas drew use tax. Tax was paid at title or registration, or directly to the Comptroller for non-Texas registration includ…
Did Texas allow credit for tax paid to Mexico when an international-commerce vehicle entered Texas and obtained Texas registration?
No. The Comptroller's legal staff said a vehicle entering Texas from Mexico owed historical motor vehicle tax when the operator applied for Texas registration. Because the vehicle came from a foreign …
Is the rental of a crane taxable when the rental company supplies the operator but the customer supervises and directs the crane's use?
It's taxable — because the customer directs and controls how the crane is used, renting the crane (even with the rental company's operator) is a taxable lease of tangible personal property. Enercon Sy…
When a truck lease separately bills the lessee for interest expense (plus a profit markup), is that interest charge part of the taxable rental receipt?
Yes — the separately billed interest charges, including the 10% profit markup, are part of the taxable rental receipt and sales tax must be collected on them. Island Leasing Corp. leases trucks to New…
Does filing the required bulk-sale notice, by itself, relieve the purchaser of all liability for the seller's unpaid sales taxes — and does timing matter?
No — filing the bulk-sale notice by itself does not relieve the purchaser of all liability; it is the timely notice combined with withholding the purchase price that limits and protects the buyer. Kle…
Does the Kansas exemption for a vehicle or aircraft sold to an out-of-state resident cover trailers, and what must the dealer keep on file?
The K.S.A. 79-3606(k) exemption covers only a 'motor vehicle' or aircraft sold and delivered in Kansas to a bona fide resident of another state, not to be registered in Kansas and not remaining in the…
Was a manufacturer-built well service unit subject to Texas motor vehicle tax or limited sales tax?
The described well service unit was not subject to motor vehicle sales and use tax. Because the manufacturer built it entirely for a specialized function and it was not designed to carry a divisible h…
New York advertising agencies sometimes buy materials -- like photoengraving plates and drawings -- as agent for an out-of-state client, and those materials end up owned by that out-of-state client while briefly located in New York. Does that client's ownership of such materials in New York, by itself, make the out-of-state client corporation subject to New York's Article 9-A franchise tax?
No. The American Association of Advertising Agencies, Inc. (AAAA) raised the issue on behalf of member agencies located in New York that perform services for non-New York clients not otherwise subject…
When did the Texas Motor Vehicle Division treat an interstate vehicle transaction as a Texas sale versus a Texas use?
A vehicle located in Texas when sold by a Texas seller was treated as a Texas sale even if delivered out of state, with no credit against that sales tax for another state's use tax. A vehicle outside …
What had to accompany a Texas motor vehicle tax payment for it to be treated as paid under protest in 1980?
The payment and a written protest letter had to accompany one another. The letter needed to state fully and in detail every ground for claiming the assessment unlawful or unauthorized. If separated, t…
Are restaurant meals for a municipality's employees on official business exempt from sales tax when the city pays directly, and when the employee pays and is reimbursed?
Exempt in both cases — meals for city employees on City business are exempt from sales tax whether the City pays the restaurant directly or the employee pays and is fully reimbursed. The City of Rome …
Is computer hardware and custom software used to produce books for sale exempt from New York State and county sales and use taxes?
Both are exempt — the computer hardware used to produce books for sale is exempt production equipment, and the custom software is nontaxable intangible personal property. Matthew Bender & Company, a l…
Who owed Texas use tax on an out-of-state vehicle brought onto Texas highways under this 1980 guidance?
A Texas resident, domiciliary, or person doing business in Texas owed use tax when an out-of-state purchased vehicle was brought onto Texas public highways. An entity holding or required to hold a Tex…
Is a fishing party boat that carries passengers from New York to New Jersey fishing waters and back — without discharging them in another state — an exempt commercial vessel engaged in interstate commerce?
Not exempt — because the boat brings its passengers back without discharging them in another state, it isn't engaged in interstate commerce, so its fuel, provisions, supplies, and repairs are taxable.…
When a contractor makes asphalt and uses it in its own capital-improvement road jobs, is that a 'sale' of the asphalt that qualifies the contractor for the production machinery and fuel exemptions?
No — the contractor uses (doesn't sell) the asphalt it makes for its own capital-improvement jobs, so it isn't a vendor and can't claim the machinery or fuel/utility production exemptions. Willets Poi…
Our finance subsidiary lends money to affiliated companies in the same corporate family to help fund their capital needs, evidenced by unsecured, non-negotiable intercompany notes that are never sold on any market or exchange. Does the interest we earn on those notes count as investment income from investment capital (potentially more favorably taxed) or as business income from business capital under New York's Article 9-A franchise tax?
Business capital, not investment capital -- meaning the interest is business income. Mobil International Finance Corp. lent money to various companies within the Mobil corporate family to help finance…
Is a weekly ad-heavy shopping publication a tax-exempt newspaper or periodical, so its sales aren't subject to sales tax?
It's exempt as a periodical — the weekly 'Buy-Lines Press' isn't a newspaper (no reports of current events), but it meets the periodical test, so its sales aren't taxed. B-L Press, Inc. asked whether …
Are 'start-up' charges and one-year warranty service on newly installed rooftop HVAC units subject to sales tax?
