Are web-based retail site-selection reports taxable, and how is the tax sourced to local jurisdictions?

Plain-English summary

The petitioner sells a web-based report ("Retail Signatures") that helps retailers, shopping centers, and developers decide which retail brands to recruit for a given location. The customer inputs its site (address/coordinates), picks a Tenant Viability Analysis or Tenant Ranking Analysis, and pays by credit card; the provider applies its proprietary analysis to third-party demographic and market data and delivers a PDF for download. The provider only knows the customer's credit-card billing address -- not where the report is downloaded. It asked (1) whether the receipts are taxable, and (2) if so, how to source the tax to the right local jurisdiction.

The Office of Counsel concluded the reports are taxable information services, sourced to where the customer accesses them.

• Taxable information service. Collecting, compiling, and analyzing information and furnishing reports is taxed under Tax Law 1105(c)(1) (and 1105(c)(9) when furnished electronically). Although a report about one site might seem personal, the underlying demographic/competitive data is drawn from a common database offered to any customer asking about potential tenants -- so it isn't "personal or individual." Customization to a specific site doesn't change this (Rich Products, Towne-Oller).
• Destination tax. It's the point of delivery that controls (20 NYCRR 525.2(a)(3)). Reports delivered/accessed by customers in New York are taxable; reports accessed out of state are not -- and the provider's NY location and where it does the analysis are irrelevant.
• Sourcing with only a billing address. Because electronic delivery makes the access point hard to pin down, the provider should -- following KPMG LLP, TSB-A-03(5)S -- obtain a statement in each purchase request that (1) says whether the access/delivery location differs from the billing address, (2) gives the access address if different, and (3) acknowledges the info is used to set the correct New York State and local tax. That statement is an acceptable basis for allocating sales between NY and out-of-state, absent fraud or knowledge it's untrue (Tax Law 1133(a)).

What this means for you

Sellers of data-driven reports and analytics

If your report is built from a shared/common database you'd sell to anyone, it's a taxable information service even when each output is tailored to one customer's question. The "personal or individual" exclusion is narrow -- it turns on whether the source data is unique to the customer, not on how customized the deliverable looks.

Online/electronic sellers worried about local rates

You owe tax based on where the customer receives the report. When you only have a billing address, build a customer statement into checkout (access location, address, acknowledgment). Done right, it lets you collect the correct rate -- or treat an out-of-state sale as nontaxable -- and protects you absent fraud.

Common questions

Q: The report is unique to my site -- isn't that 'personal or individual'?
A: No. The data comes from a common database the provider offers to anyone; customizing the report to your location doesn't make the information personal or individual.

Q: I'm out of state -- do I owe New York tax?
A: Not if you access/receive the report outside New York. Tax follows the delivery point, not where the provider sits.

Q: How does the seller know which rate to charge?
A: By collecting a statement in your purchase request about where you'll access the report, used to set the correct state and local tax (the KPMG method).

Citations and references

• Tax Law section 1105(c)(1) (information services)
• Tax Law section 1105(c)(9) (electronically furnished information services)
• Tax Law section 1133(a) (vendor liable to collect tax)
• 20 NYCRR 525.2(a)(3) (destination/point-of-delivery determines tax)
• Rich Products Corp. v Chu, 132 AD2d 175 (common database = taxable)
• Towne-Oller & Assoc. v State Tax Comm, 120 AD2d 873
• TSB-A-03(5)S (KPMG LLP; customer-statement sourcing method)
• TSB-A-90(43)S (Comeau; out-of-state electronic delivery not taxable)

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_55s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-09(55)S
Sales Tax
December 7, 2009

Office of Counsel
Advisory Opinion Unit
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S090417A

