Is a real-time web-analytics product that reports a customer's own website traffic subject to sales tax?

Plain-English summary

A company sells a real-time web-analytics product. Customers embed the company's tracking code on their website; the company then collects metrics about that site's visitors (traffic sources, engagement, load times, top pages, etc.) and reports them back to that customer through a private, password-protected dashboard. One customer's data is not shared with other customers — except that two packages show small anonymized benchmark comparisons drawn from other sites (at no extra charge, with no underlying raw data revealed). It asked whether the product is taxable.

The Office of Counsel concluded the product is a nontaxable information service:

• Collecting/compiling/analyzing information and furnishing reports is an information service (Tax Law section 1105(c)(1), (9)). But there is an exclusion for information that is "personal or individual in nature" and not substantially incorporated in reports furnished to others (20 NYCRR 527.3(a)(2)).
• Here, all three packages report data that pertains only to the customer's own website and is not substantially incorporated into reports to others — so they are personal or individual and fall within the exclusion.
• The incidental anonymized benchmarking (in two packages) does not make it taxable: it is a de minimis part of the overall product, carries no additional charge, and the company never provides the raw data underlying the benchmarks (citing TSB-A-12(24)S).
• The dashboard software the customer uses to view its data is incidental to the information service and is not separately taxable (citing Matter of DZ Bank; TSB-A-12(24)S).

What this means for you

Reporting a customer's OWN data is a nontaxable personal/individual service

An information service that gathers and reports data about the customer's own website/operations — not pooled from a common source and not resold to others — generally falls within New York's "personal or individual" exclusion and is nontaxable. (Contrast a service built on common-source data sold to many customers, which is taxable.)

Small, free benchmarking stays de minimis

Adding anonymized benchmark comparisons does not taint the exemption when the benchmarking is incidental, carries no separate charge, and never exposes the underlying raw data. Charging separately for it, or handing over the raw competitor data, could change that.

Incidental viewing software isn't a taxable software sale

A dashboard/portal used solely to view the information you are already providing is incidental to the nontaxable information service — not a separate taxable sale of software.

Common questions

Q: It's clearly an information service — why isn't it taxed?
A: Because the information is personal or individual — it concerns the customer's own website and is not substantially incorporated into reports to others — so it falls within the exclusion in Tax Law section 1105(c)(1).

Q: Doesn't the anonymized benchmarking make it taxable?
A: No. The benchmarking is de minimis, carries no extra charge, and never reveals the raw underlying data, so it does not make the service taxable.

Q: Is the dashboard taxable as software?
A: No — it is incidental to the information service and is not separately taxable.

Q: Can I rely on this opinion?
A: It binds the Department only as to the petitioner. Use it as guidance and confirm your own facts.

Citations and references

• Tax Law section 1105(c)(1) (information services)
• Tax Law section 1105(c)(9) (information services furnished by telephony/telegraphy)
• 20 NYCRR 527.3(a)(2) (personal or individual information exclusion)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2016.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a16_3s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-16(3)S
Sales Tax
February 22, 2016

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

PETITION NO. S140318A

The Department of Taxation and Finance received a Petition for Advisory Opinion from
Petitioner, REDACTEDREDACTEDREDACTEDREDACTEDREDACTED. Petitioner asks
whether the sale of Product A, which delivers real-time web analytics data regarding website
performance to owners of websites, is subject to sales and use tax. We conclude that the product
is a nontaxable information service.
Facts
Petitioner sells a web analytics product that allows its customers to monitor web traffic
("visits") to the customer's website in real-time. To use Petitioner's product, customers must
embed Petitioner's JavaScript code (the "Code") within the customer's website. The customer
cannot alter, reverse engineer, turn on or off, or even access the Code. Customers can remove
the Code from their computers, but this would destroy its functionality. Rather, the Code runs
seamlessly in the background on a customer's website. Once the Code is embedded, Petitioner
sends tracking beacons between its servers and the browsers of visitors to the customers' website
("visitors"). The Code allows Petitioner to collect various metrics ("data") related to visitors' use
of the customer's website. The collected data is streamed to Petitioner's servers, where it is
analyzed and then reported to the customers through a passwordprotected, hosted dashboard
website (the "Dashboard") provided by Petitioner. The customer cannot accomplish anything
using the dashboard other than to view the information provided by Product A, as it has no
executable functions in and of itself.
The data reported through the Dashboard pertains to activity on the customer's website.
Petitioner does not collect personally identifiable information from visitors. Petitioner collects
visitors' internet protocol ("IP") addresses to show geographic information, but stores only
anonymized IP addresses with the final octet blurred. With this data, customers are able to
make informed decisions regarding their websites to achieve their traffic goals with respect to
visitors and usage of their websites. In order to protect the confidentiality of a customer's
data, each customer’s Dashboard is available and viewable only to that customer. One
customer's data is not provided to other c u s tomers, though for certain products discussed
more thoroughly below, Petitioner does collect and use data from its customers to create
anonymized benchmarks that are made available to other customers.
Product A is offered and sold to customers in one of three distinct service packages.

