Does an electronic-only investing journal qualify for NY's electronic periodical exemption instead of being a taxable information service?

Plain-English summary

The petitioner sells an electronic-only publication about global investing -- 60-90 pages per issue, mostly articles by its owner and independent contractors, each issue featuring an exclusive interview plus pieces on macro policy, fixed income, equities, commodities, real estate, etc. It's delivered as a PDF on a password-protected site about 20 times a year, isn't updated between issues, holds itself out as "A Journal of Independent Research, Analysis, Opinion and Insight," and lets subscribers search only its own past articles. It asked whether it qualifies for the electronic periodical exemption (Tax Law 1115(gg)(2)).

The Office of Counsel concluded yes -- the exemption applies:

• Background. Electronically delivered information services are generally taxable (Tax Law 1105(c)(1), (9)), and before Chapter 583 of the Laws of 2011 (effective March 1, 2012), electronic-only newsletters didn't qualify for the print newspaper/periodical exemption. Chapter 583 added 1115(gg), exempting "electronic news services" and "electronic periodicals."
• The eight-part test (Tax Law 1101(a)(38)). An electronic periodical must: (A) have news content as its predominant, prominently-featured purpose; (B) be published at stated intervals at least 4x/year but no more than weekly, not updated between issues; (C) have content from contracted wire services or multiple employees/contractors; (D) be available to the public; (E) hold itself out as a magazine/periodical/journal; (F) have continuity of title and general content; (G) not be, in whole or substantial part, a listing, catalog, database, or compilation; and (H) offer no free search beyond a search of its own (or an affiliate's) past news content.
• The publication satisfies all of them. News content predominates and is featured; it's issued ~20x/year and not updated between issues; written by multiple contributors; public; holds itself out as a journal; consistent over time; not substantially a list/catalog/database; and its search is limited to its own past content.
• Result: it qualifies as an electronic periodical and the publisher need not collect sales tax from subscribers.

What this means for you

Digital publishers and newsletter operators

Going electronic-only doesn't doom you to "information service" tax. If your publication is genuinely a periodical -- predominantly news/articles, regular cadence (4x/year to weekly), multiple authors, not a database/catalog, and search limited to your own back issues -- it can be an exempt electronic periodical.

Watch the disqualifiers

Updating between issues, publishing more than weekly or fewer than four times a year, being substantially a database/catalog/listing, or offering a broad free search beyond your own content can knock you out of the exemption and back into taxable information-service territory.

Common questions

Q: We only publish electronically -- can we still be exempt?
A: Yes, since the 2011 law added the electronic periodical exemption (effective March 1, 2012). You must meet the eight statutory tests.

Q: What most often disqualifies a publication?
A: Being substantially a database/catalog/listing, updating between issues, an off-cadence schedule, or a free search reaching beyond your own past content.

Q: Does a paywall/password site matter?
A: No. Delivery via a password-protected site is fine; what matters is meeting the periodical definition.

Citations and references

• Tax Law section 1115(gg) (exemption for electronic news services and electronic periodicals)
• Tax Law section 1101(a)(38) (definition of electronic periodical)
• Tax Law section 1105(c)(1) (information services)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2013.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a13_33s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-13(33)S
Sales Tax
September 10, 2013

