NY TSB-A-11(6)S Sales Tax 2011-03-21

Is a certified abstract of title that guarantees the correctness of its search a taxable information service in NY?

Short answer: No -- it's not taxable. The sale of an ordinary abstract of title became a taxable information service on September 1, 2010, but a 'guaranteed title search' is treated as an insurance product instead. Under Insurance Law 6403(b), guaranteeing the correctness of searches of instruments affecting real-property title is the doing of an insurance business, and the NYS Insurance Department's February 2011 General Counsel opinion confirmed that a certified abstract guaranteeing the correctness of its search is insurance. The company's abstract certifies that its items are correctly set forth and that nothing more in the indexes affects the premises, so it guarantees the correctness of its search and qualifies as an insurance product. The certified abstract is therefore not taxable as an information service.

Disclaimer: This is an official New York State Department of Taxation and Finance Advisory Opinion (TSB-A), issued by the Office of Counsel at a taxpayer's request. It is limited to the facts set forth in it and binds the Department only with respect to the petitioner to whom it was issued, and only if that petitioner fully and accurately described all relevant facts; another taxpayer cannot rely on it. It reflects the law, regulations, and Department policy in effect when issued and may since have changed. Taxpayer-identifying details are redacted. New York State and local sales taxes are administered centrally by the Department. This summary is informational only and is not legal or tax advice. Consult a licensed New York tax professional about your specific situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked at the bottom of this page, or PDF in the sidebar) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

The petitioner is a corporation that sells abstracts of title in New York. Its abstracts include a certification that, "for a valuable consideration," upon examining the county clerk's grantor/mortgagor indexes and other public records, "it finds the items set forth in the foregoing Abstract of Title, and nothing more, and that said items are correctly set forth, and that there is nothing more in said indexes which appears to affect the premises." The company asked whether its certified abstract is a taxable information service.

The Office of Counsel concluded it is not taxable:

Ordinary abstracts are taxable since 9/1/2010. Tax Law 1105(c)(1) taxes information services, and since September 1, 2010 the sale of an abstract of title is a taxable information service (TSB-M-10(7)S).
But a guaranteed title search is insurance. The Department has held that a "guaranteed title search" is not taxable (TB-ST-5), because Insurance Law 6403(b) makes guaranteeing the correctness of searches of title-affecting instruments the doing of an insurance business. A February 23, 2011 Opinion of the NYS Insurance Department's Office of General Counsel held that issuing a certified abstract that "guarantees the correctness" of its search is the doing of an insurance business under 6403(b)(1).
Application. Because the company's certified abstract guarantees the correctness of its search (items "correctly set forth," "nothing more" affecting the premises), it qualifies as a guaranteed title search -- an insurance product -- and is not taxable as an information service.

This is a companion to TSB-A-11(7)S (same holding for a law firm's certified abstract).

What this means for you

Title-abstract companies

A plain abstract (just reporting the records) is a taxable information service since 9/1/2010, but a certified abstract that guarantees the correctness of its search is treated as title insurance -- the doing of an insurance business under Insurance Law 6403(b) -- and is not subject to sales tax. The key is whether your certification guarantees the search results. (Contrast TSB-A-11(9)S, where plain abstracts were taxable, and see the companion TSB-A-11(7)S.)

Buyers

A certified, guaranteed abstract shouldn't carry sales tax; a plain abstract delivered in New York will.

Common questions

Q: Is our certified abstract of title taxable?
A: No, if it guarantees the correctness of its search -- that makes it an insurance product under Insurance Law 6403(b), not a taxable information service.

Q: What's the difference from a taxable abstract?
A: The guarantee. A plain abstract is a taxable information service (since 9/1/2010); a certified abstract guaranteeing correctness is nontaxable insurance.

Q: Does the issuer have to be an insurance company?
A: No. Issuing a guaranteed certified abstract is itself the doing of an insurance business under 6403(b), whoever issues it.

Citations and references

Tax Law section 1105(c)(1) (information services)
Insurance Law section 6403(b) (guaranteeing correctness of title searches = insurance business)

Source

Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2011.htm
Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a11_6s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-11(6)S
Sales Tax
March 21, 2011

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

PETITION NO. S100908B

On September 8, 2010, the Department of Taxation and Finance received a Petition for Advisory
Opinion from name redacted. Petitioner asks whether its sale of an abstract of title that certifies its results
qualifies as an information service taxable under Tax Law section 1105(c)(1). We conclude that the
certified abstract is an insurance product and is thus not taxable as an information service.
Facts
Petitioner sells abstracts of title in New York State. Attached to its abstracts is a page with its
name and address at the top that includes the following language:
A Corporation duly incorporated under the Laws of the State of New York, for a valuable
consideration to it paid, does hereby certify to the record owners of an interest in or specific lien
upon the premises hereinafter referred to or described, that upon examination of the Grantor and
Mortgagor Indexes to the Records in the office of the Clerk of the County of Monroe [and other
public records] against the names of the parties shown below, during the record period of such
ownership respectively from and including the date to the date hereof.
Against the following names:
And that it finds the items set forth in the foregoing Abstract of Title, and nothing more, and
that said items are correctly set forth, and that there is nothing more in said indexes which
appears to affect the premises or any part thereof, described in Liber of , at page in said Clerk's
Office, set forth in said Abstract of Title in No. on the margin hereof (except liens or
incumbrances correctly discharged of record.)
*

And Petitioner further Certifies that no Judgment appears upon the docket books to have been
docketed during the last ten years, and no Collector's Bond filed and indexed during the last
twenty years, and no Financing Statements affixed to Real Property indexed during the last five
years . . . except as correctly set forth in said Abstract of Title; that the items set forth in the
foregoing Abstract of Title, including those taken from the records and files of the office of the
Surrogate of “X” County, are correctly abstracted.
Analysis
Tax Law section 1105(c)(1) imposes sales tax on receipts from the service of furnishing
information by printed, mimeographed or multigraphed matter, or by duplicating written or printed matter
in any other manner. Effective September 1, 2010, sales of abstracts of title are taxable as information
services (see TSB-M-10(7)S, Sales and Compensating Use Tax Treatment of Certain Information

-2-

TSB-A-11(6)S
Sales Tax
March 21, 2011

Services). The Department has held that a “guaranteed title search” is not taxable (see Abstracts of Title
and Other Public Records Searches Tax Bulletin, TB-ST-5). That conclusion was based on Insurance
Law § 6403(b), which makes the “guarantee[ing]” of “the correctness of searches for all instruments
affecting titles to real property” the doing of an insurance business.
The issue here then is whether Petitioner’s title abstract constitutes a guaranteed title search for
purposes of Insurance Law section 6403(b). In an Opinion of the Office of General Counsel dated
February 23, 2011 (“OGC Opinion”), the New York State Insurance Department addressed the question
whether the issuance of the certified abstract described therein was the doing of an insurance business for
purposes of Insurance Law section 6403(b)(1). The abstract stated that the certification was being
provided for "a valuable consideration” and that the items listed in the abstract “are correctly set forth,
and that there is nothing more in said indexes which appears to affect the premises or any part thereof.”
The OGC Opinion held that, because the abstract “guarantees the correctness” of its search, its issuance
“is the doing of an insurance business” for purposes of section 6403(b)(1). Based on the OGC opinion
letter, Petitioner’s certified abstract also qualifies as a guaranteed title search and thus constitutes the
doing of an insurance business. Accordingly, Petitioner’s certified abstract is an insurance product and is
not taxable as an information service.

DATED: March 21, 2011

NOTE:

/S/
DANIEL SMIRLOCK
Deputy Commissioner and 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.