Split result — the 'start-up' is part of a nontaxable capital-improvement installation, but the later one-year warranty service is a taxable repair. Enercon Service, Inc. performs two services on roof…
Is a bulletin that is essentially a listing of manufacturers' refund offers a tax-exempt periodical, or a taxable information service?
It's taxable — a bulletin that is essentially a listing of manufacturers' refund offers is a taxable information service, not an exempt periodical or newspaper. Rose Marie Thompson asked whether she m…
What liability did a Texas vehicle seller face for an incorrect value affidavit or failure to provide the buyer an affidavit?
The purchaser owed historical motor vehicle tax on every Texas retail sale, but the seller had document duties. The seller had to provide the Manufacturer's Statement of Origin, a completed joint Sell…
New York Advisory Opinion TSB-H-80(245)I: Are exempt-interest dividends from a proposed regulated-investment-company share class investing exclusively in New York State and local bonds subject to New York Personal Income Tax or the Unincorporated Business Income Tax?
No, for either tax. The Department held that exempt-interest dividends excluded from federal gross income aren't part of the federal adjusted gross income that starts the New York Personal Income Tax …
New York Advisory Opinion TSB-H-80(244)I: Is a partnership that trades stocks, options, financial futures, risk arbitrage, and commodities solely for its own account subject to New York's unincorporated business tax?
No. The Department held that a partnership whose only activity is buying and selling stocks, options, financial futures, and commodities purely for its own account - with no customers and no commissio…
New York Advisory Opinion TSB-H-80(243)I: Is a limited partnership organized to acquire stock, make investments, and hold financial assets solely for its own account subject to New York's unincorporated business tax?
No. The Department held that Hoffman & Co., a limited partnership organized to acquire capital stock, finance investments in companies, and hold and trade securities and other financial assets - all s…
New York Advisory Opinion TSB-H-80(242)I: Is a limited partnership organized to acquire stock, make investments, and hold financial assets solely for its own account subject to New York's unincorporated business tax?
No. The Department held that Industrial Capital Group, a limited partnership organized to acquire capital stock, finance investments in companies, and hold and trade securities and other financial ass…
New York Advisory Opinion TSB-H-80(241)I: Does a technical editor, writer, and translator's income qualify as the practice of a profession exempt from New York's unincorporated business tax?
No. Even though more than 80% of the taxpayer's gross income came from personal services (writing, editing, interviews, and translations) and capital wasn't a material income-producing factor, the Dep…
Are annual assessments a homeowners' association charges its members subject to New York's tax on dues paid to a social or athletic club?
Yes (for the State tax) — a homeowners' association that maintains common recreational areas is a 'social club,' so its annual assessments over ten dollars are taxable dues, though Saratoga County cho…
Is the rental of a slitting machine used to cut metal coils to customers' specifications exempt from sales tax as production machinery?
Exempt — renting a slitting machine used to cut metal coils to customers' specifications is production machinery used in processing, so the rental receipts aren't taxed (outside New York City). Genera…
What did Texas auditors do about interest earned when county tax assessor-collectors deposited motor vehicle taxes?
Attorney General Opinion MW-47 stated that all interest earned on motor vehicle tax placed in county interest-bearing accounts had to be remitted to the Comptroller. After Dallas County remitted more …
If a nonprofit employee club buys blocks of admission tickets and resells them to its members at cost, must it collect sales tax on the amounts members pay?
No. The Kermis Club, a nonprofit social club whose members are all employees of General Electric's Knolls Atomic Power Laboratory, buys blocks of admission tickets (for plays, amusement parks, and sim…
Is a bank that finances an equipment lease — advancing the money and taking an assignment of the lessor's interest, but never holding title or possession — a 'vendor' that must collect and remit sales tax?
No. Manufacturers and Traders Trust Company (M&T) finances equipment leases: the lessee picks the equipment and supplier, the lessor pays the supplier, and M&T advances the money to the lessor in exch…
Can a caterer that prepares complete airline meals buy the paper containers, cups, foil, utensils, and bags used to package the meals tax-free as purchases for resale?
No. Sky Chefs prepares complete meals sold to airlines and buys paper containers, cups, foil, utensils, and bags to package them. These are not tax-free purchases for resale. Customers do not buy the …
New York Advisory Opinion TSB-H-80(136)I: Can a corporate officer count days worked from his out-of-state home as out-of-state days for New York nonresident income allocation, when he wasn't required to work from home?
No. The Department held that 20 NYCRR 131.16 allows a nonresident employee to allocate out-of-state days only where working outside New York was a necessity of the employer's business, not simply a ma…
Our parent corporation sells a large share of one subsidiary's total resale inventory and 100% of another's, but neither subsidiary is separately subject to New York's Article 9-A tax on its own. Can the Tax Commission force us to file a combined New York return covering the parent and those two subsidiaries, plus a third DISC subsidiary that has no direct purchases from the parent?
Yes for the two goods-supply subsidiaries, but no for the property-less DISC. The Gates Rubber Company sold to its subsidiary National Tires, Inc. an amount equal to about 5.6% of the parent's own sal…
Do buyers of fractional interests in a racehorse owe New York sales or use tax when the seller keeps racing the horse in New York before title actually passes to them?
No. Buyers of undivided one-fortieth interests in the thoroughbred stallion Spectacular Bid, under a syndication agreement, do not incur New York sales or use tax when the seller (Hawksworth Farm Asso…
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