The New York gross receipts tax is a set of excise taxes under Article 9 of the Tax Law charged on total revenue that utility and telecommunications businesses collect from New York customers. Rates run from 0% to 2.9% depending on the service, and the two governing sections are 186-a for utilities and 186-e for telecom.1New York State Senate. New York Code TAX – Tax on the Furnishing of Utility Services2New York State Senate. New York Tax Law 186-E – Excise Tax on Telecommunication Services Because the tax hits gross revenue rather than profit, there are no deductions for costs, and even businesses whose utility or telecom activity is a sideline can fall within scope.
Who Has to Pay
Section 186-a applies to any business classified as a “utility,” which in practice means providers of electricity, gas, steam, water, or refrigeration delivered through pipes, wires, or mains, along with any company supervised by the New York State Department of Public Service. The statute applies whether utility service is your main business or a side activity. A landlord who buys electricity wholesale and resells it to tenants is a utility for this purpose, even though real estate is the primary business.1New York State Senate. New York Code TAX – Tax on the Furnishing of Utility Services
Section 186-e covers every provider of telecommunications services, defined as selling telephony, telegraphy, or the transmission of voice, image, data, or information through wire, cable, fiber optic, microwave, radio wave, satellite, or similar media. If you sell telecom services at all, you owe the tax regardless of whether telecom is your core business.2New York State Senate. New York Tax Law 186-E – Excise Tax on Telecommunication Services
A telecom provider that is also supervised by the Department of Public Service owes tax under both sections and files one return on Form CT-186-E, which captures both obligations. Providers with only utility services and no telecom activity file Form CT-186-P instead.3New York State Department of Taxation and Finance. Instructions for Form CT-186-E Telecommunications Tax Return and Utility Services Tax Return4New York State Department of Taxation and Finance. Instructions for Form CT-186-P Utility Services Tax Return – Gross Income
One narrow exemption exists. A utility with $500 or less in gross income for the year owes nothing under Section 186-a. The exemption does not reach the Section 186-e telecommunications tax or its MTA surcharge, so telecom providers cannot use it to skip filing.3New York State Department of Taxation and Finance. Instructions for Form CT-186-E Telecommunications Tax Return and Utility Services Tax Return
The Rates
The rate you pay depends on the service and the section that applies. Some rates have phased down to zero over the years, so it’s worth walking through them carefully.
Utility Services Under Section 186-a
Gross income from the transport, transmission, or distribution of gas or electricity through mains, pipes, or wires is taxed at 2%. This rate has held since January 1, 2005.1New York State Senate. New York Code TAX – Tax on the Furnishing of Utility Services
All other gross income of those utilities dropped to 0% on the same date. Utilities that fall within the statutory definition but are not supervised by the Department of Public Service also pay 0%. In effect, the only utility revenue still taxed at a meaningful rate under Section 186-a is income from transmitting and distributing gas or electricity.1New York State Senate. New York Code TAX – Tax on the Furnishing of Utility Services
A telecom provider that is also supervised by the Department of Public Service owes an additional 186-a tax of 2.5% of gross income on top of its 186-e obligations.1New York State Senate. New York Code TAX – Tax on the Furnishing of Utility Services
Telecom Services Under Section 186-e
Non-mobile telecom services (landline telephony, data transmission over fixed lines, and the like) are taxed at 2.5% of gross receipts. That covers intrastate service as well as interstate and international service that originates or terminates in New York and is billed to a New York service address.2New York State Senate. New York Tax Law 186-E – Excise Tax on Telecommunication Services
Mobile telecom services are taxed at 2.9% of gross receipts, effective since May 1, 2015. The tax applies whenever the customer’s place of primary use is in New York, no matter where the call actually originates or terminates.2New York State Senate. New York Tax Law 186-E – Excise Tax on Telecommunication Services
MTA Surcharge
Businesses operating within the Metropolitan Commuter Transportation District owe an additional surcharge calculated as a percentage of the underlying tax. Form CT-186-E includes Schedules B and F for computing the surcharge on the 186-a and 186-e components.3New York State Department of Taxation and Finance. Instructions for Form CT-186-E Telecommunications Tax Return and Utility Services Tax Return The surcharge percentage that applies to Article 9 filers has shifted from the 17% that held for decades, so check the current year’s form instructions rather than relying on an older figure.
How the Tax Is Calculated
The base is gross receipts or gross operating income from New York sources. There is no deduction for cost of goods, operating expenses, or any other business cost. You pay on total revenue, not profit, which is why the rates look low compared with an income tax.
For telecommunications, only receipts with a New York connection count. Intrastate calls are fully taxable. Interstate and international calls are taxable when they originate or terminate in New York and are billed to a New York service address. Private telecom services, such as dedicated lines between locations, use a special allocation formula in Section 186-e to determine the New York portion.2New York State Senate. New York Tax Law 186-E – Excise Tax on Telecommunication Services
Providers that bundle taxable telecom with non-taxable services on one bill have to allocate the charge, usually by relative value or separate pricing. This is a frequent audit trigger. Keep clear documentation of how you split bundled charges.
Receipts must be categorized by type on the return. The CT-186-E separates mobile telecom (2.9%) from other telecom (2.5%) and breaks out the 186-a utility component where it applies.3New York State Department of Taxation and Finance. Instructions for Form CT-186-E Telecommunications Tax Return and Utility Services Tax Return
When and How to File
The return is annual, not quarterly. For taxable years beginning on or after January 1, 2016, it is due April 15 of the following year. A provider reporting 2025 activity files by April 15, 2026.2New York State Senate. New York Tax Law 186-E – Excise Tax on Telecommunication Services
Form CT-5.9-E requests a three-month extension to file Form CT-186-E. An extension gives you more time to file, but it does not extend the deadline to pay. Any balance due accrues interest from the original April 15 date.5New York State Department of Taxation and Finance. Corporation Tax Web File
Most corporation tax filers, including those filing CT-186-E, must file electronically. You can Web File through a free Business Online Services account on the Department of Taxation and Finance website or use approved commercial software. Filing on paper when e-filing is required can bring its own penalties. Taxpayers whose liability exceeds the department’s threshold must also pay by Electronic Funds Transfer; the current threshold and accepted payment methods are on the department’s e-file page.5New York State Department of Taxation and Finance. Corporation Tax Web File
Penalties and Interest for Late Returns
Missing the filing deadline brings a penalty of 5% of the tax due for each month or partial month the return is late, capped at 25%. If the return is more than 60 days overdue, the minimum penalty is the lesser of $100 or the total amount due.6New York State Department of Taxation and Finance. Interest and Penalties
Late payment carries a separate 0.5% monthly penalty on the unpaid amount, also capped at 25%. The two penalties stack. A business that files three months late and hasn’t paid faces 15% in late-filing penalties plus 1.5% in late-payment penalties on top of the tax.6New York State Department of Taxation and Finance. Interest and Penalties
Interest accrues on any unpaid balance from the original due date. New York sets its rates quarterly, and they tend to run several percentage points above federal rates, with the current figure published on the department’s website. Between penalties and interest, a bill left alone for a few months grows quickly.