Are a web service provider's advertising, listing, support-database, and ASP fees subject to New York sales tax?

Plain-English summary

Jones Day (named, petitioning for an unnamed client whose offices and servers are all outside New York) asked how sales tax applies to six fee types for its client's internet services: (1) banner ad fees, (2) web advertising-information fees, (3) advertising fees to apartment/condo/community leasing agents and owners, (4) separately billed setup fees to create/change a listing, (5) customer-support database fees, and (6) ASP fees that add functionality to a customer's own website (hosted on the client's out-of-state servers). The client's site only carries advertising and redirects buyers to advertisers -- it has no shopping cart and brokers no sales.

The Office concluded advertising and customer-only data are nontaxable, but ASP web-functionality is taxable software.

• Advertising = not taxable (Issues 1-3). Services are taxed only if enumerated in Tax Law 1105(c), and advertising is specifically excluded (1105(c)(1)). Banner ads, catalogue/listing fees for retailers and for residential agents/owners, and one-time private-party ads are all nontaxable advertising.
• Photo setup fee = not taxable, with one caveat (Issue 4). A separately stated setup fee for the client to photograph a property is nontaxable -- unless the customer gets non-electronic copies of the photos, which would be a taxable sale of tangible personal property (1105(a)).
• Customer-support database = depends on the data (Issue 5). Furnishing information is taxable (1105(c)(1)/(9)), but the personal/individual exclusion applies when the data is the customer's own proprietary sales information not shared with other customers -- then it's a nontaxable information service. If the client adds common-database data (e.g., third-party warranty info), it becomes a taxable information service, sourced to where the customer receives it (destination tax; allocate in/out of NY per KPMG; resale-exempt portions must be separately stated and reasonable, Bernstein).
• ASP web functionality = taxable software (Issue 6). Fees to add functionality to a third party's website are receipts from the sale of prewritten software (Tax Law 1101(b)(6)). Accessing the hosted software is constructive possession with the right to use (526.7(e)(4)); the code's location is irrelevant; tax is sitused to the customer's employee-users in New York.

What this means for you

Digital advertising platforms and online marketplaces

Charging to place ads or listings -- banners, catalogue listings, property listings, one-time ads -- is nontaxable advertising, even with tiered "prominence" pricing and photo setup. Keep deliverables electronic; handing over physical photo copies can create a taxable sale.

Data services vs. software (the taxable lines)

A database that returns only the customer's own data is a nontaxable information service; the moment you fold in shared/common-source data, it can flip to taxable. And ASP/hosted functionality -- software the customer accesses to run features -- is taxable prewritten software regardless of where your servers are, sourced to the customer's New York users.

Common questions

Q: Are our online banner and listing ad fees taxable?
A: No. Advertising is specifically excluded from sales tax, so banner ads and catalogue/property listing fees aren't taxable (electronic-only photo setup fees included).

Q: Is our customer-support database taxable?
A: Not if it returns only the customer's own proprietary data. If you add common-database/third-party data, it becomes a taxable information service, sourced to where the customer receives it.

Q: Why are ASP fees taxable when advertising isn't?
A: ASP fees buy access to prewritten software (functionality), which is taxable tangible personal property. The code's location doesn't matter; tax follows your customer's New York employee-users.

Citations and references

• Tax Law section 1105(c)(1) (information services; advertising excluded)
• Tax Law section 1105(c)(9) (electronically furnished information services)
• Tax Law section 1101(b)(6) (prewritten software is tangible personal property)
• Tax Law section 1105(a) (sales tax on tangible personal property)
• 20 NYCRR 526.7(e)(4) and 525.2(a)(3) (constructive possession; destination tax)
• TSB-A-03(5)S (KPMG; allocation between in/out-of-state users)
• TSB-A-04(23)S (Bernstein Law Firm; separately stated exempt portion)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2009.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a09_44s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-09(44)S
Sales Tax
September 24, 2009

