May 2, 1989
TO: TAX MEMBERS NO. 15-89
MONEY MARKET FUND CHIEF EXECUTIVE OFFICERS NO. 3-89
RE: NEW YORK ADVISORY OPINION ON PASS-THROUGH OF FEDERAL
AGENCY OBLIGATION INTEREST
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The attached advisory opinion was recently issued by the
New York State Commissioner of Taxation and Finance regarding
whether the term "obligations of the United States", as used in
the New York State pass-through statute, includes the obligations
of federal agencies. The issue arises because section 612(c)(1)
of the New York Tax Law exempts from tax the "obligations of the
United States and its possessions" and specifically provides for
pass-through treatment whereas section 612(c)(2) of the New York
Tax Law exempts obligations of agencies and instrumentalities of
the United States but does not contain a comparable pass-through
provision.
The advisory opinion provides that, in determining what is
meant by "obligations of the United States and its possessions,"
taxpayers may look to the State's Technical Service Bureau
Memorandum TSB-M-86-(8)I (also attached) which provides a list of
obligations issued by the United States government, states and
municipalities and indicates whether the interest on each
obligation is subject to New York State income tax. Various
agency obligations are included on the list.
Pursuant to New York law, "[a]n advisory opinion ... shall
be binding on the Commissioner only with respect to the person to
whom the advisory opinion is rendered."
We will keep you informed of developments.
Keith D. Lawson
Assistant General Counsel
Attachments