NY TSB-A-13(6)S Sales Tax 2013-02-11

Is an employee wellness program -- web portal, health education, biometric assessments, and advice -- subject to NY sales tax?

Short answer: No. A company that sells employers a wellness program for their employees -- combining an online portal with health/nutrition/exercise education and tracking, annual biometric health assessments, and personal health advice -- is providing an unenumerated service that is not subject to NY State or local sales tax. It is not the NYC-taxable service of a weight-control or health salon (Tax Law 1212-A(a)(2)) because the company operates no such establishment and is not affiliated with one. And it is not a taxable information service (1105(c)(1)/(9)): the instructional material is an integral part of a broader service aimed at changing behavior (it is educational, and educational services aren't enumerated as taxable), and the personal health advice is not 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 sells an employee wellness program to companies, which provide it to their employees. The program has two parts: an online portal (nutrition, exercise, and general wellness information; participants can track their physical activity, eating, and weight) and annual in-person biometric health assessments (a questionnaire plus a blood lipid panel by licensed medical staff, with personal results reported back through the portal). Employers receive only aggregate reporting (HIPAA-protected; participation is voluntary and can't affect employment). The petitioner asked whether its receipts are taxable.

The Office of Counsel concluded it is selling a nontaxable, unenumerated service. Two possible tax hooks were rejected:

Not a NYC weight-control/health-salon service. Tax Law 1212-A(a)(2) (and NYC Admin Code 11-2002(a)) tax services of a weight-control salon, health salon, or similar establishment. The petitioner operates no physical establishment and is not affiliated with one, so its charges are not the sale of such services (TSB-A-10(46)S).
Not a taxable information service. Tax Law 1105(c)(1)/(9) tax information services, but the petitioner is not a passive distributor of information. The instructional material is an integral component of a broader service whose objective is to change behavior by imparting knowledge -- it is educational, and educational services (even interactive ones delivered over the Internet) are not enumerated as taxable under 1105(c) (Deloitte & Touche, TSB-A-99(58)S; Tower Innovative Learning Solutions, TSB-A-06(5)S). The other component -- personal health advice -- is also not an information service.

So the wellness program is an unenumerated service and not subject to sales or use tax.

What this means for you

Wellness, coaching, and health-education providers

A wellness/health-education program -- even one delivered through an online portal with tracking tools and including clinical biometric screening -- is generally a nontaxable unenumerated service in NY, as long as it is genuinely an educational/behavior-change service and personal advice, not a packaged sale of information or software. Two things keep it nontaxable: you are not operating a weight-control/health salon establishment (the NYC tax hook), and your content is integral to the service rather than a stand-alone information product.

Where it could tip

Operating (or being affiliated with) a physical health/weight-control salon in NYC, or selling a stand-alone information/data product, could change the result.

Common questions

Q: We deliver wellness content through a web portal -- is that a taxable information service?
A: No. The content is integral to a broader, behavior-changing educational service, and educational services aren't enumerated as taxable -- even interactive online ones.

Q: We run biometric screenings and give personal health advice -- taxable?
A: No. Personal health advice is not an information service, and the overall program is an unenumerated, nontaxable service.

Q: Does the NYC health-salon tax apply to us?
A: Not if you don't operate, and aren't affiliated with, a weight-control or health salon or similar establishment.

Citations and references

Tax Law section 1105(c) (enumerated taxable services)
Tax Law section 1105(c)(1) (information services)
Tax Law section 1105(c)(9) (information services)
Tax Law section 1212-A(a)(2) (NYC tax on weight-control/health salons)
Administrative Code of the City of New York section 11-2002(a) (NYC health-salon tax)

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_6s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-13(6)S
Sales Tax
February 11, 2013

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

PETITION NO. S100831A

The Department of Taxation and Finance received a Petition for Advisory Opinion from
name and address redacted. Petitioner asks whether its receipts for wellness programs are subject to
sales and use tax. We conclude that Petitioner is selling a service that is not subject to sales and use
tax.
Facts
Petitioner provides wellness related services to companies, which in turn provide the service
to their employees. Petitioner sells an international award winning employee wellness program.
Petitioner’s mission is to promote healthy lifestyles and encourage personal health management by
providing comprehensive education, skill sets and tools to implement healthy habits on a daily
basis.
Petitioner’s service has two components: an online element through a webportal and annual
in-person visits with the companies’ employees. The web portal provides participants with
nutrition, exercise and general wellness information. The participants can track personal
information and interact with the system by establishing an individual personal portal to record
information such as logs of physical activity, eating habits, weight.
Petitioner also provides annual biometric health assessments, which consist of a
questionnaire and general blood lipid panel performed by licensed medical personnel. The personal
results are reported back to the individual through the web portal. (Client companies may utilize
this wellness service to provide incentive rewards to employees that achieve certain benchmarks.)
The personal wellness information that Petitioner provides to clients is protected by the
federal Health Insurance Portability and Accountability Act of 1996 (HIPAA). HIPAA provides the
following protection for employee participants:
1.
2.
3.
4.

The employer can only receive aggregate reporting on all aspects of the program.
Wellness participation and personal health information cannot be available in personnel records.
Employees cannot be compelled to participate in the program.
Wellness participation cannot affect performance reviews, job continuance, demotions or
promotions.

-2-

TSB-A-13(6)S
Sales Tax
February 11, 2013

Analysis
The fees charged by Petitioner for the service of wellness programs are not subject to the
New York City tax imposed upon the use of, and services provided by, a weight control salon or
health salon, or similar establishment authorized by Tax Law section 1212-A(a)(2) and imposed
pursuant to section 11-2002(a) of the New York City Administrative Code. Petitioner does not
operate a physical establishment, nor is it affiliated with, any weight control salon or health salon or
other establishment described in Tax Law section 1212-A(a)(2) or section 11-2002(a) of the
Administrative Code. Therefore, Petitioner's charges to its clients do not constitute the sale of
services by a weight control salon or health salon, or similar establishments.
See
TSB-A-2010(46)S.
In addition, Petitioner is not providing an information service subject to sales tax under Tax
Law sections 1105(c)(1) or 1105(c)(9). One component of Petitioner’s wellness program is the
provision of instructional material on healthy lifestyles, which is a means to the end of improving
the health of employees. The provision of this instructional material is not an information service
because it is an integral component of a broader service. Petitioner is not a mere passive distributor
of information. Rather, its objective is to change behavior by imparting knowledge. Petitioner has
designed and structured the material to assist people in learning how to improve their health; thus,
the material accessed is educational. Educational services, whether or not provided in an interactive
format over the Internet, are not among the services enumerated as taxable under Section 1105(c) of
the Tax Law. Deloitte & Touche, Adv Op Comm T&F, December 3, 1999, TSB-A-1999(58)S; see
also Tower Innovative Learning Solutions, Inc., Adv Op Comm T&F, February 2, 2006, TSB-A2006(5)S. The other component of Petitioner’s wellness program is the dispensing of personal
advice on achieving and maintaining good health. This advice does not constitute an information
service.
In sum, Petitioner is providing an unenumerated service that is not subject to sales and use
tax.

DATED: February 11, 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.