NYS-Sales and Compensating Use Tax Treatment of Certain Information Services

Tax Department policy regarding taxable information services:

A wide variety of businesses are engaged in furnishing taxable information services. As a general rule, furnishing information created or generated from a common database, or information that is widely accessible, is a taxable information service. The sale of a report that uses or relies on statistical models or historical data is also generally considered to be a taxable information service, as is the service of gathering information from a variety of sources and recasting that information into a report. The resulting reports are not considered personal or individual in nature because they contain information that can be incorporated into reports furnished to other persons. A sale includes the sale of a single report and also includes an ongoing payment for access to information, such as a subscription.

Whether a service qualifies as an information service depends on its primary function. The fact that one element of a service is an information service does not mean that the service as a whole is taxable as an information service. The Tax Department will determine a service’s primary function based on an examination of the nature of the service being sold and what is being paid for by the purchaser. How the buyer subsequently uses the information purchased is not relevant to this inquiry. If a customer’s chief purpose in paying for a service is to receive information from that service, whether it is the price of a stock, the chain of ownership of real property, or contact information for a person meeting certain qualifications, the service as a whole qualifies as an information service. This result holds true even if the customer receives other benefits as part of the service. A service is taxable as an information service if its primary function is one of the following:

• Advertising rate reports for a given medium or market
• Archive services (examples include sales of access to historical information, documents and manuscripts, archived articles or journals)
• College selection services and financial assistance information services (examples include college and scholarship search services)
• Consumer product reports, such as product evaluations
• credit monitoring services
• Directory and mailing list services (examples include the sale of customer lists, lists of postal mailing addresses, lists of e-mail addresses, lists of bad checks, telephone directories, business directories, collections of fact, price lists and almanacs, collections or compilations of proprietary drug trials, and compilations of legal case results)
• Employment history reports
• Employment placement reports and employment registries (examples include
• Employment databases, babysitting registries, and model registries), but not charges merely to post information
• genealogical research services;
• Information furnished by credit reporting bureaus;
• Internet-based data and Web search services (examples include Internet entertainment information sites, Internet sports information sites, Internet newsletters, and Internet search portals and search Web sites);
• Investment reports and services (examples include stock market reports and forecasts, mutual fund rating services, and stock quotation services);
• Matching or networking services (examples include online dating services, physician matching services, and contractor locator services), but not charges merely to post information;
• News clipping services (examples include services providing individual news or
• Magazine articles on a given subject);
• Newsletter subscriptions (however, newspapers and periodicals are not taxable);
• Online telephone or address directory services;
• Patent search services (unless provided by an attorney in the practice of law);
• Pedigree record services (for example, an online directory);
• People or parts locator services (examples include online classmate locator services or online vintage car parts locator services);
• Public records furnished (electronically or in paper format) by a private entity, such as a document retrieval service (examples include real property deeds, motor vehicle accident or violation reports, etc.; however, public records sold by a governmental entity, such as a county clerk, are not subject to tax; for more information, see Public documents sold by private entities below);
• Real property information databases (but if the database provides only access to public documents as such see Public documents sold by private entities below);
• Reporting services that compile news stories or issues related to a certain topic;
• Reports or databases of information on movies, books, or other media;
• Sports scouting reports;
• Sports statistics or athletic performance reports (examples include horse racing handicapping or tip sheets, and fantasy baseball or fantasy football reports); and survey results (examples include marketing and public opinion research reports).

The absence of a service from this list does not mean that it is not subject to tax under Voluntary Disclosure and Compliance program.

Taxpayers, including sellers of information services, are eligible for the Tax Department’s Voluntary Disclosure and Compliance program. The goal of the program is to encourage taxpayers to voluntarily disclose and correct delinquent tax liabilities and avoid penalties.

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Source: Business Document Filing in All 50 States.