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

PETITION NO. S040628B

On June 28, 2004, the Department of Taxation and Finance received a Petition for Advisory
Opinion from Jones Day, 2727 North Harwood Street, Dallas, Texas 75201-1515.
The issues raised by Petitioner, Jones Day, on behalf of an unnamed client are:
1. Whether fees charged for banner advertisements on a Web site are subject to sales
tax.
2. Whether monthly and non-recurring, one time fees for advertising information carried
on a Web site are subject to sales tax.
3. Whether monthly and non-recurring one time advertising fees charged to apartment,
condominium, and community real estate leasing agents and owner lessors are subject
to sales tax.
4. Whether non-recurring separately billed setup fees charged to create or change the
customer’s listing on the service provider’s own Web site are subject to sales tax.
5. Whether fees charged to support customer’s Web pages are subject to sales tax.
6. Whether fees charged by an application service provider for services that add
functionality to a Web site owned by the customer and branded in the customer’s
name are subject to sales tax when provided and hosted by the application service
provider on its servers located outside New York State.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Web listing fees
For a fee, Petitioner’s client (“Client”) offers a wide range of services over the Internet to
its customers (“Advertisers”), each with its own benefits and levels of service that are described
below. Client does not own or lease tangible personal property or real property in New York.
All of Client’s offices, equipment and computer servers are located outside of New York.
Advertiser, who is generally a retailer of tangible personal property, engages Client to
place advertisements on Client’s Web site that will direct a potential customer (“Buyer”) to
Advertiser. The advertisements are accomplished through banner ads, where Buyer clicks on the
advertisement and is directed to the Advertiser’s Web site, or Buyer can search through Client’s

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Sales Tax
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catalogue database of available inventory from all Advertisers to find the item Buyer is seeking.
If a match is found, Buyer is given a link which either provides information for Buyer to contact
Advertiser directly by email or telephone, or sends Buyer to Advertiser’s Web site for further
information.
Advertisers enter into their own computer system and process information about their
inventory which is automatically transferred to Client’s web server each night. Client parses the
data so a Buyer can search Client’s database. Different levels of service are offered by Client.
Larger Advertisers pay a monthly fee that allows an Advertiser to add information to Client’s
database and web pages, including specific or generic pictures or specific details about as much
inventory as the Advertiser desires. A second, less expensive option limits the maximum
number of items that may be placed on Client’s database and web pages. This reduced fee
remains constant whether Advertiser uses all of its available advertising slots or not.
Client’s web site contains solely the advertising message for the goods advertised and
redirects Buyer to the appropriate web page maintained by Advertiser or provides Buyer with
contact information to reach Advertiser directly. Client’s web site does not have any purchase or
shopping cart functionality. Client does not broker any sale of tangible personal property.
Transactions between Buyer and Advertiser are handled by Buyer and Advertiser, either on
Advertiser’s Web site, or by telephone.
Client also allows individuals (“One Time or Private Party Advertisers”) to place
information about a single item of tangible personal property for sale on Client’s web pages.
This information is included in Client’s database and can be searched by Buyer as described
above. In most instances, rather than directing Buyer to a Web site, Buyer receives information
to contact the seller directly.
In addition to retailers of tangible personal property, Client offers banner ads and a
catalogue database to multiple residential property leasing agents and owner lessors (“Agents
and Owners”). This database can be searched by a potential tenant (“Tenant”) by type of
property, location, and basic amenities. Tenant is given a list of matching properties and when
each is selected Tenant receives contact information, property information, pictures, maps and
sometimes a virtual tour of the property and amenities. There is usually an email link for Tenant
to send an information request directly to Agent or Owner as well as links to Agent’s or Owner’s
Web site or other properties managed by Agent or Owner.
The Agent or Owner dictates the content of the information presented about the
properties. In most cases, but not all, Client sends a photographer to the property to take the
pictures that will be used on the property listing. In some cases, there is no separate charge or
increased fee to have Client take these pictures, although in other cases there will be a minor,
separately stated setup fee.

