N.Y. Comp. Codes R. & Regs. tit. 20 § 527.3

Current through Register Vol. 46, No. 50, December 11, 2024

Section 527.3 - Sale of information services

Tax Law, § 1105[c][1])

(a)Imposition.

(1) Section 1105(c)(1) of the Tax Law imposes a tax on the receipts from the service of furnishing information by printed, mimeographed or multigraphed matter or by duplicating written or printed matter in any manner such as by tapes, discs, electronic readouts or displays.

(2) The collecting, compiling or analyzing information of any kind or nature and the furnishing reports thereof to other persons is an information service.

(3) Among the services which are information services are credit reports, tax or stock market advisory and analysis reports and product and marketing surveys.

Example 1:

A company distributes a newsletter to its subscribers weekly, showing the range of daily market prices for certain commodities. The newsletter comprises a taxable information service.

Example 2:

A company publishes a bound volume monthly, which it furnishes to its subscribers. The volume contains information with respect to current advertising rates of various media in different localities. This publication is a taxable information service.

Example 3:

A firm supplies to business concerns listings of prospective customers' telephone numbers is providing a taxable information service and must collect the appropriate tax on the charges for such service.

Example 4:

A computer service company owns a service program consisting of analyses of law cases and statutes. It is asked by a customer to research all references to the word "assessment". The fee for the printout received by the customer constitutes a taxable receipt from an information service, as the citations listed may be given to another subscriber requesting the same information.

(4) Charges for credit information services, other than those that are transmitted orally, are subject to tax. The following rules shall apply in determining taxability of services that include both oral and written reports:

(i) Any fee for a written report is taxable.

(ii) Any fee for an oral report is taxable if the oral report is preliminary to the written report.

(iii) An annual fee for subscribing to a service is taxable if it entitles the subscriber to a certain number of free reports, or to reduced charges on reports, unless the subscriber is entitled only to oral reports.

Cross reference:

Periodicals and newspapers, see Part 528 of this Title.

(b)Exclusions.

(1) Sales tax does not apply to receipts from sales of information services which are for resale as such.

(2) The sales tax does not apply to the receipts from the sale of information which is personal or individual in nature and which is not or may not be substantially incorporated into reports furnished to other persons by the person who has collected, compiled or analyzed such information.

Example 1:

The report submitted by a private detective agency to its clients is a personal report, the charge for which is not taxable.

Example 2:

Automobile insurance damage appraisals performed for insurance companies are individual reports, the fees for which are not subject to sales tax.

Example 3:

A computer service company has a program consisting of withholding tax tables. Using the same program, it computes the payroll for several subscribers. The fee charged to each subscriber is not taxable as it is for an information service, the results of which are not incorporated into reports furnished others.

Example 4:

A firm is in the business of reading newspapers and periodicals, cutting out all articles in which the name of a customer or a topic of interest to the customer appears, and transferring such clippings to the customer, whether by mail or otherwise, for a fee. This is a service of furnishing information which is taxable. The tax is due on the entire charge regardless of the method of billing for the service, including any charge by the firm for shipping or delivery of the clippings to the customer. Even though this information may be individual in nature, it may be incorporated in reports furnished to others.

(3) Sales tax does not apply to receipts from sales of information services which are only furnished orally. See paragraph (4) of subdivision (a) of this section.

(4) The sale of information services to newspapers and radio or television broadcasters which are used in the collection and dissemination of news is excluded from tax.

(5) Fees for the services of advertising agencies or other persons acting in a representative capacity are excluded from the tax. Advertising services consist of consultation and development of advertising campaigns, and placement of advertisements with the media without the transfer of tangible personal property. The furnishing of a personal report containing information derived from information services, by an advertising agency, to its client for a fee is not a taxable information service. However, if an advertising agency is engaged only for the purpose of conducting a survey or if a survey is separately authorized and billed to the customer, the taxability of such survey is determined in accordance with the provisions of subdivision (a) of this section and the other provisions of this subdivision. Sales of tangible personal property such as layouts, printing plates, catalogs, mailing devices or promotional handouts, tapes or films by an advertising agency for its own account are taxable sales of tangible personal property. (See section 527.1 of this Part.)

Example 5:

An advertising agency is hired to design an advertising program and to furnish art work and layouts to the media. The fee charged by the agency to its client for this service is not subject to the tax. However, if the layout and artwork is sold by the advertising agency prior to use by it to the customer for his use, the advertising agency is making a sale of tangible personal property which is subject to sales tax.

(c)Purchases by persons providing information and advertising service.

(1) The purchase of materials used in performing an information service subject to tax under section 1105(c)(1) of the Tax Law is not a retail sale where it is transferred to the purchaser of the service and therefore is exempt from the sales tax. (See section 526.6 of this Title.) However, where the information service is not subject to tax under section 1105(c)(1) of the Tax Law, the purchase of materials used in performing the service is taxable to the person rendering the service.

Example 1:

A credit bureau purchases forms for the furnishing of credit status reports to its clients. The forms purchased are not subject to the sales tax since they were purchased for use in performing a taxable service.

Example 2:

A firm which computes payroll information purchases forms for the purpose of furnishing reports to its clients. The reports will contain information which is personal or individual and not a taxable information service. Such purchases by the firm are at retail and subject to the sales tax.

(2) All purchases of materials by an advertising agency for use in performing its services are purchases at retail subject to sales tax.

(3) The purchase of a service subject to tax under section 1105(c)(1) of the Tax Law by a vendor who will resell that service as such or as a part of a service also subject to tax under section 1105(c)(1) is not a purchase at retail and is exempt from the sales tax.

Example 3:

A vendor of an investment advisory service purchases a commodity information service and stock market information service. Both services purchased by the vendor are incorporated into the service he sells. The vendor may purchase the services he uses for resale without payment of sales tax.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 527.3