Are a financial-data company's charges for data feeds, online reports, application software, technical/research support, and training subject to NY sales tax?

Plain-English summary

The petitioner is a California-based aggregator of financial data feeds (with a New York City office) whose customers are hedge funds, money managers, and other financial institutions. Its analysts gather information from SEC filings, press releases, websites, interviews, and earnings transcripts into a single master database (on out-of-state servers). It asked how NY sales tax applies to its various products.

The Office of Counsel sorted the offerings into four buckets:

• Data feeds = taxable information services (Tax Law 1105(c)). The Hierarchy, RISC, Relationship, Trademark, and Healthcare feeds are compilations of data accessible to all subscribers (20 NYCRR 527.3(a)(2)). The "personal or individual" exclusion does not apply: the controlling factor is the source of the information (ADP, Rich Products, Towne-Oller), and here it comes at least partly from public sources and from a common database every subscriber can access -- so it can by definition be substantially incorporated in reports to others. Even customized feeds stay taxable if they are substantially derived from that common, non-confidential source.
• Online reports = taxable information services, no periodical exemption. The M&A, FDA, Drug/Device, MedTech, Company Profile, and Competitor reports are data in rigid standardized formats with no narrative -- which don't qualify as periodicals (Standard Rate & Data; 20 NYCRR 528.6(c)). And because the company prints no paper counterpart, the electronic versions aren't tangible personal property under 1101(b)(6), so the 1115(a)(5) periodical exemption can't reach them either.
• Application software = taxable prewritten software (1105(a)). The optional, separately-billed application that lets customers find, filter, and organize the data is prewritten computer software (1101(b)(14)) and a distinct product -- it can be bought with or without the feeds and carries its own charge.
• The bundled query tool is NOT a sale. The query tool that comes free with every feed is an integral component the company provides without charge; the company is the user of it. Under Tax Law 1110, software used by its author isn't subject to use tax if the author doesn't sell similar software -- so no use tax, provided it isn't sold separately.

Optional support and training = not taxable. Premium technical support, premium research support, and training are optional, separately itemized services that aren't among the enumerated taxable services -- so they're not taxable, provided buyers of the taxable feeds aren't required to buy them and the charges are reasonable. One catch: if a technical-support charge bundles in software upgrades or new versions, that portion is taxable as a sale of prewritten software unless separately stated and reasonable.

What this means for you

Data and analytics vendors

Pulling from a common database that all your subscribers tap defeats the "personal or individual" exclusion -- even heavy customization won't save it if the underlying source is shared or public. The line that matters is the source, not how tailored the output looks.

Software vs. service inside one product

A tool that is bundled free and that you operate is treated as your own use (no tax to the customer, no use tax to you). The same kind of software sold as a separate, optional, separately-priced product is taxable prewritten software. Watch "support" contracts: bundling upgrades/new versions into a support fee can make that slice taxable.

Electronic "publications"

Data delivered only electronically generally can't claim the periodical exemption unless it's an exact counterpart of a paper edition you actually sell.

Common questions

Q: My data feed is customized for each client -- is it still a taxable information service?
A: Yes, if the customized output is substantially derived from a common, non-confidential data source (like the provider's master database or public filings). Customization doesn't change the source.

Q: We give a free query/viewer tool with our data. Do we owe tax on it?
A: No -- you're the user of integral software you provide free, and there's no use tax so long as you don't also sell that software separately.

Q: Are our optional support and training charges taxable?
A: Not if they're optional, separately stated, and reasonable, and buyers of the taxable product aren't forced to buy them. But software upgrades slipped into a support fee are taxable unless separately stated.

Citations and references

• Tax Law section 1105(c)(1) (information services)
• Tax Law section 1105(c)(9) (information services by telephony)
• Tax Law section 1105(a) (sales of tangible personal property)
• Tax Law section 1101(b)(6) (tangible personal property; prewritten software)
• Tax Law section 1101(b)(14) (prewritten computer software defined)
• Tax Law section 1101(b)(5) (sale; license to use)
• Tax Law section 1110 (use tax; software used by its author)
• Tax Law section 1115(a)(5) (periodical exemption)
• 20 NYCRR 527.3(a)(2) (information service defined)
• 20 NYCRR 528.6(c) (periodicals)
• ADP Automotive Claims Service, Inc.; Rich Products Corp. v. Chu; Towne-Oller & Assoc. (common-source rule)
• TSB-A-97(42)S; TSB-A-03(13)S; TSB-A-98(55)S; TSB-A-91(53)S; TSB-A-00(7)S; TSB-A-98(71)S; TSB-M-93(3)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_32s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Counsel
Advisory Opinion Unit