Petitioner name and address redacted asks (1) whether the receipts from sales of its services via
the Internet are subject to New York State sales tax, and (2) if the receipts are taxable, whether it may
situs its electronically accessed service to local jurisdictions (and applicable tax rates) based upon
information from its customers’ purchase requests.
We conclude that Petitioner’s receipts are subject to State and local sales tax, with the rate and
local distribution of tax to be determined from the information Petitioner solicits from the customer in
that customer’s purchase request.
Facts
Petitioner sells a web-based report that allows retailers, shopping centers, and real estate
developers to assess the potential success of specific retail brands for a given location. Petitioner’s
“Retail Signatures” is a web-based service to improve retail tenant recruitment. The service will provide
Petitioner’s customer with a list of retail chains to target for a proposed retail site. It is touted (per
Petitioner’s website) to help its customers select profitable store sites and optimize their network of store
locations. Petitioner applies its own proprietary analysis, using customer profiles and predicted market
potential for products and services derived from third party data, to optimize site selection and store
location network, and provides the information in the form of a report. Customers of Petitioner’s Retail
Signatures product may choose to receive a Tenant Viability Analysis (a complete list of retail chains that
show potential for the customer’s location) or a Tenant Ranking Analysis (a listing of retail chains ranked
and scored for a more targeted recruitment effort).
The results provided in a Tenant Viability Analysis (report 1) are based on the existing presence
of the retail chain in the market and the distance a retail chain’s new store must be from its sister stores to
minimize the effect of sales transfers from the proposed tenant’s store. This report also provides a
Competitive Density Index Score indicative of the presence of competitor stores and sister stores of the
proposed tenant for a specific retail category. A Tenant Ranking Analysis (report 2) includes the
information from a Tenant Viability Analysis plus Market Quality and Market Potential scores that rate
the fit of the specific potential tenant based on the similarity of households surrounding existing store
locations and the households surrounding the potential location (Market Quality), and on the number of
households in the proposed location’s trade area compared to the number of households in similar trade
areas for existing store locations (Market Potential).
Customers desiring an analysis of potential clients (tenants) for their retail space need only input
information to assist Petitioner in locating the customer’s site (address, intersections, and coordinates).
The customer then chooses the type of analysis desired, and any options, and submits payment
information (credit card billing information). Petitioner alerts the customer by e-mail that the report, in
response to its request, is available for download in PDF format, and provides the customer with a link to
the data. The analytic reports are stored by Petitioner for 30 days and then deleted. Petitioner offers no

-2-

TSB-A-09(55)S
Sales Tax
December 7, 2009

refunds or returns; however, if the customer’s location was incorrectly identified by Petitioner, it will
generate a new analysis for the correct location at no cost to the customer. Petitioner currently collects
New York State and local sales taxes from customers whose credit card billing information reflects a
business billing address in the state of New York. The only information Petitioner has relating to its
customer’s location is the billing address information and the e-mail address to which it sends the
notification that the customer’s report is completed and available for download. Petitioner does not know
the physical location of the customer’s e-mail address (IP address) or the place/address where its
customer might download and accept delivery of the reports.
Analysis
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 (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) is subject to sales tax (Tax Law Section
1105(c)(1)). Under the provisions of section 1105(c)(9) of the Tax Law, the furnishing or provision of an
information service (other than an information service subject to tax under section 1105(c)(1) of the Tax
Law) that is furnished electronically (whether via intrastate or interstate means) is subject to tax if the
information to be taxed under section 1105(c)(9) would otherwise be subject to sales tax under section
1105(c)(1) were it furnished by printed, mimeographed or multigraphed matter or by duplicating written
or printed matter in any other manner.
Generally, if a common database is used to generate reports or otherwise disseminate
information, the information sold is subject to sales tax under section 1105(c)(1) of the Tax Law even
though the reports, screens, or displays of such information may be customized to meet the specific needs
of customers. See Rich Products Corporation v Chu, 132 AD2d 175 (3d Dept 1987) lv denied 72 NY2d
802; Towne-Oller & Assoc. v State Tax Comm, 120 AD2d 873(3d Dept 1986); Alan/Anthony, Inc., Adv
Op Comm T&F, June 19, 1992, TSB-A-92(51)S. In the present case, though a reply to a request about a
potential tenant for a specific site location might seem to constitute information that is personal or
individual to the requestor, the demographic information delivered by Petitioner relating to the proximity
of competitors to the potential tenant, how the potential tenant and similar businesses have fared in
similar locations, and the nature of the residents surrounding the particular location is common data base
information that is available to and offered to any other person requesting information about potential
tenants (which may include the same tenants suggested as having potential to the first requestor) for other
sites. See also Bernstein Law Firm, PLLC, Adv Op Comm T&F, September 22, 2004, TSB-A-04(23)S.
Thus, the charges by Petitioner to its customers for its reports constitute charges for information services
subject to sales tax pursuant to section 1105(c)(1) or 1105(c)(9) of the Tax Law when delivered in
New York. The reports are taxable regardless of whether they are emailed to its customers or viewed by
the customer on Petitioner's website.
The facts that Petitioner is located in New York and the compilation, analysis, etc. are performed
in New York, and that the location about which information is requested is either within or without
New York are not relevant to whether New York sales tax is imposed on the sale. It is the point of
delivery that determines the imposition of tax. See Section 525.2(a)(3) of the Sales and Use Tax
Regulations. Services are taxed based upon the location to which they are delivered notwithstanding that
the service may have been performed elsewhere. The reports delivered to the customer in New York are
subject to sales tax regardless of whether the site location that is the subject matter of the report is within
or without the State.