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The different service level fees are tied directly to how prominently the property appears
on Client’s web site after a search, the extent of information carried about the property, and the
number of different properties advertised by the same Agent or Owner. Higher monthly fees
entitle the Agent’s or Owner’s property to appear higher in the list of properties presented to the
potential Tenant. Higher fees also entitle Agent or Owner to more pictures or additional
functionality (such as virtual tours) on the advertised listing.
Individuals seeking to lease their property (and occasionally leasing agents who do not
wish to place ongoing advertisements) may also place a one time advertisement on Client’s web
site for a non-recurring fee. Such advertisers provide their own pictures of the property. While
the information provided about the property is the same as the information provided by Agents
or Owners, certain aspects of these one time advertisements are not searchable and the
advertisements are not as prominently listed on search results. Therefore, these advertisers pay a
reduced fee.
Customer support fees
Client provides customers with access to services via the Internet such as a sales and
contact database which is made accessible through a web browser. The database can be used by
the customer to provide post-sale support and allows the customer to send further targeted
advertising to consumers based on their purchase interest. In other cases, purchasers of
customers’ products are given access to a specialized web database containing specific
information about their purchase, including warranty and service information, based on the
specific serial number or other identification for the specific item. Client’s customers pay Client
to make this service available to their purchasers and may even subsequently charge purchasers
for the use of the service. These databases contain proprietary information gathered by Client
from its customers relating to the customer’s sales. The information gathered from one of
Client’s customers is not made available to other customers.
ASP fees for web site functionality
For a quarterly fee, Client provides a product that adds functionality to a third-party
advertiser’s web site. This product is hosted on the Client’s web servers through an Application
Service Provider interface. All functionality is controlled and maintained on Client’s servers;
however, the third-party’s web site may or may not be hosted on servers in New York.
The third-party advertiser’s web site presents a searchable database of real estate listings,
branded in the third-party’s name, even though all program functions are actually performed on
Client’s servers. This enhanced functionality includes the ability for the third-party’s customers
to enter one time or private advertising information. The third-party’s customer inputs a credit
card to pay for the listing. The credit card is processed through Client’s credit card service
merchant account. However, all revenues are returned to the third party after subtracting Client’s
cost in processing the credit card transaction.

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Applicable law and regulations
Section 1101(b) of the Tax Law provides, in part:
When used in this article for the purposes of the taxes imposed by subdivisions
(a), (b), (c) and (d) of section eleven hundred five and by section eleven hundred ten, the
following terms shall mean:
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(5) Sale, selling or purchase. Any transfer of title or possession or both, exchange
or barter, rental, lease or license to use or consume (including, with respect to computer
software, merely the right to reproduce), conditional or otherwise, in any manner or by
any means whatsoever for a consideration, or any agreement therefor, including the
rendering of any service, taxable under this article, for a consideration or any agreement
therefor.
(6) Tangible personal property. Corporeal personal property of any nature. . .
Such term shall also include pre-written computer software, whether sold as part of a
package, as a separate component, or otherwise, and regardless of the medium by means
of which such software is conveyed to a purchaser. . . .
(7) Use. The exercise of any right or power over tangible personal property or
over any of the services which are subject to tax under section eleven hundred ten of this
article or pursuant to the authority of article twenty-nine of this chapter, by the purchaser
thereof . . . or any consumption of such property or of any such service subject to tax
under such section eleven hundred ten or pursuant to the authority of such article twentynine. . . .
Section 1105(a) of the Tax Law imposes a tax on the receipts from every retail sale of
tangible personal property, except as otherwise provided.
Section 1105(c) of the Tax Law imposes tax on the receipts from every sale, except for
resale, of certain enumerated services, including, in part, 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, . . .

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Sales Tax
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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
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, mimeographed or
multigraphed matter or by duplicating written or printed matter in any other manner nor
(ii shall the provision of cable television service to customers be taxed under this
paragraph.
Section 525.2(a)(3) of the Sales and Use Tax Regulations provides:
Except as specifically provided otherwise, the sale tax is a “destination tax.” The
point of delivery or point at which possession is transferred by the vendor to the
purchaser, or the purchaser’s designee, controls both the tax incidence and the tax rate.
Section 526.7 of the Sales and Use Tax Regulations provides, in part:
(a) Definition. (1) The words sale, selling or purchase mean any transaction in
which there is a transfer of title or possession, or both, of tangible personal property for a
consideration.
(2) Among the transactions included in the words sale, selling or purchase are
exchanges, barters, rentals, leases or licenses to use or consume tangible personal
property.
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(e) Transfer of possession. (1) Except as otherwise provided in paragraph (3) of
this subdivision, a sale is taxable at the place where the tangible personal property or
service is delivered, or the point at which possession is transferred by the vendor to the
purchaser or his designee.
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(4) Transfer of possession with respect to a rental, lease or license to use, means
that one of the following attributes of property ownership has been transferred:

