Which fees of a professional-networking site are taxable -- subscriptions, in-network email, job ads, and surveys?

Plain-English summary

The petitioner runs a professional-networking website (members build profiles, connect, and message). It asked about four revenue streams: premium subscriptions, paid in-network email, job postings / virtual job fairs, and member surveys. The answer divides cleanly along one line: selling access to/use of the member database is a taxable information service; advertising and the customer's own survey data are not.

The rules:
- Tax Law 1105(c)(1) taxes information services (collecting/compiling/analyzing information and furnishing reports), but excludes advertising and information that is personal or individual (relates only to one customer, from a source tied to it, not substantially incorporable in others' reports). 1105(c)(9) extends the tax to information delivered electronically.
- Selling a mailing list -- names/emails meeting criteria -- is taxable information (Alan Drey).

The Office of Counsel concluded:

• Premium subscriptions -- taxable. They let subscribers search the member database and contact targeted members via in-network email -- in substance, buying use of a mailing list. The personal/individual exclusion fails: the data is a common database, and overlapping search results could be substantially incorporated in others' reports (ADP; Rich Products; Towne-Oller). (Free searches with no charge generate no receipt.) Distinguished from SSOV '81, where the provider did significant other work (profile development, video coaching); here membership is essentially database access.
• Paid in-network email -- taxable. Charges to email members identified by a database search are use of the database.
• Job postings & virtual job fairs -- not taxable. Fees to post job listings and for employer participation in virtual job fairs are advertising services, excluded from tax (Jones Day, TSB-A-09(44)S/09(52)S; 20 NYCRR 527.3(b)(5)). Because all members can view and respond to postings free, there's no taxable receipt. But a fee to send a customer's job solicitation to targeted members is taxable (database use).
• Surveys -- mixed. The customer's payment for completed surveys is taxable (use of the member database to target respondents). But a separately stated survey-results report is personal/individual (derived solely from the customer's own questions, not a common source, not shared) -- not taxable if sold separately. Separate design/programming/incentive services aren't taxable either. The small fee paid to members for participating isn't a taxable purchase. (If the provider later resells compiled survey data, those receipts become taxable.)

What this means for you

Platform and marketplace operators

The tax question isn't "is it a website service" -- it's whose data is being sold. Charging customers to mine your shared member database (search + targeted outreach) is a taxable information service, even dressed up as a subscription or "send an email" feature. By contrast, advertising (job ads, sponsorships, listings everyone can see free) is not taxable, and delivering a customer its own survey responses can be nontaxable personal/individual information if billed separately from database access.

How to bill

Separate the lines: database-access/targeting charges (taxable) from advertising and from a customer's own-data reports (nontaxable). Bundling them risks taxing the whole charge.

Common questions

Q: We're a subscription site -- why is the subscription taxable?
A: Because the subscription's value is searching your member database and contacting targeted members -- that's selling use of a mailing list, a taxable information service. The common-database source defeats the personal/individual exclusion.

Q: Are job postings and virtual job fairs taxable?
A: No. They're advertising services, which are excluded from the information-services tax. And since members view and respond to postings for free, there's no taxable receipt.

Q: Is delivering survey results to the customer taxable?
A: Not if billed separately -- the results come only from the customer's own questions, so they're personal/individual. But the customer's payment for using your member database to run the survey is taxable.

Citations and references

• Tax Law section 1105(c)(1) (tax on information services; excludes advertising and personal/individual information)
• Tax Law section 1105(c)(9) (information services delivered by telephony/telegraphy)
• 20 NYCRR section 527.3(b)(5) (advertising services)
• Alan Drey Company, TSB-H-78(3)S (mailing lists are taxable information)
• SSOV '81 Ltd. d/b/a People's Resources (DTA Nos. 810966-67) (services beyond selling contact data)
• TSB-A-09(44)S / TSB-A-09(52)S (online advertising not taxable)

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_40s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-10(40)S
SalesTax
September 15, 2010

