Are a web-analytics company's client-specific website statistics untaxed, while its aggregated industry-wide statistics service is taxable?

Plain-English summary

WebSide Story runs two related digital-marketing analytics products. HBX Web Analytics embeds tracking code into a client's own website, routes visitor-behavior data to WebSide Story's California servers, and gives the client over 500 statistics (time on site, page views, navigation paths, drop-off points, geographic origin) about ITS OWN website, viewable and exportable through a password-protected web portal. StatMarket, by contrast, pools data gathered from every website that uses WebSide Story's underlying HBX tracking technology and publishes roughly 20 aggregated, industry-wide statistics (browser share, screen resolution, operating system usage, etc.) — available to anyone who subscribes, with no client-specific data ever shown.

The Department split these two products right down the middle. HBX Web Analytics is technically an "information service" (collecting and analyzing data, then reporting it) — but it's excluded from sales tax because the data is "personal or individual in nature": it relates exclusively to one client's own website and, critically, the client-specific data is never folded into StatMarket or shared with other customers. StatMarket is the opposite case: it aggregates data from ALL clients' websites into one industry-wide report sold identically to any subscriber — data that IS substantially incorporated into reports furnished to other persons, taking it outside the personal/individual exclusion. So StatMarket charges ARE a taxable information service.

What this means for you

SaaS and web analytics companies

If your product reports data about a single customer's own account/website/operations back to that same customer only, and never repackages that specific data into a product sold to others, you likely qualify for the personal/individual information exclusion. The moment you pool customer data into an aggregated, industry-wide product sold to any subscriber, that aggregated product becomes a taxable information service — even if it's built on the same underlying technology and data pipeline as your untaxed product.

Data and business-intelligence companies with tiered offerings

This is a clean two-product template: keep client-specific analytics and aggregated/benchmarking products on separate service lines with separate pricing, since they get opposite tax treatment even when powered by the same collection technology.

Accountants and tax professionals

The controlling distinction, reaffirmed here from earlier appellate cases (Rich Products, Towne-Oller), is whether the SAME data is substantially incorporated into reports sold to OTHER customers — not whether the underlying service or technology is the same across both products.

Common questions

Q: Is a web analytics report about my own website taxable in New York?
A: No, as long as the data is exclusive to your own site and isn't incorporated into a report sold to other customers.

Q: Is an industry benchmarking or aggregated-data report taxable?
A: Yes, when it pools data across multiple customers and sells the same aggregated report to any subscriber — that's a taxable information service.

Q: Does it matter that both services use the same tracking technology?
A: No — the tax analysis turns on whether the specific data delivered is personal/individual to one client or aggregated and resold to others, not on the shared underlying technology.

Q: Can another web analytics company rely on this Advisory Opinion?
A: No. It binds the Department only for the petitioner and facts described; another company's data-sharing structure should be checked against its own facts.

Citations and references

Statutes and regulations:

• Tax Law § 1105(c)(1), (c)(9) (information services; telephony-delivered services)
• 20 NYCRR 527.3 (information services exclusions)

Cases referenced:

• Rich Products Corporation v Chu, 132 AD2d 175
• Towne-Oller & Assoc. v State Tax Comm, 120 AD2d 873

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2006.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a06_17s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-06(17)S
Sales Tax
May 30, 2006

Office of Tax Policy Analysis
Technical Services Division
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S060109A

On January 9, 2006, the Department of Taxation and Finance received a Petition for
Advisory Opinion from WebSide Story, Inc., 10182 Telesis Court, San Diego, CA 92121.
The issue raised by Petitioner, WebSide Story, Inc., is whether the fees charged to
customers for Petitioner’s HBX Web Analytics services and StatMarket services as described
below are subject to sales tax.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner provides various on-demand digital marketing services including the following.
HBX Web Analytics
Petitioner provides a Web analytics service that allows its clients to obtain real-time
information about online visitor and customer behavior. The data is collected by embedding
Petitioner’s HBX code into the client’s HTML Web site code. This code routes data about a
consumer’s visit to a client’s Web site to Petitioner’s server. Petitioner’s server then performs an
analysis on the information received. The server and data center where the analysis is performed
are located in San Diego, California. Petitioner provides over 500 statistics tailored to each
client based on the path, patterns, and profiles of user behavior.
Clients are able to view the data analysis via a Web interface using identifications and
passwords to log onto Petitioner’s server and retrieve the data analysis specific to their Web
sites. Clients can tailor reports according to their needs, and these reports can be viewed, printed
and/or exported to the client’s own spreadsheet program.
Examples of information that clients may obtain include the amount of time consumers
view the client’s Web site, which pages within a client’s Web site consumers view, how
consumers navigate a client’s Web site, at what point consumers abandon the client’s Web site,
and where consumers come from (segmented by geography or Internet protocol).
StatMarket
StatMarket gathers statistics from millions of Internet users who visit any Web site that
uses Petitioner’s HBX technology and publishes these statistics through a convenient Web
browser interface. StatMarket publishes aggregated data gathered from all Web sites using HBX
Web Analytics. The information gathered is not specific to a client’s specific Web site; rather it
is a summary of the characteristics and activities of consumers on all clients’ Web sites.