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(i) custody or possession of the tangible personal property, actual or constructive;
(ii) the right to custody or possession of the tangible personal property;
(iii) the right to use, or control or direct the use of, tangible personal property.
Technical Services Bureau Memorandum TSB-M-93(3)S, dated March 1, 1993, entitled
State and Local Sales and Compensating Use Taxes Imposed on Certain Sales of Computer
Software provides, in part:
Prewritten computer software is any computer software that is not designed and
developed by the author or other creator to the specifications of a specific purchaser.
The sale of prewritten software includes any transfer of title or possession, any
exchange, barter, rental, lease or license to use, including merely the right to reproduce,
for consideration. Thus, a payment made by a customer . . . for a license to use, or for the
rental or lease of prewritten software is subject to sales or use tax . . . .
Software that was originally designed and developed to the specifications of a
specific purchaser (i.e., “custom” software) loses its identity as such and becomes
prewritten software, subject to tax, if and when it is sold to someone other than the person
for whom it was specifically designed and developed. . . .
Prewritten software is subject to tax whether sold as part of a package or
separately. Software created by combining two or more prewritten programs or portions
of prewritten programs is still prewritten software subject to tax. The medium by which
the software is transferred to the purchaser has no effect on the software's taxability.
Thus, prewritten software is taxable whether sold, for example, on a disk, tape or by
electronic transmission over telephone lines.
Prewritten software, even though modified or enhanced to the specifications of a
specific purchaser, remains prewritten software subject to tax. However, if a charge for
the custom modification or enhancement is reasonable and separately stated on the
invoice or billing statement, then the separately stated charge for the custom modification
or enhancement is not subject to tax.
Example 1. A software developer creates an accounting system using prewritten
software modules for general ledger, accounts receivable, accounts payable,
payroll, inventory management, etc. The developer may also sell the modules
separately or bundled in other packages. Even though the modules may be
modified to the specific requirements of the client's business, the sale of the
modules is subject to sales or use tax as prewritten software. An additional charge
for modification or “custom” programming by the developer would not be subject

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to sales or use tax if the developer's charge for the modification is reasonable and
is separately stated on the billing statement.
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Sale of Software Upgrades
Generally, the sale of a revision or upgrade of prewritten software is subject to tax
as the sale of prewritten software. If, however, the software upgrade is designed and
developed to the specifications of a specific purchaser, its sale to that specific purchaser
would be exempt as custom software.
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Customer Support and Related Services
Services taxable under section 1105(c) of the Tax Law are exempt from tax under
section 1115(o) of the Tax Law where performed on any computer software. However,
where such services to be performed on software are sold in conjunction with the sale of
tangible personal property, such as prewritten software, the charge for such services is
exempt only if it is reasonable and separately stated on the invoice or billing statement
given to the customer.
Thus, charges for customer (user) support or for information services provided by
a vendor to a customer, either in person or by some type of telecommunications
arrangement (e.g., telephone, modem, facsimile machine, etc.), in the nature of training,
consulting, instructing or other diagnostic or troubleshooting services related to
prewritten software are exempt from sales and use taxes where the charges are reasonable
and separately stated. Charges for the service of installing, repairing, maintaining or
servicing prewritten software are also exempt from sales and use taxes where the charges
are reasonable and separately stated on the invoice. Of course, any charges for the above
described services sold in connection with custom software are exempt from tax.
Programming and systems analysis are also exempt services. However, where
these services are rendered in conjunction with the sale of prewritten software, the charge
for the service is exempt from tax only when the charge for the service is reasonable and
separately stated on the invoice or billing statement given to the customer.
Example 2: A computer vendor sells an “off-the-shelf” software program to a
customer. The vendor charges additional fees for installing the software, on-site
training, and diagnostic and trouble-shooting customer support. The sale of the
software is taxable since it is prewritten. However, the charges for installation,

