Are a company's tenant-screening / credit-reporting services subject only to NYC local sales tax, or to State and local sales tax across New York?

Plain-English summary

A California-based tenant-screening company -- a consumer reporting agency under the federal Fair Credit Reporting Act -- resells data from the three national credit bureaus (Experian, TransUnion, Equifax) plus public-record sources, and compiles tenant-screening reports for landlords and property managers (credit summary, employment and criminal history, prior evictions, even a terrorist-watchlist check). It asked whether its services are subject only to the separate NYC credit-reporting tax, or to State and local sales tax across New York.

The Office of Counsel concluded the services are taxable information services statewide.

• Taxable information service (1105(c)(1)/(9)). Collecting, compiling, or analyzing information and furnishing reports is a taxable information service. Because the company draws on a common database and publicly available information that can be substantially incorporated into reports furnished to multiple customers, the "personal or individual" exclusion does not apply (Rich Products; Towne-Oller). Customizing the report's format doesn't help. And credit reports / credit information services are specifically taxable information services (20 NYCRR 527.3(a)(3),(4); Credit Bureau of Central NY). If delivered electronically, 1105(c)(9) reaches them on the same terms.
• Not just the NYC credit-reporting tax. The company argued its services fall only under NYC's separate tax on credit-rating/credit-reporting services (Tax Law 1212-A(a)(3)). But that NYC tax applies only "except to the extent otherwise taxable" under Article 28. Because these services are taxable under 1105, the 1212-A(a)(3) tax doesn't apply -- regardless of whether they'd otherwise count as credit-reporting services.
• Result: State + local, statewide. The charges are subject to State and local sales tax wherever the services are delivered in New York, both inside and outside NYC. For deliveries in NYC, the combined statewide rate, the MCTD rate (1109), and the NYC local rate (1210) all apply. (Before August 1, 2008, the NYC tax was imposed under 1107; TSB-M-08(9)S.)

What this means for you

Credit-reporting, screening, and data-resale businesses

If your reports are built from shared bureau data and public records -- the classic common-database fact pattern -- they're taxable information services under 1105(c)(1)/(9), no matter how you tailor the output. Don't assume a specialized local tax (like NYC's credit-reporting tax) is your only exposure: those local taxes typically yield "to the extent otherwise taxable" under the state Article 28, so a service taxable under 1105 is taxed under 1105 (state + local), not under the narrower local provision. Collect State and local tax based on where you deliver the service; NYC deliveries carry the combined state + MCTD + NYC rate.

Common questions

Q: Our screening reports are customized per landlord -- does that make them personal/individual and exempt?
A: No. Because they're built from a common database and public records that can be incorporated into reports for many customers, the personal/individual exclusion doesn't apply. Customization of format doesn't change that.

Q: Aren't credit-reporting services only subject to the NYC tax?
A: No. The NYC credit-reporting tax applies only to the extent the service isn't otherwise taxable under Article 28. These services are taxable under 1105, so state and local sales tax applies statewide.

Citations and references

• Tax Law section 1105(c)(1) (information services)
• Tax Law section 1105(c)(9) (information services furnished electronically)
• Tax Law section 1212-A(a)(3) (NYC tax on credit reporting services)
• Tax Law sections 1109, 1210 (MCTD and local taxes); section 1107 (former NYC tax)
• 20 NYCRR 527.3(a)(3), (4) (credit reports as information services)
• Rich Products Corp. v. Chu; Towne-Oller & Assoc.; Credit Bureau of Central NY; TSB-A-92(51)S; TSB-A-91(14)S; TSB-A-90(37)S; TSB-M-08(9)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2010.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a10_19s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-10(19)S
Sales Tax
May 3, 2010

