When was a credit-rating report a nontaxable custom search, and when was it a taxable standardized report?

Plain-English summary

California said credit-rating reports could not be classified categorically. The contract, marketing, and other transaction facts determined whether the customer bought a service or tangible personal property.

A customer-specific request for a report on one named person or entity most likely was a nontaxable library-search service.

A credit-reporting business made taxable property sales when it sold standardized reports to multiple customers or marketed a report to the public or a defined segment of the public. Public marketing could produce a taxable report sale even if only one customer ultimately bought it.

What this means for you

Credit and business-information providers

Customer-specific research and predeveloped marketable reports fell on different sides of the opinion's line.

Accountants and tax professionals

Review when research begins, whether a named subject drives the work, how many customers can buy it, marketing, contract terms, and delivery format.

Common questions

Q: Was a report requested on one specific person taxable?

A: Most likely not; the opinion treated it as a library-search service.

Q: Were standardized reports taxable?

A: Yes.

Q: Did a standardized report need multiple buyers to be taxable?

A: No. Marketing it to the public or a market segment could be enough even if only one buyer purchased it.

Citations and references

• The opinion states its credit-report conclusions without a numbered statutory or regulatory citation
• It separately references Business Taxes Law Guide Annotations 385.0340, 385.0341, and 385.0350 for multiple-listing publications

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 515.0954
• Original supporting opinion: 515.0954 PDF

Original ruling text

515.0954

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

WILLIAM M. BENNETT
First District, Kentfield

1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 324-8208

BRAD SHERMAN
Second District, Los Angeles
ERNEST J. DRONENBURG, JR.
Third District, San Diego

July 1, 1992

MATTHEW K. FONG
Fourth District, Los Angeles
GRAY DAVIS
Controller, Sacramento
BURTON W. OLIVER
Executive Director

REDACTED TEXT
REDACTED TEXT

This is in response to your inquiry by telephone to this office about multiple listing service publications and credit rating reports. The Board treats transfers for a consideration of multiple listing service publications as sales of tangible personal property. Until July 15, 1991, the only issue with respect to these publications had been whether such sales qualified for the newspaper and periodical exemption. BTLG Sales and Use Tax Annotations 385.0340, 385.0341, and 385.0350. The tax treatment of credit rating reports will depend upon the contract between the parties, how the report is marketed, and other factors and must be determined on a transaction by transaction basis. If a customer makes a request for a report on a specific person or entity, the transaction most likely will be treated as a library search and therefore a nontaxable service. However, if the credit rating business sells standardized reports to more than one customer or markets such reports to the public or to a specific segment of the public, even if there is only one purchaser, the credit rating business is making taxable sales of tangible personal property. Very truly yours,

GJJ:cl
REDACTED TEXT
bc:

Mr. Glenn A. Bystrom
Out-of-State District Administrator

Gary J. Jugum
Assistant Chief Counsel