TSB-A-10(32)S
Sales Tax
July 23, 2010

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S100316C

On March 16, 2010, the Department of Taxation and Finance received a Petition for Advisory
Opinion from name and address redacted. Petitioner asks whether its receipts from the sale of financial data,
software, reports, and technical support, research support, and training services are subject to sales tax.
We conclude that Petitioner’s sale of data is subject to sales tax under Tax Law section 1105(c) as
the furnishing of an information service. Reports that are sold online are subject to sales tax under Tax Law
section 1105(c) as the furnishing of an information service. The sale of application software is subject to
sales tax as the sale of tangible personal property. Separately billed charges for technical support, research
support, and training are not subject to sales tax.
Facts
Petitioner, a California based company, has an office in New York City. It is an aggregator and
purveyor of financial data feeds. The data feeds are comprised of historical data and are updated on a daily,
weekly, or monthly basis, depending upon the type of data and the requirements of a particular customer.
The data feeds are updated by Petitioner’s analysts, who gather information from SEC filings, press releases,
web sites, interviews, and earnings transcripts, as well from their own primary research. The data is
maintained in a single master database stored on Petitioner’s servers, which are located outside New York
State.
Petitioner has multiple data feeds that it will license, and it will also create customized data feeds to
fit a customer’s requirements. Petitioner’s data feeds include the following:
1.

Hierarchy Data Feed” classifies companies into specific categories based on the products and
services they sell;

2.

“RISC Data Feed” is an industry classification system that maps companies into specific industry
groups;

3.

“Relationship Data Feed” provides data on companies’ relationships by mapping their customer,
supplier, partner, product, and geographic relationships;

4.

“Trademark Data Feed” provides data on companies’ products by mapping their products, services,
and trade names owned and marketed by them;

5.

“Healthcare Data Feed” provides data on clinical and regulatory events, such as patent expirations
and FDA applications and decisions.

Petitioner’s customers are hedge funds, money managers, and other financial institutions, which use
Petitioner’s data feeds to evaluate and manage the risk of investments.

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Customers access the data feeds online using a username and password provided by Petitioner. Data
feeds are updated at regular intervals. Customers download data feeds to their servers at regular intervals as
the data feeds are updated. Customers query the data feeds through software. Petitioner provides customers
with prewritten software that they use to download data from Petitioner’s servers. In the alternative,
customers can make data queries using their software such as Oracle Database or Excel Spreadsheets, which
are configured based on documents provided by Petitioner. Queried results are formatted in tabular reports,
which are stored on the customer’s server.
Customers pay a recurring client license fee for each data feed per user. The query tool is included
in the price for the data feed, i.e., Petitioner’s customers pay the same fee regardless of whether they use the
query tool provided by Petitioner.
A customer may require unique data feeds that are customized to meet its requirements. Petitioner
bills separate charges to its customer for the cost of creating a customized data feed.
As an alternative to the use of the query tool, Petitioner offers for sale as a distinct product a
prewritten software application that enables customers to find, filter, and organize company information from
the data feeds; capabilities that the query tool does not have. The application can be used with the full range
of Petitioner’s data feeds and also can be used with products other than those sold by Petitioner. Petitioner
bills a separate charge for the application software if it is purchased in conjunction with access to data feeds.
This product is stored on Petitioner’s servers located outside New York State and can be accessed by a
customer from any computer by entering a unique username and password. A customer licensing the
application software pays a single recurring fee for each user.
Petitioner also sells the following reports:
•

M & A Scenario Reports - these reports provide information on any merger and acquisition
scenarios between public companies, including information such as overlapping and
complementary product lines, business divisions, customers, suppliers, and partners;

•

FDA Approval Decision Reports - these reports contain comprehensive calendars of FDA
decisions for New Drug Application and Biologic License Application filings;

•

Drug/Medical Device Reports - these reports contain a detailed presentation of a company’s
drugs/devices-- both existing and in development--including their indications, clinical trial
status, and primary mechanism of action;

•

MedTech PMA Pipeline Monitor Reports - these reports provide actionable information by
identifying MedTech companies with expected premarketing approvals over the course of the
next two years and includes details on each device candidate.

•

Company Profile Reports - for every U.S. and Canadian-listed company, Petitioner sells a
Company Profile Report that offers a 360-degree view of how the company generates value, the
products/services it sells broken down by sector and subsectors, and its key relationships.