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

PETITION NO. S090616A

Petitioner name and address redacted asks whether its fees for: (1) subscriptions for the use of its
professional networking site; (2) sales of additional in-network e-mail services; (3) employer posting of
job listings and conduct of on-line virtual job fairs; and (4) online surveys of its members are subject to
State and local sales and use taxes.
We conclude that Petitioner’s sales of subscriptions to its professional networking site are
receipts from the sale of an information service subject to the taxes imposed pursuant to sections
1105(c)(1) or 1105(c)(9) of the Tax Law. Petitioner's in-network e-mail services are an integral part of
Petitioner’s information services and are subject to sales tax under sections 1105(c)(1) and 1105(c)(9). Its
charges for advertising jobs and for employer participation in on-line virtual job fairs constitute receipts
from the sale of advertising services excluded from sales tax pursuant to section 1105(c)(1) of the Tax
Law. Some of Petitioner’s receipts in conjunction with customer surveys of Petitioner’s members
constitute receipts from the sale of information that is personal or individual in nature and that is not or
may not be substantially incorporated in reports furnished others, thus qualifying for the exclusion from
the sales tax on information service under section 1105(c)(1) of the Tax Law. However, Petitioner’s
receipts from the use of its database information by employers, recruiters, investment professionals, etc.
to provide targeted mailings to its members constitute receipts from sales of an information service which
is subject to sales tax.
Facts
Petitioner owns and operates an Internet networking website ("the Website") for professionals,
which enables members to find, be introduced to, and collaborate with other professionals who can help
them accomplish their professional and business goals.
Website members manage their public profile, which can be viewed by other members. Members
may use the website to find and be introduced to potential clients, service providers, and subject experts
who are recommended by other members; create and collaborate on projects, gather data, and solve
problems; search for business opportunities and find potential business partners; participate in discussions
with professionals in private group settings; discover inside connections that can help with job searches
and closing business deals; and post and distribute job listings.
On joining the Website, each member creates a professional profile that includes information
about the member's education, work experience (such as job titles and length of service), and professional
affiliations.
Members use the Website features and functionality to build their professional "network." These
features include an electronic address book upload, where members create professional connections
by uploading contacts from their address book software, such as name redacted, name redacted, and

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name redacted and sending in-network email invitations to individuals who are not already in their
professional network.
Members can actively search their professional network for individuals who match specific
criteria and invite those individuals to join their network. If the invitee accepts, the two members will be
directly connected on the network. Directly connected members can email each other by in-network
email and will, depending on profile option preferences, be able to view each other's full profiles and first
degree connections. Members can also send invitations to second degree connections, which are
individuals who are in the network of a mutual member.
Members can connect to third degree connections, using a tool called an Introduction. Members
who want to connect with an individual on the contact list of one of their direct connections can send an
Introduction request to their direct connection asking to forward their request for Introduction. Members
who are not paid subscribers can send up to five introductions per month.
Members can also expand their network by sending invitations to members found by a name
search of Petitioner’s Website. Petitioner will forward the invitation if the member can satisfy an
automated request to verify that he or she knows the individual as a colleague, classmate, or business
partner. If the member claims to be acquainted as a "friend "or "other," Petitioner requests the e-mail
address of the invitee before forwarding the invitation. The recipient of the e-mail invitation has the
option to accept, reject, or archive the request for a later decision.
A member may also allow his or her network to be expanded from outside Petitioner’s Website
via Internet search engines such as name redacted, which allows non-members to access a version of the
member's "public" profile page. Members can adjust the privacy setting to limit or remove their public
profile. The member's public profile does not list the member’s connections.
Members have free access to a number of software application tools on Petitioner’s Website to
enhance their networking experience.
Premium Subscriptions
Over the past few years, Petitioner has expanded beyond its core no-charge services to offer
premium services, which members can purchase to enjoy a more enhanced experience. Premium level
subscribers include recruiters, investment professionals, management consultants, analysts, market
researchers, and individuals who want to use the network to seek business opportunities, find a job, or
look for job candidates. For a monthly subscription fee, premium service subscribers receive the
following enhancements to the basic membership:
•
Direct access to member profiles beyond the "second degree." Subscribers can perform searches
of member profiles for specific attributes to build a unique list of connections or potential job
candidates which the subscriber can contact via in-network email.
•
Reference search capability.
Premium subscribers can perform a search of member
profiles to identify potential personal references for candidates.
•
Ability to send a certain number of in-network email messages to any member, not just first
degree connections.
•
Increased amount of Introductions.
•
Access to the Website's premium communication network, which is limited to subscribers and
opens the subscriber's range of contacts beyond the first and second degree without using the