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

PETITION NO. S080827B

On August 27, 2008, the Department of Taxation and Finance received a Petition for Advisory
Opinion from name and address redacted. Petitioner asks whether its credit reporting services delivered
in New York City and elsewhere in the State are subject only to the local City sales tax, or are also subject
to State and local sales taxes.
We conclude that Petitioner’s services are information services subject to State and local sales
taxes pursuant to Tax Law §1105(c)(1).
Facts
Petitioner is a California-based corporation that provides tenant screening services as a consumer
reporting agency on a national basis. Petitioner provides credit-reporting services to landlords and
property management companies when they have applicants looking to rent dwellings from them.
Petitioner states that it is a reseller of data supplied by all three national credit bureaus (Experian,
TransUnion and Equifax) and falls under the federally mandated Fair Credit Reporting Act (the Act).
The Act (codified at 15 U.S.C. § 1681 et seq.) regulates the collection, dissemination, and use of
consumer credit information. Consumer reporting agencies (CRAs) subject to the Act are entities that
collect and disseminate information about consumers to be used for credit evaluation and certain other
purposes. They hold the databases that are the origins of a consumer's credit report.
Section 603(f) defines a "consumer reporting agency" as any person "which, for monetary fees,
dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of
assembling or evaluating consumer credit information or other information ... for the purpose of
furnishing consumer reports to third parties...." In turn, section 603(d) defines a "consumer report" as the
communication by a CRA of "any information” that bears on a consumer’s “credit worthiness, credit
standing, credit capacity, character, general reputation, personal characteristics, or mode of living" and
that is "used or expected to be used or collected in whole or in part" for the purpose of serving as a factor
in establishing eligibility for credit or insurance to be used primarily for personal, family, or household
purposes, employment purposes, or any other purpose authorized under section 604. An entity that meets
the definitional requirement for a CRA in section 603(f) of the Act is covered by the law even if the only
information it collects, maintains, and disseminates is obtained from "public record" sources.
Petitioner uses information it obtains from credit bureaus and other sources of public record
information to prepare its tenant screening reports. Petitioner formats its reports so that its clients can
better understand the contents and use the reports to determine if tenant applicants meet their renting
criteria. Petitioner provided a sample tenant screening report. The report lists various “Default Criteria”
and indicates whether the tenant applicant meets the criteria. The report summarizes the applicant’s credit
information, and includes the applicant’s personal information such as name, address, SSN, etc., the

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TSB-A-10(19)S
Sales Tax
May 3, 2010

applicant’s employment history, criminal history, record of previous evictions, and a listing of the
applicant’s credit accounts. The report also indicates whether the applicant is listed on a federal terrorist
watchlist.
Petitioner began selling its services to customers in New York City in January 2005. On May 1,
2007, Petitioner purchased the assets of another tenant screening company located in New York State
outside of the City, and began to serve a broader customer base in New York.
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 under Tax Law
§1105(c)(1)). Under the provisions of Tax Law §1105(c)(9), 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.
Petitioner states that it is a consumer reporting agency subject to The Fair Credit Reporting Act
(the Act). Petitioner assembles consumer credit information from credit reporting agencies that are also
subject to the Act. Petitioner also collects and analyzes other information from public record sources and
furnishes this information to customers (landlords and property management companies) in tenant
screening reports that enable the customer to determine whether to rent to a tenant applicant. The
information in these reports is obtained from publicly available sources, and may be substantially
incorporated in reports furnished to multiple customers. In fact, Petitioner’s sample tenant screening
report indicates on page 1 that Petitioner copies information from public records, and Petitioner uses that
information in its tenant screening report delivered to its customers. Accordingly, Petitioner’s tenant
screening services are taxable information services under Tax Law §1105(c)(1) or §1105(c)(9). See 20
NYCRR 527.3(a)(3), (4) which provide that credit reports or credit information services are subject to
sales tax under §1105(c)(1). See also Credit Bureau of Central New York, Inc. v State Tax Comm’n
(3 Dept 1984) 105 AD2d 1042; CCB Management of Texas, Inc., Adv Op Comm T&F, TSB-A-91(14)S,
January 23, 1991; Rochester Credit Center, Inc., Adv Op Comm T&F, TSB-A-90(37)S, July 24, 1991
(concluding that credit reports are taxable information services.)
Section 1212-A(a)(3) of the Tax Law authorizes New York City to impose a local sales tax on
credit rating, credit reporting, credit adjustment, and collection services, “except to the extent otherwise
taxable under article twenty-eight of this chapter.” As discussed above, Petitioner’s tenant screening
services are information services subject to tax under Tax Law §1105(c)(1) or §1105(c)(9). Because
Petitioner’s services are taxable under §1105, the services are not subject to tax under §1212-A(a)(3),
regardless of whether the services may be credit rating or credit reporting services. Accordingly,

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TSB-A-10(19)S
Sales Tax
May 3, 2010

Petitioner’s charges for its services are subject to State and local sales tax when the services are delivered
to customers in New York State, both within and outside New York City. Charges for services delivered
in New York City are subject to the combined Statewide tax rate, MCTD tax rate under Tax Law §1109,
and local City tax rate imposed pursuant to Tax Law §1210. It should be noted that before August 1,
2008 the local City sales tax was imposed under Tax Law §1107. See Summary of the 2008 Sales and
Use Tax Budget Legislation, TSB-M-08(9)S.

DATED: May 3, 2010

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.