Were website-generated automobile sales leads taxable information services in New Jersey when billed per lead or by subscription?

Plain-English summary

New Jersey treated nonexclusive automobile sales leads delivered by a website as taxable information services.

The website listed dealership inventory, let prospective buyers search it, collected and verified buyer information, and sent the leads to dealerships by email or fax. A lead included names, addresses, telephone numbers, email addresses, and descriptions of the vehicles the prospects wanted.

The information was not “personal or individual” within the statutory exclusion because the website could provide the same collected information to all participating dealerships with matching inventory or search criteria.

The charge remained taxable whether the website billed separately for each lead or charged a flat monthly subscription fee.

Bundling the service with website advertising or space did not change the result. The Division said the true object of the overall service remained the sales-lead information.

The TAM stated that the Division would enforce this result prospectively from the notice date.

What this means for you

Lead-generation platforms

Nonexclusive lists compiled and supplied to multiple customers fit the taxable information-service analysis in this TAM.

Automobile dealerships

Expect tax on lead charges whether priced per lead or as a subscription when the service has the characteristics described here.

Bundled-service sellers

Adding advertising or website space did not make the package non-taxable when the true object remained the information.

Common questions

Q: Why were the leads taxable information services?
A: The website collected and verified information and could furnish it to multiple participating dealerships.

Q: Did per-lead billing matter?
A: No. Per-lead and monthly subscription billing produced the same result.

Q: Did emailing or faxing the leads change the result?
A: No. The statutory definition covered information furnished by any means or method.

Q: Did bundling advertising with the leads avoid tax?
A: No. The Division viewed the true object as providing sales-lead information.

Citations and references

• N.J.S.A. 54:32B-3(b)(12) — information services
• N.J.S.A. 54:32B-2(yy) — definition of information services

Source

• Landing page: https://www.nj.gov/treasury/taxation/tam-pubs.shtml
• Original PDF: https://www.nj.gov/treasury/taxation/pdf/pubs/tams/tam21.pdf

Original ruling text

Sales Lead Provided to Automobile Dealership via Website
TAM 2011-21 – Issued November 4, 2011
Tax: Sales and Use Tax
On and after October 1, 2006, Sales and Use Tax is imposed on “information services.” N.J.S.A.
54:32B-3(b) (12). The law defines “information services” as the furnishing of information of any
kind, which has been collected, compiled, or analyzed by the seller, and provided through any
means or method, other than personal or individual information which is not incorporated into
reports furnished to other people. N.J.S.A. 54:32B-2(yy).

Motor vehicle dealerships contract with Website. Website agrees to list dealer inventory
and make it searchable by prospective car buyers. Website agrees to collect prospective
buyer information and verify the accuracy of the information. The auto dealership is then
provided with the sales lead information via email or fax. The information collected by
Website is non-exclusive and may be provided to any or all of the participating
dealerships that have the same inventory or as designated by the search criteria. The
Website offers its service to be invoiced either per sales lead or as a flat fee for a monthly
subscription.
A list of name(s), address(es), phone number(s), email address(es), and the vehicle description(s)
prospective customer(s) is interested in, is a sales lead which meets the above definition of
information service. Since this information was collected and may be provided to all
participating dealerships that have the same make and model in their inventory, the information
is not “personal or individual.”
Therefore, Website’s charge for sales leads is subject to tax as an information service. The
Division has determined that the method of billing (e.g., per sales lead or flat fee for monthly
subscription) does not affect the taxable outcome. Even where Website’s service is packaged
with website advertising or space, the true object of the overall service remains the provision of
sales lead information.
NOTE: The Division will enforce this on a prospective basis as of the date of the Notice.

Note: A Technical Advisory Memorandum (“TAM”) is an informational statement of the law,
regulations, or Division policies. It is accurate on the date issued. Subsequent changes in the law
or regulations, judicial decisions or changes in Division policies could affect the validity of the
information presented in a TAM.

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