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subscriber's Introductions. In contrast, members who are not paid subscribers can only contact
and communicate via Company's email with their direct connections.
In-network e-mail
In addition to a certain amount of in-network e-mails included with both basic and premium
membership, members can opt to purchase the ability to send additional in-network emails, for a
separately stated fee. Free members, who are limited to sending 5 in-network e-mails per month, may
purchase the ability to send additional in-network e-mails without having to upgrade to paid subscriber
status. The in-network e-mail process allows members who are not directly related to directly contact
other members.
Virtual job fairs
Petitioner charges a fee for recruiters to participate in or sponsor virtual job fairs on its Website.
A virtual job fair is the electronic equivalent of a traditional job fair, where applicants can gather
information about sponsoring companies, submit their resumes, and chat live with recruiters.
Job postings
Both free and premium members can see jobs posted on Petitioner’s Website (which are
identified in search results as “exclusive” job listings), and other jobs posted on the Internet. Regardless
of the source of the job posting (Website or other Internet employment postings), Petitioner will display
to the member persons within the member’s network who have connections to the posting employer.
Members can use their network to contact persons at the employer to obtain more information, answer
questions, or introduce the member to the employer’s hiring manager. Only Petitioner’s members can
respond to job postings on Petitioner’s Website, but a member does not have to be a paid subscriber in
order to respond. When a member applies for a job on the Website, the member’s profile, along with
other information provided by the member in the on-line job application, are forwarded to the employer.
Petitioner’s members are encouraged to forward job postings that they think might be of interest to one of
their network connections.
Online surveys
Petitioner offers customized online business surveys that are targeted to members by job title,
seniority, function, age, country, company size, and other variables. Petitioner offers these surveys to
third-party customers who are not members of Petitioner’s Website. Petitioner acts as the intermediary
between its targeted members and the customer. The customer designs the survey and gives Petitioner a
profile of the characteristics of members they are interested in contacting. Petitioner sends an e-mail to
the targeted members with a link to the survey. If the member clicks on the link and successfully
completes the survey, Petitioner pays the member a small fee (e.g., $15), or donates the payment to a
charity on behalf of the member.
Petitioner performs programming services related to preparing the survey, devises incentives to
be offered to survey respondents, selects Website members to be surveyed, works with the customer to
select the survey dates, manages the survey process, and provides the customer with the results. Fees for
the provision of these services are separately stated to the customers. Petitioner does not share the
customer's survey results with other customers. Its agreements with its customers do, however, provide
that the survey results are also furnished to the participants. Petitioner does not prepare the survey
questions. Reports of survey findings are delivered electronically. The customer pays Petitioner based
upon the number of members who complete the survey.

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Analysis
We conclude that Petitioner’s receipts from sales of its premium memberships and subscriptions,
charges for the use of its in network email by members/subscribers, and charges to customers for
conducting surveys of Petitioner’s members are subject to sales tax.
Petitioner’s receipts for job postings by employers, recruiters, etc., charges for advertising or
conducting virtual job fairs, and charges for developing surveys are not subject to sales tax.
Section 1105(c) of the Tax Law imposes sales tax on 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 . . .
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, provided or delivered by means of telephony or telegraphy or telephone or
telegraph service (whether by intrastate or interstate means) is subject to sales tax if the information to be
taxed under section 1105(c)(9) would otherwise be subject to tax under section 1105(c)(1) were the
information furnished by printed, mimeographed or multigraphed matter or by duplicating written or
printed matter in any other manner.
Petitioner has created a database of the demographic information of its members, including the
members’ employment history (company, job title and description, expertise), education, schools and
colleges attended, etc. Petitioner’s members and customers use searches of this database information to
locate persons who meet specific demographic criteria. For example, recruiters and employers might use
the search to locate individuals having the particular education, employment background, and skills they
are seeking to employ. If Petitioner locates individuals satisfying the specified criteria, Petitioner charges
a fee to link the employers and recruiters with those persons by providing the employers and recruiters
with the ability to contact the targeted persons through Petitioner’s in-network email service. Sales of
mailing lists consisting of collections of names and addresses (which listing might consist entirely of email addresses) are considered the sale of information taxable under section 1105(c)(1)of the Tax Law.
See Alan Drey Company, Dec St Tax Comm, January 27, 1978, TSB-H-78(3)S, affd 67 AD2d 1055.
Thus, the sales of the mailing list of the targeted persons constitute receipts from the sale of a taxable
information service. The fact that Petitioner does not provide the list directly to the customer (Petitioner
itself performs the mailing to the target on behalf of the customer) does not change the fact that the
customer has received the full use of the database information on members having the sought after
education, employment, skills, etc.
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 excluded from the tax imposed under section 1105(c).
However, mere customization of the information provided to meet the specific needs of a customer does
not exclude the sale from the imposition of the tax.