•

Competitor by Product Reports- these reports use data from the name redacted Hierarchy data
feed to map a company’s products and services, providing product-by-product comparables
against the company’s competitors. This enables detailed sector-by-sector comparison among
the company and its direct competitors, based on the products and services it sells.

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The core of these reports is data presented in standardized formats. The reports do not contain
narrative articles. The reports are available for purchase from Petitioner’s e-commerce store. Certain reports
are published on a monthly basis and other reports are published when requested by a customer.
Petitioner offers customers two levels of technical support: standard level and premium level. The
standard level is provided without additional charge. Premium level is an optional service. Standard level
service provides customers with access to all bug fixes and customer support lines for basic application
questions and access to Petitioner’s user’s guide. The standard level service also provides customers with
product enhancements and new versions. The premium level of support provides customers with support
beyond the standard configuration and application questions, including debugging, custom integration,
diagnosing hardware/software problems, firewall support, and operating system trouble shooting. Technical
support for premium service is separately itemized and invoiced.
Petitioner offers customers two levels of research support: standard level and premium level. The
standard level is provided without additional charge. The standard level provides customers access to
Petitioner’s research analysis to ask general questions related to Petitioner’s data feeds and applications. The
premium level of support provides customers with support beyond the standard general research questions,
including the assignment of a dedicated researcher and the ability to have Petitioner’s analysts run specific
customer queries. Premium level research support is separately itemized and invoiced.
Petitioner offers as an optional service training on the proper use of Petitioner’s data feeds and
applications. Training is separately itemized and invoiced.
Analysis
Tax Law section 1105(c)(1) imposes sales tax on the receipts for the service of furnishing of
information by printed matter, 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 that is personal or individual in nature and that is not or may not be substantially incorporated in
reports furnished to other persons. Tax Law section 1105(c)(9) imposes sales tax on the receipts for the
service of furnishing or provision of an information service that is furnished, provided, or delivered by means
of telephony or telegraphy or telephone or telegraph service (whether intrastate or interstate) of whatever
nature. Section 1105(c)(9) contains a qualification that in no event shall the furnishing or provision of an
information service be taxed under section 1105(c)(9) unless it would otherwise be subject to taxation under
section 1105(c)(1) if it were furnished by printed, mimeographed or multigraphed matter or by duplicating
written or printed matter in any other manner.
Section 1105(a) imposes sales tax on the sale of tangible personal property. Tangible personal
property is defined in Tax Law section 1101(b)(6) as including prewritten computer software. 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. Tax Law § 1101(b)(14). The sale of prewritten software
includes any transfer of title or possession or license to use for consideration. See Tax Law § 1101(b)(5).
The medium by which the software is transferred to the purchaser has no effect on its taxability. Tax Law §
1101(b)(6); TSB-M-93(3)S. Software delivered electronically (i.e., downloaded) is still taxable as the sale of
tangible personal property. Id. In sum, a customer’s payment made for a license to use prewritten software is
subject to sales tax as a receipt for the sale of tangible personal property.
Petitioner’s data feed products (Hierarchy, RISC, Relationship, Trademark, Healthcare) are
information services subject to sales tax under Tax Law section 1105(c). The collecting, compiling or