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Sales Tax
May 30, 2006

The information gathered is used by Web application design professionals to determine
the number of consumers using certain Web browsers, screen resolutions, operating systems,
screen colors, plug-ins, research referrers, ISPs, etc. This information allows a designer to tailor
a Web site to appeal to the greatest number of consumers. StatMarket aggregates approximately
20 general statistics. No specific client data is displayed in StatMarket. The information is
available to anyone subscribing to this service.
Like HBX Web Analytics, clients are able to view the aggregated data analysis via Web
interface. They are given user identifications and passwords to log onto Petitioner’s server and
retrieve the data analysis.
All of Petitioner’s services are charged to the clients on either a monthly, quarterly or
annual basis.
Applicable law and regulations
Section 1105 of the Tax Law provides in part:
Imposition of sales tax--On and after June first, nineteen hundred seventy-one,
there is hereby imposed and there shall be paid a tax . . . upon:
*

*

*

(c) The receipts from every sale, except for resale, of the following services:
(1) The furnishing of information by printed, mimeographed or multigraphed
matter or by duplicating written or printed matter in any other manner, including the
services of collecting, compiling or analyzing information of any kind or nature and
furnishing reports thereof to other persons, but excluding the furnishing of information
which is personal or individual in nature and which is not or may not be substantially
incorporated in reports furnished to other persons, and excluding the services of
advertising or other agents, or other persons acting in a representative capacity, and
information services used by newspapers, radio broadcasters and television broadcasters
in the collection and dissemination of news, and excluding meteorological services.
(Emphasis added.)
*

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(9)(i) The furnishing or provision of an entertainment service or of an information
service (but not an information service subject to tax under paragraph one of this
subdivision), which is furnished, provided, or delivered by means of telephony or
telegraphy or telephone or telegraph service (whether intrastate or interstate) of whatever
nature, such as entertainment or information services provided through 800 or 900

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Sales Tax
May 30, 2006

numbers or mass announcement services or interactive information network services.
Provided, however, that in no event (i) shall the furnishing or provision of an information
service be taxed under this paragraph unless it would otherwise be subject to taxation
under paragraph one of this subdivision if it were furnished by printed . . . matter or by
duplicating written or printed matter in any other manner. . . .
Section 527.3 of the Sales and Use Tax Regulations provides, in part:
(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.
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(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.
Opinion
Petitioner’s HBX Web Analytics service provides clients with the ability to retrieve
information about online visitor and customer behavior with regard to the client’s own specific
Web site. Petitioner’s server collects and analyzes data to provide statistics based on path,
patterns and profiles of user behaviors for the specific client Web site. Clients are able to view
and retrieve the data analysis and develop reports via Petitioner’s Web interface.
Services are not subject to sales tax unless they are specifically enumerated as being
subject to tax under section 1105 of the Tax Law. Petitioner’s HBX Web Analytics service of
collecting and analyzing the client’s Web site data to develop statistics and profiles of user
behavior is informational in nature, and thus constitutes the rendering of an information service
within the meaning and intent of section 1105(c)(1) of the Tax Law. Petitioner states that the
data furnished to a client relates exclusively to the client’s Web site. It appears that this

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information is not substantially incorporated into reports furnished to other clients. Although
aggregate data collected by HBX Web Analytics is used in Petitioner's StatMarket service, the
client-specific data furnished to each HBX Web Analytics service subscriber is not included in
the StatMarket service. The information Petitioner provides to the purchaser of the HBX Web
Analytics service is personal or individual in nature, and provided therefore, that this data is not
or may not be substantially incorporated in reports furnished to others, the charges for such
service are excluded from tax. See section 1105(c)(1) of the Tax Law and section 527.3 of the
Sales and Use Tax Regulations.
Petitioner’s StatMarket service gathers statistics from the Internet users who visit any
Web site that uses Petitioner’s HBX technology. Unlike HBX Web Analytics, the StatMarket
service aggregates data gathered for all Web sites using Petitioner’s HBX technology. The
information available through this service is a summary of the characteristics and activities of
consumers on all Petitioner’s clients’ Web sites and is not specific to a particular client’s Web
site. Purchasers of this service are able to view the aggregated data analysis via Web interface.
The information provided by StatMarket is commonly available to all purchasers using this
service. The information is not personal or individual in nature and is substantially incorporated
in reports furnished to other persons. Therefore, Petitioner’s charges for StatMarket are charges
for information services subject to sales tax pursuant to sections 1105(c)(1) and 1105(c)(9) of the
Tax Law. See Rich Products Corporation v Chu, 132 AD2d 175; Towne-Oller & Assoc. v State
Tax Comm, 120 AD2d 873.

DATED: May 30, 2006

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.