-3-

TSB-A-09(55)S
Sales Tax
December 7, 2009

Thus, the receipts from reports delivered by electronic means to customers within New York are
subject to the New York State and local sales tax. See Paul R. Comeau, Adv Op Comm T&F, August 20,
1990, TSB-A-90(43)S; KPMG LLP, Adv Op Comm T & F, January 31, 2003, TSB-A-03(5)S. When the
reports are delivered by electronic means to customers at an out-of-state location, the receipts from the
sale of the reports are not subject to New York State sales tax. See Paul R. Comeau, supra. This would
be true regardless of whether the reports were delivered by electronic means or in tangible format.
Though a seller’s bills of lading or other shipping documents usually reflect the out-of-state
delivery of the goods and services and are considered sufficient documentation of the nontaxability of the
sales, in the case of the electronic delivery of a service, it is more difficult to ascertain where the service is
delivered. In KPMG LLP, Adv Op Comm Tx & Fin, January 31, 2003, TSB-A-03(5)S advice was
provided concerning an appropriate method of allocation and documentation that an online provider of
information services could use and maintain as proof of out-of-state delivery of its taxable services
delivered via electronic means to in-state and out-of-state locations where the services were billed to a
New York address. In that case, the customers accessed the service by the use of the passwords supplied
by the seller, who was therefore able to identify which customer had consumed its product. But the
passwords did not necessarily allow the seller to know the location from which the service was accessed
or at which location the service was received by the customer. Nevertheless, the seller, as a person
required to collect tax (when not in possession of a timely and properly completed resale or exemption
certificate from its customer), was liable for the appropriate amount of tax required to be collected. See
Section 1133(a) of the Tax Law.
Petitioner’s circumstances are similar to those in KPMG LLP in the sense that although Petitioner
has been provided credit card billing information for its customers, absent the provision of additional
information by the customer, Petitioner does not know the location at which its report is received by or
accessed by the customer.
In KPMG LLP, supra, it was advised that a letter from the customer regarding the business
locations or other situs of the customer’s employees who would access the information service would be
relevant to allocating the receipts from the sale of the information service between in-state and out-of
state sales. The customer’s letter had to specify the New York street address where the information was
delivered or accessed and contain an acknowledgement that the customer understood that the business
location (situs) information was being furnished to permit the seller to determine the proper New York
State and local sales tax. While noting that, in general, the determination whether a proposed method for
apportioning receipts from the sale of online services is a reasonable method for collection of sales tax
requires consideration of all the facts and circumstances in a particular case, it was determined that in the
circumstances described the customer’s statements would be sufficient proof and documentation, absent a
showing of fraud or knowledge on the part of the seller that the information was not true, for purposes of
the seller’s determination of the proper New York State and local sales tax to be collected.
Unlike the Petitioner in KPMG LLP, Petitioner does not furnish equipment to its customers, pay
for the telecommunications lines (Internet access) connected to the customer’s premises, or have an
ongoing obligation to provide the same customer with monthly or annual multiple uses of its service.
Rather, Petitioner’s contact with its customers occurs exclusively via the Internet and consists of a single
purchase and use by any given customer.
Therefore, with respect to its web-based “Retail Signatures” service, it is appropriate that
Petitioner obtain a statement from its customers in each customer’s purchase request that: (1) affirms and
acknowledges whether the location for delivery (i.e., access by the customer) of the report is different

-4-

TSB-A-09(55)S
Sales Tax
December 7, 2009

from the billing address; (2) if the location is different, furnishes address information (e.g., street address,
city, state, etc.) for the location where the customer accesses the service; and (3) includes an
acknowledgement by the customer that it understands the information provided by the customer is for use
by Petitioner in assessing the correct tax due. This statement would form an acceptable basis for
Petitioner’s allocation of its sales of the "Retail Signatures" service between New York sales and out-ofstate-sales, absent a showing of fraud or knowledge on the part of Petitioner that the contents of the
statement are untrue.

DATED: December 7, 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.