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analyzing information of any kind or nature and the furnishing reports thereof to other persons is an
information service.” 20 NYCRR 527.3(a)(2). The data feeds are compilations of data, which are accessible
to all purchasers of the service.
The exclusion pertaining to information that is personal or individual in nature and that is not or may
not be substantially incorporated in reports furnished to other persons is inapplicable to the data feed
services. The first criterion (information that is personal or individual in nature) is satisfied only by
information that is uniquely personal or individual in nature. Matter of Allstate Ins. Co. v. Tax Commn. of the
State of New York, 115 AD2d 831, affd 67 NY2d 999; Twin Coast Newspapers, Inc. v. State Tax
Commission, 101 AD2d 977. It is the source of the information which controls whether the report prepared
will meet the criteria of "personal and individual." Matter of ADP Automotive Claims Service Inc., Tax
Appeals Tribunal, August 8, 1991. Information is not uniquely personal or individual in nature if it comes
from a common source or a data repository that itself is not confidential. See Matter of ADP Automotive
Claims Service Inc. v Tax Appeals Tribunal, 188 AD2d 245 (3rd Dep’t 1993); Rich Products Corporation v
Chu, 132 AD2d 175 (3d Dep’t 1987); Towne-Oller & Assoc. v State Tax Comm, 120 AD2d 873 (3d Dep’t
1986); Alan/Anthony, Inc., Adv Op Comm T&F, June 19, 1992, TSB-A-92(51)S. The information in the
data feeds comes at least in part from public sources; therefore, the information in the databases is not
personal or individual in nature.
The data feeds do not satisfy the second criterion of the exclusion. All subscribers can access the
same database. Since all customers access the same data source, the information obtained by them by
definition can be substantially incorporated in reports furnished to others. See Matter of Rich Products.,
supra; Twin Coast Newspapers, supra.
Even when the information provided to a data feed customer is customized in some manner, the
information service would still be taxable if customized information is substantially derived from a common
data source that is not confidential, e.g., a common data source maintained by the information service
provider. See Matter of Rich Products., supra; Matter of Towne-Oller and Associates, supra; Economic
Cycle Research Institute, Inc., Adv Op Comm T & F, July 23, 1997, TSB-A-97(42)S. Petitioner’s
customized data feeds that are substantially derived from the data feeds described above or from public
sources would be subject to sales tax as taxable information services.
The receipts from the sale of the M & A Scenario Reports, FDA Approval Decision Reports,
Drug/Medical Device Reports, MedTech PMA Pipeline Monitor Reports, Company Profile Reports, and
Competitor by Product Reports are subject to sales tax as sales of information services. The publications do
not qualify for the periodical exemption because of their content. Publications that provide only information
and data in rigid standardized formats do not qualify as periodicals. See Standard Rate & Data Service, Inc. v
State Tax Commission, 72 A.D.2d 659 (3d Dep’t 1979); see also 20 NYCRR 528.6(c). Irrespective of the
content of the publications, the publications would not qualify as exempt periodicals. The Tax Law
definition of tangible personal property in section 1101(b)(6) extends the exemption from sales and
compensating use taxes afforded printed newspapers and periodicals by Tax Law section 1115(a)(5) to the
electronic distribution of newspapers and periodicals only if they are exact counterparts (other than
advertisements) of paper editions. Petitioner does not produce tangible paper editions of its publications for
sale; therefore, the online publications do not come within the sales tax definition of tangible personal
property and are not exempt. See CCH Incorporated, Adv Op Comm T & F, April 1, 2003, TSB–A–
03(13)S; The Bureau of National Affairs, Inc., Adv Op Comm T & F, August 6, 1998, TSB–A–98(55)S;
Mark S. Klein, Adv Op Comm T & F, July 29, 1991, TSB–A–91(53)S.

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Petitioner's license of its application software that enables customers to find, filter, and organize
company information from the data feeds constitutes the sale of tangible personal property because the
licensed software constitutes prewritten computer software as defined in Tax Law section 1101(b)(14), and
receipts for the software license would be subject to sales tax under Tax Law section 1105(a). This
application software remains a distinct product when sold in conjunction with access to data feeds because a
customer can purchase the software or access to the data feed without purchasing the other product and
Petitioner bills a separate charge for the software.
Petitioner is not selling the query software because this software is an integral component of its data
feed product and is provided without charge to purchasers of that product. Petitioner is the user of this
software. Tax Law section 1110 provides that software used by its author is not subject to use tax if the
author does not offer similar software for sale as such, or as a component part of other property in the regular
course of business. Petitioner, therefore, will not owe use tax on the software, provided that Petitioner does
not sell the software as such or as a component part of other property in the regular course of business.
Petitioner’s receipts for premium level technical and research support, and for training are charges
for discrete services that are not subject to sales tax. These services are optional and separately stated on a
customer's invoice. Section 1105(c) of the Tax Law imposes sales tax on certain enumerated services. The
premium level technical and research support, and training services described by Petitioner are not among
the enumerated services subject to sales or use tax; therefore, Petitioner's charges for technical support,
research support, and training services are not subject to sales tax, provided that customers purchasing
taxable information services are not required to purchase the technical support, research support and training
services, and that the receipts for these services are reasonable in relation to the entire charge. See KPMG
LLP, Adv Op Comm T&F, February 2, 2000, TSB-A-00(7)S; Virtual Systems Group, Adv Op Comm T&F,
October 9, 1998, TSB-A-98(71)S; Economic Cycle Research Institute, Inc., supra. However, if the charges
for technical support include upgrades or new versions of the application software, those charges would be
subject to sales tax as receipts from the sale of prewritten software, unless the charges for the software
upgrades or new versions are separately stated and reasonable in relation to the entire charge.

DATED: July 23, 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.