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September 24, 2009
on-site training and customer support services are not taxable if reasonable and
separately stated on an invoice or billing statement given to the customer.
Software Maintenance Agreements
If a software maintenance agreement provides for the sale of both taxable
elements (e.g., prewritten software upgrades) and nontaxable elements (e.g., training,
consulting, diagnostic and troubleshooting support, etc.), the charge for the entire
maintenance agreement is subject to tax unless the charge for the nontaxable elements is
reasonable and separately stated in the maintenance agreement and separately billed on
the invoice or other document of sale given to the purchaser.
Example 3: A vendor of computer systems sells a maintenance agreement to
provide on-site training, repairs, software upgrades, and customer support by
telephone for a customer's computer system (hardware and prewritten software).
The portion of the cost of the agreement allocated to prewritten software upgrades
and for repair or maintenance of the computer system hardware is taxable.
However, the portion of the cost allocated for on-site training, repairs and
maintenance of the prewritten software and telephone support is exempt if the
cost is reasonable and separately stated in the written agreement and the customer
invoice.
Opinion
Web listing fees
Petitioner’s Client offers a wide range of advertising services over the Internet to its
customers, each with its own benefits and levels of service. The advertisers who engage Client
include: vendors of tangible personal property (Advertisers), leasing agents of multiple
residential properties and lessors of residential properties (Agents and Owners), and individuals
wishing to advertise items of tangible personal property for sale or residential properties
available for rental or lease.
On Client’s web site, a Buyer or Tenant clicks on banner advertisements and is directed
to the Advertiser’s web site, or Buyer or Tenant can search through Client’s catalogue database
of available inventory of tangible personal property or residential properties from all Advertisers
to find what the Buyer or Tenant is seeking.
Client’s web site contains solely the advertising message for the goods and properties
advertised, and redirects Buyer to the appropriate web page maintained by Advertiser, Agent,
Owner or individual. Client’s web site also provides Buyer or Tenant with contact information
to reach Advertiser, Agent, Owner or individual directly. Client’s web site does not have any
purchase or shopping cart functionality. Client does not broker any sales of tangible personal

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September 24, 2009
property. Transactions between Buyer or Tenant and Advertiser, Agent, Owner or individual are
handled by the parties, either on their web site, or by email or telephone.
Services are not subject to sales tax unless they are specifically enumerated under section
1105(c) of the Tax Law. Advertising services are not among the services subject to sales tax.
Section 1105(c)(1) of the Tax Law specifically excludes advertising from sales tax. Therefore,
with respect to Issues 1, 2, and 3 Client’s charges to its Advertisers, Agents, Owners or
individuals for advertising services are not subject to sales tax. With respect to Issue 4, the
separately stated setup fee charged when Client sends a photographer to a property to take the
pictures that will be used on the property listing is also not taxable. However, were copies of
such photographs provided the customer, other than exclusively in electronic form, the setup
charges for the photograph may be subject to tax under Tax Law §1105(a) as charges for the sale
of tangible personal property.
Customer support fees
With respect to Issue 5, Client charges customer support fees when Client provides
customers with access, via the Internet, to sales and contact databases which are used by the
customer to provide post-sale support and allow the customer to send further targeted advertising
to consumers based on their purchase interest. Client also charges customers for providing
access for consumers to a specialized web database containing specific information about their
purchases. These databases contain proprietary information gathered by Client from its
customers relating to the customer’s sales. The information gathered from one of Client’s
customers is not made available to other customers.
Sales tax is imposed on the service of furnishing information to purchasers, regardless of
whether the information is furnished in a printed report or electronically. There is an exclusion
from tax for 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. See Tax Law
§§1105(c)(1) and 1105(c)(9). Client’s database products have some aspects of an information
service. Provided that the information furnished to a customer consists of proprietary sales
information gathered by Client from the customer and is not made available to other customers,
these services appear to be personal or individual in nature and not otherwise offered for sale and
furnished to other persons. In that case, these database products would appear to constitute
nontaxable information services. Alternatively, if Client adds information to a customer’s data
that is derived from a common database (e.g., warranty information from a third-party source for
products sold at retail by the customer) Client’s database product may be subject to the tax on
information services pursuant to sections 1105(c)(1) and 1105(c)(9) of the Tax Law. Since the
point of delivery determines taxability, only receipts attributable to Client’s customers who
receive the information from Client in New York State would be subject to sales tax. See Sales
and Use Tax Regulation section 525.2(a)(3). When the information is delivered by electronic
means to customers both within and without New York, sales tax should be allocated between

