1. (1) The regulations of the Division of Taxation are official statements of general applicability that implement or apply the provisions of the Tax Law and related statutes and prescribe the practices and procedural requirements of the division. These regulations are intended to foster a uniform and equitable administration of the Tax Law and related statutes.

2. (2) Subdivision First of section 171 of the Tax Law provides explicit authority for the Commissioner of Taxation and Finance to make such reasonable rules and regulations, not inconsistent with law, as may be necessary for the exercise of the commissioner's power and for the performance of the commissioner's duties under the Tax Law. Numerous other provisions throughout the Tax Law and related statutes provide similar or specific authority to effectuate the purposes of such laws.

   (b) Rule making.

3. (1) The terms rules and regulations are interchangeable. In accordance with section 8 of article IV of the Constitution of New York State and section 102 of the Executive Law, the division's regulations are adopted by the Commissioner of Taxation and Finance pursuant to the rule making procedure prescribed in article 2 of the State Administrative Procedure Act. This procedure ensures that interested taxpayers, tax practitioners, personnel of the department and members of the general public are notified of all regulations being adopted by the commissioner and that they are afforded an opportunity to comment on, and participate in the development of, such regulations.

4. (2) Among the methods of communication that are specifically excluded from the rule making procedure imposed by the State Administrative Procedure Act are:

   1. (i) declaratory rulings; and

   2. (ii) forms, instructions, interpretative statements and statements of general policy which in themselves have no legal effect but are merely explanatory. These methods of communication by the division, including others, are discussed in the sections of this Part that follow.

      (c) Force and effect.

5. (1) Regulations have traditionally been classified as being either legislative or interpretive in character. The division's regulations are no exception, although this distinction may not always be apparent. Legislative regulations of the division are regulations that create rights and responsibilities under the Tax Law and related statutes pursuant to the statutory delegations by the Legislature to make reasonable rules and regulations. They are adopted to implement provisions of the Tax Law or related statutes that have intentionally been left incomplete and to fill in the details that are necessary to complete the framework established by such laws. Accordingly, legislative regulations of the division have the full force and effect of law, unless they are beyond the power delegated, improperly promulgated, arbitrary, capricious, or contrary to law. Such regulations should not be altered or set aside merely because alternative constructions of the underlying provisions of the Tax Law or related statutes can be made. Where the division's legislative regulations are within the powers delegated, are properly promulgated and are otherwise in accordance with law, such regulations set precedent and are binding.
6. (2) Interpretive regulations of the division do not create rights or responsibilities, but merely explain and clarify the division's position on the various provisions of the Tax Law and related statutes. However, although interpretive regulations of the division are merely explanatory, they do constitute an authoritative codification of the division's specialized experience and informed judgments which have undergone the formal rule making procedure imposed by the State Administrative Procedure Act. Thus, the division's interpretive regulations set precedent and are binding upon the taxpayer, the division and the commissioner, unless they are altered or set aside by the Tax Appeals Tribunal (see, however, section 2375.1[a][2] of this Part), a reviewing court of competent jurisdiction, duly enacted legislation or properly promulgated amendments to such regulations.

(a) General.