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The first criterion (the information sold 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, 495 NYS2d 789, affd 67 NY2d 999, 502 NYS2d 1004. 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,
leave to appeal denied 82 NY2d 655; 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.
The information sold by Petitioner also fails to satisfy the second criterion of the exclusion.
Though the information provided to purchasers is customized in some manner, if the customized
information is substantially derived from a common data source maintained by the information service
provider, the information service is still taxable. 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. All purchasers seeking to contact Petitioner’s members with the targeted skills will be
provided with similar overlapping results. Though one person’s list of members possessing certain
demographics may be slightly different than another’s person’s list, the information obtained by the one
purchaser can be substantially incorporated in reports furnished to others. See Matter of Rich Products.,
supra; Twin Coast Newspapers, supra.
Membership and subscriptions
Petitioner’s basic membership (for which there is no charge) allows the members to create their
professional profile. Members provide and manage information about their professional accomplishments
in their field. Information in an individual’s profile is available for view by other members. The
individual’s profile may be viewed by other members on Petitioner’s network and if the member opts to
allow it, the profile may be accessible for public view on the Internet. Petitioner provides members with
privacy settings allowing the member to limit how the information the member has posted on Petitioner’s
network might be viewed on its network, and on the Internet at large, by persons who are not members of
Petitioner’s network. Members also have access to software application tools made available to them by
Petitioner without charge for use by the members in enhancing their networking experiences.
Premium subscribers can perform searches of the members’ profiles. The results of these
searches may be used by subscribers to build their list of connections, solicit potential job candidates and
to locate personal references for job candidates. The subscriber may then, using Petitioner’s in-network
e-mail, contact those individuals to request a connection, ask whether the individual would be willing to
provide a reference for a job candidate, solicit a response/application for a job, etc. In essence, the search
permits a premium subscriber to send an e-mail to persons identified via a targeted selection process. To
the extent that there is no charge by Petitioner to members for their searches and use of the database, there
are no receipts subject to sales tax. Petitioner’s receipts from the use of its database, including charges to
correspond with target search results (i.e., use of Petitioner’s mailing lists), are subject to sales tax
pursuant to the provisions of section 1105(c)(1) and 1105(c)(9) of the Tax Law. Thus Petitioner’s charge
for its premium subscription is subject to sales tax.