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

PETITION NO. S130204A

The Department of Taxation and Finance received a Petition for Advisory Opinion from
name redacted. Petitioner asks whether its financial publication qualifies for the exemption from
sales and use tax for electronic periodicals in Tax Law § 1115(gg)(2).
We conclude that the electronic periodical exemption applies to Petitioner’s publication.
Facts
Petitioner sells a publication focusing on global investing across asset classes.
All issues of the publication have the same basic format. Each issue typically consists of
60 to 90 pages. Almost all of the pages of each issue are devoted to articles prepared by
Petitioner’s owner or independent contractors. Every issue features a main article incorporating
an exclusive interview of a highly successful investment strategist or other person of significant
interest to the investing community. Each issue typically will also have articles about some
topical combination of macro-economic policy, fixed-income trends, developments in equities,
events in hard and soft commodities markets, real estate, private equity, etc. The publication does
not typically include comprehensive tables of financial data or other statistical information, as its
purpose is to present financial investment ideas, rather than financial data. The publication is not
designed in such a way that successive issues could be put together to form a compendium,
compilation, or database.
The publication is not available to subscribers in hardcopy. Rather, subscribers access
the publication via Petitioner’s password-protected website, where the newest issue is available
as a PDF printout, along with past editions. That webpage features the following header: “A
Journal of Independent Research, Analysis, Opinion and Insight.” The publication is issued on a
regular schedule, about 20 times a year, and is not updated between issues. The website includes
short summaries of articles that appeared in past issues, along with links to the articles. The
website allows subscribers to perform searches limited to the articles published in past issues of
the publication.
Analysis
The Tax Law imposes sales tax on the sale, except for resale, of information services,
including those delivered electronically (Tax Law §§ 1105[c][1], [9]; 20 NYCRR § 527.3[a][1];
Murphy Heating Service, Inc. v Chu, 124 AD2d 907 [3d Dept 1986]). Prior to the enactment of

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TSB-A-13(33)S
Sales Tax
September 10, 2013

Chapter 583 of the Laws of 2011, applicable to sales made or uses occurring on or after March 1,
2012, newsletters delivered exclusively electronically did not qualify for the newspaper or
periodical exemption in § 1115(a)(1) (see Tax Law § 1101[b][6]; 20 NYCRR § 528.6; TSB-A91[60]S) and potentially were subject to tax as an information service. Chapter 583 amended the
Tax Law by adding § 1115(gg), which provides an exemption for “electronic news services” and
“electronic periodicals.”
Petitioner asks whether its publication, which is available only in electronic form,
qualifies as an “electronic periodical” for purposes of § 1115(gg). The term “electronic
periodical” is defined in Tax Law § 1101(a)(38), in pertinent part, as a publication that is
accessed electronically, and which meets the following requirements:
(A) The publication's predominant purpose is the presentation of news content, which it
prominently features.
(B) The publication is published at stated intervals, at least as frequently as four times a
year but no more frequently than weekly, and is not updated between issues.
(C) The publication's news content is purchased from contracted wire services or written
or produced by multiple employees or engaged independent contractors of the person
providing the publication, including, but not limited to, employees or engaged
independent contractors of any affiliate of such person.
(D) The publication is available to the public.
(E) The publication holds itself out as a “magazine,” “periodical” or words of similar
import and does not hold itself out as something other than a “magazine,” “periodical,” or
words of similar import.
(F) The publication has continuity as to its title and the general nature of its content over
time.
(G) The publication is not, in whole or in substantial part, a listing, catalog, database, or
compilation.
(H) The only search function the publication offers without a separately-stated,
reasonable charge is a search of the publication's or of an affiliate's present or past news
content.
For the purposes of the electronic periodical exemption, “news content” is defined as “articles,
photographs, and video and audio material devoted to literature, the sciences, the arts, news, an
industry, profession, sport or other field of endeavor, and does not include listings,
advertisements, catalogs, compilations, databases, or the like.” (Tax Law § 1101[a][38[ii]).

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TSB-A-13(33)S
Sales Tax
September 10, 2013

The predominant purpose of Petitioner’s publication is the delivery of news content,
which it prominently features using a format that is consistent over time. It is published at stated
intervals and with the sufficient degree of frequency, and is not updated between issues. Its news
content is written or produced by multiple employees of Petitioner or independent contractors
engaged by Petitioner. It holds itself out as a journal and is available to the public. The
publication is not, in whole or in substantial part, a listing, catalog, database, or compilation. It
has a search function, but the search function is limited to retrieving the publication’s past news
content.
Accordingly, Petitioner’s publication qualifies for the “electronic periodical”
exemption, and Petitioner is not required to collect sales tax from its subscribers.

DATED: September 10, 2013

NOTE:

/S/
DEBORAH R. LIEBMAN
Deputy 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. The information provided in this
document does not cover every situation and is not intended to replace the law or
change its meaning.