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the two. See KPMG LLP, Adv Op Comm T&F, January 31, 2003, TSB-A-03(5)S; Paul R.
Comeau, Adv Op Comm T&F, August 20, 1990, TSB-A-90(43)S.
In addition, Client’s sales of information services to customers exclusively for resale are
not subject to tax. Client would not be required to collect sales tax on any portion of the
information services that were exempt, provided, the charges for the exempt portion were
separately stated and reasonable from the charges for the taxable items. Otherwise, the entire
receipts for the services would be subject to tax. See Bernstein Law Firm, PLLC, Adv Op Comm
T&F, September 22, 2004, TSB-A-04(23)S.
Alternatively, some of Client’s database products may constitute prewritten computer
software. The sale or license of prewritten software to Client’s customers may be subject to
sales tax as discussed below.
ASP fees
With respect to Issue 6, Client charges ASP Fees for web site functionality to third-party
web sites. This functionality is hosted on the Client’s web servers through an Application
Service Provider interface. All functionality is controlled and maintained on Client’s servers;
however, the third-party’s Web site may or may not be hosted on servers in New York.
Client’s ASP fees for web site functionality are receipts from the sale of prewritten
computer software. Prewritten computer software is included in the definition of tangible
personal property, “regardless of the medium by means of which such software is conveyed to
the purchaser.” Tax Law §1101(b)(6). The sale of prewritten computer software is subject to tax
as the sale of tangible personal property. See Tax Law §§1101 (b)(6); 1105(a). “Sale” is defined
as “[a]ny transfer of title or possession or both, exchange or barter, rental, lease or license to use
or consume (including with respect to computer software, merely the right to reproduce) or
otherwise, in any manner or by any means whatsoever for a consideration, or any agreement
therefor.” Tax Law §1101(b)(5). Sales and Use Tax Regulation section 526.7 provides generally
that “a sale is taxable at the place where the tangible personal property or service is delivered or
the point at which possession is transferred by the vendor to the purchaser or his designee.”
Regulation section 526.7(e)(4) further provides that a transfer of possession has occurred if there
is actual or constructive possession, or if there has been a transfer of “the right to use, or control
or direct the use of, tangible personal property.” The location of the code embodying the
software is irrelevant, because the software can be used just as effectively by the subscriber even
though the subscriber never receives the code on a tangible medium or by download.
The accessing of Client’s software by Client’s customers constitutes a transfer of
possession of the software, because the customer gains constructive possession of the software
and gains the “right to use, or control or direct the use” of the software. Client’s customers have
the right to access the software in order to use the databases provided by Client, or in the case of
third-party advertisers, to provide web advertising services. This is true even if no “copy” of the

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software is transferred to the customer. Accordingly, the sale of a license to use Petitioner’s
software to a customer in New York is subject to State and local sales tax. The situs of the sale
for purposes of determining the proper local tax rate and jurisdiction is the location associated
with the license to use (i.e., the location of the customer’s employees that use the software). If
the customer’s employees who use the software are located both in and out of New York State,
Client should collect tax based on the portion of the receipt attributable to the employee users
located in New York. See TSB-A-03(5)S, supra.
Client’s charges for processing credit card payment transactions are similar to bank
processing fees and are not subject to sales tax, provided, the charges are separately stated and
reasonable.

DATED: September 24, 2009

NOTE:

/s/
Jonathan Pessen
Director of Advisory Opinions
Office of Counsel

An Advisory Opinion is issued at the request of a person or entity. It is
limited to the facts set forth therein and is binding on the Department only
with respect to the person or entity to whom it is issued and only if the
person or entity fully and accurately describes all relevant facts. An
Advisory Opinion is based on the law, regulations, and Department
policies in effect as of the date the Opinion is issued or for the specific
time period at issue in the Opinion.