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In network e-mail
Charges to send an e-mail to persons identified by searching Petitioner’s member database for
persons who have particular demographic attributes are charges for the use of Petitioner’s database and
constitute receipts from the sale of a taxable information service.
Employment solicitations (job postings, virtual job fairs, etc.)
Charges for advertising on Internet websites are generally considered to be receipts from the sale
of a nontaxable service. (See Matter of Jones Day, Adv Op Comm Tx & Finance, September 24, 2009,
TSB-A-09(44)S and TSB-A-09(52)S Adv Op Comm Tx & Finance, November 13, 2009.) Thus, fees
received from customers for posting employment opportunities on Petitioner’s Website are not subject to
sales tax. Similarly, fees charged by Petitioner to prospective employers for the employer’s participation
in virtual (on-line) job fairs are a charge for an advertising service, the receipts from which are not subject
to sales tax. See 20 NYCRR §527.3(b)(5).
A compilation of job listings constitutes an information service subject to the sales taxes under
section 1105(c)(1) or section 1105(c)(9) of the Tax Law. However, both free members and paid
subscribers may view Petitioner’s database of job offerings. If Petitioner allows all members to view all
job postings listed by Petitioner (whether the posting is from Petitioner’s exclusive job listings or culled
by Petitioner from other venues) there would not appear to be a receipt which would be subject to sales
tax. Though only members can submit a response to a job posting, both free members and paid
subscribers are eligible to respond to a job posting. Because there is no charge to access, view and
respond to a job posting on Petitioner’s Website, there is no receipt subject to tax.
The fees charged by Petitioner to someone who has an employment opportunity and wants
Petitioner to send its solicitation for a job application to members having the attributes selected or
targeted by the customer are receipts from the sale of an information service subject to sales tax.
Charges by Petitioner to a member for sending e-mail introductions, based upon the results of the
member’s targeted search of Petitioner’s database, are, as previously noted, receipts from the sale of a
taxable information service.
We note that Petitioner’s sales of its database information are different than those found not
subject to tax by the Tax Appeals Tribunal in SSOV ’81 Ltd. d/b/a Peoples Resources, (DTA Nos.
810966, 810967, decision dated January 19, 1995). In SSOV ’81 Ltd., the Tribunal found that the
petitioner’s services involved more than merely selling its members’ contact information. The petitioner
engaged in other significant activities, such as assisting the members in the development of their profiles
and advising members about how best to present themselves in video presentations. In this case,
Petitioner is not engaged in other activities, nor do its membership charges include any significant
services other than access to its database.
Surveys
Payment by the survey customer to Petitioner for successful completion of a survey by one of
Petitioner’s members is a receipt from the customer’s use of Petitioner’s member database and, as such,
constitutes a receipt from the sale of a taxable information service. The payment by the survey customer
of a small fee to the targeted member for that member’s participation in the survey (or the donation by the
survey customer to a charity designated by the participating member) does not constitute the purchase by
the survey customer of property or services subject to sales tax imposed pursuant to section 1105 of the
Tax Law.

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It appears that in providing the survey results to its customers, Petitioner collects, compiles, and
analyzes the survey responses and furnishes this information to the customer. The report to the customer
of the survey responses thus constitutes an information service. However, as the information is derived
solely from the response to the customer’s question rather than from a common data source, and the
information is not provided to other customers or compiled for later use by Petitioner in providing
information to other customers, this information is considered personal or individual in nature and is not
incorporated into reports furnished to others by Petitioner. Accordingly, the survey results are excluded
from the information services tax under section 1105(c)(1) of the Tax Law. See also Alan/Anthony, Adv
Op Comm Tx & Fin, January 31, 1992 ,TSB-A-92(6)S and Alan/Anthony, Adv Op Comm Tx & Fin, June
19,1992, TSB-A-92(51)S. Charges for the survey results are not subject to sales tax presuming this
service is sold separately and distinct from Petitioner's charges for the customer's use of Petitioner's
member database in conducting the survey.
If Petitioner is providing information collected and compiled from its customer surveys in reports
Petitioner sells to other persons, Petitioner’s receipts from collecting, compiling, and furnishing survey
information would constitute receipts from the sale of a taxable information service, for both the initial
and subsequent sales.
The separate charges for other services provided by Petitioner in conjunction with the customers’
surveys (programming services, designing incentives, etc.), other than the use of Petitioner’s database, do
not constitute sales of information or other services subject to sales tax under section 1105(c)(1) or
1105(c)(9) of the Tax Law. Such charges are thus not subject to tax presuming those services are sold
separately and distinct from Petitioner’s charges for the customer’s use of Petitioner’s member database
in conducting the survey.
We note that the advice provided in this Opinion is based upon the descriptions of Petitioner’s
service(s) for the purpose of this Opinion. Changes to the subscription plan provisions or additions of
new service offerings by Petitioner might result in different tax consequences than discussed herein.
These conclusions represent the current position of the Department. To the extent NetCreations,
Inc., Adv Op Comm T&F, May 17, 2007, TSB-A-07(13)S, or any other advice from the Department
suggests a contrary conclusion, it does not represent current policy.

DATED: September 15, 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.