NYS TSB Addresses Sales Tax on Information Services - July 2010
New York State Department of Taxation and Finance, TSB-M-10(7)S - Information Services - Change in position re risk management reports
On July 19, the New York State Department of Taxation and Finance issued guidance on the sales and use tax treatment of information services. In general, only services that have as their primary function the provision of information are taxable. The Department will determine a service's primary function based on an examination of the nature of the services being sold. Based on this approach, a service is taxable as an information service if its primary function is one of the following (refer to the TSB for a more detailed list):
- Advertising rate reports for a given medium or market
- Consumer product reports, including product evaluations
- Credit monitoring services
- Directory and mailing list services
- Employment history reports
- Employment placement reports and employment registries (but not charges to merely post information)
- Information furnished by credit reporting bureaus
- Internet-based data and Web search services (e.g., Internet entertainment information services, Internet sports information sites, Internet newsletters, and Internet search portals)
- Investment reports and services (including stock market quotes and forecasts, and mutual fund raising services)
- Newsletter subscriptions
- Patent search services (unless provided by an attorney)
- Public records furnished by a private entity
- Real property information databases
- News reporting services
The Department has also changed its policy regarding the taxability of risk management analysis reports and revoked TSB-A-00(2)S. Beginning on September 1, 2010, the sale of a service whose primary function is to provide risk management analysis reports is taxable. Risk management analysis reports may address risk of loss in: (i) market share; (ii) investment portfolios; (iii) credit transactions; (iv) computer networks; (v) employee turnover; and (vi) security. While providing information services that are individual or personal in nature is exempt from tax, the Department takes the position that risk management analysis reports are taxable because they generally contain information obtained from a common database or information that is widely accessible, and such information can be incorporated into reports furnished to other persons. Based on this change in policy, companies providing risk management advisory reports should evaluate whether they should begin taxing sales prospectively.
The Department has also clarified its treatment of the sale of public documents by private entities, and modified its treatment of the sale of abstracts of title, both of which are taxable information services.
To view this document in its entirety, please use the following link:
http://www.tax.state.ny.us/pdf/memos/sales/m10_7s.pdf