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Sales Tax
February 22, 2016

1) Basic Service
Product A's Basic service provides traffic data for the top 20 pages of the customer's
website. Two categories of data are reported through the Dashboard: live and historical.
Live data is updated every three seconds and is provided in real-time. Historical data is a
summary of what visitors were doing over periods spanning the past day, week or month.
Under the Basic service, the following is reported through the Dashboard:
• Concurrent Visits - the total number of active page views of currently open tabs (the term
“concurrent” refers to the number of simultaneous visits to a webpage – e.g., if a
webpage has 10 “concurrents,” the webpage is concurrently open on 10 different
computers);
• Access - how visitors access the website (e.g., desktop or mobile device);
• Social Media - the number of social media links to the customer's website;
• Engaged Time - the aggregate amount of time visitors are actively using the customer's
website on a given day, as compared with the website's historical data;
• Load Time - the load time for both the visitors and the customer's server;
• Top Search Terms - the words or other terms that most frequently result in visits to the
customer's website;
• Top Links - the links from other websites that most frequently result in visits to the
customer's website;
• Traffic Sources - how visitors arrived to the website (e.g., direct, links, social media,
search or internal), as compared to Traffic Sources for other similar websites; and
• Top Pages - the most active pages on the customer's website.
The traffic data provided to a customer of the Basic service pertains only to the customer's own
website, except to the limited extent that data for "Traffic Sources" is compared to the
anonymized data of other websites being tracked by Petitioner for other customers. The Traffic
Sources data that is compared to other websites is a de minimis portion of the data provided to
each customer and consists solely of anonymized benchmark statistics prepared by Petitioner.
None of the supporting or background data underlying the Traffic Sources data is ever provided
to or otherwise made available to other customers. In fact, Petitioner is contractually prohibited
from "us[ing] or distribut[ing] compiled Traffic Data in a manner that reveals the [customer's]
identifiable Traffic Data, the identity of the [customer] or the [customer] Website." Moreover,
customers cannot choose, and are not told, which websites are included in the anonymized data.
That decision is made exclusively by Petitioner. There is no additional charge to customers for
this anonymized data.
The starting point for the pricing of Basic service is a monthly base rate. Included under
the monthly base rate are a set number of concurrent visits to the customer’s web pages and
websites to be tracked and unlimited Dashboard access by the customer. Additional fees are
charged to customers exceeding the base-level number of concurrent visits and websites tracked.
There are no additional fees that apply to the remaining portions of the Dashboard (i.e., Access,

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Sales Tax
February 22, 2016

Social Media, Engaged Time, Load Time, Top Search Terms, Top Links, Traffic Sources or Top
Pages).
2) Publishing Service
Petitioner’s Publishing Service is similar to its Basic Service with two significant
exceptions: (1) it adds additional features, and (2) it does not utilize any anonymized data.
Publishing service customers receive only their own data. The Publishing service is intended for
use by major media websites to allow them to better understand how users are interacting with
their websites and which articles are attracting new readers to the Customer’s site. Publishing
service includes Product A’s Basic service (minus the anonymized data), plus the following
additional features:
• Recirculation Data – the percentage of visitors who remain on the customer’s website
after reading one page;
• Concurrents by Traffic Source - concurrent visits sorted by largest traffic source;
• Top Pages by Concurrents - top pages sorted in order of greatest concurrent visits;
• Twitter Traffic - the webpages generating the most Twitter traffic;
• Referrers – real-time traffic data regarding referral sources for all pages of major media;
• Recirculation Data – the percentage of visitors who remain on the customer’s website;
• Acquiring and Retaining – which articles are retaining and acquiring new readers to the
customer’s site;
• Location - geolocation of visitors according to visitors' IP addresses;
• Visitor Frequency - whether visitors to the customer's website are new, returning or loyal
(i.e., frequent visitors); and
• Acceleration Indicators – the pages on the customer’s website that are gaining (green
arrow) or losing (red arrow) active visits.
Again, the traffic data provided to the customers under the foregoing additional
features of the Publishing service pertains only to the customer's own website. No
anonymized data has ever been provided with this product.
Petitioner's Video service is available only to purchasers of the Publishing service and at
an additional charge. The Video service allows customers to understand how consumers are using
their video content compared to their written content. Using proprietary software that runs in
the background, Petitioner provides customers with the following real time information:
•

How many website users are currently watching the video that is posted on the
customer's website.

•

How the video is performing compared to the webpage in general. For example, the
software can tell the customer that 10 users are currently on the website while only
three of them are watching the video.

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•

TSB-A-16(3)S
Sales Tax
February 22, 2016

How effective the video is. This is determined by analyzing the number of users
playing the video and the duration of time the video actually plays (e.g., a website
user watches 3 minutes of a 5 minute long video).

The pricing for Publishing varies depending on the needs of the customer and is based on a
pre-determined monthly fee per set number of concurrent visits. The monthly fee increases
when Video is added.
3) Ad Sales Service
Petitioner's Ad Sales service measures the "true engagement" of a website's audience,
meaning how long and where on the website the visitors are actively consuming content with
advertisements in view. This data measures the amount of time that visitors are exposed to
advertisements on the customer's website, which translates into how well advertisements are
resonating with the visitors. Customers utilize this data to package and sell space on their
websites to advertisers.
The data provided to Petitioner’s Ad Sales customers pertains only to the customer's own
website, with one exception. The Ad Sales service allows customers to generate a report
consisting of a four-slide PowerPoint presentation that details the performance of the advertising
space on the customer's website. Slide three of the PowerPoint compares the customer's website
advertising to an aggregated, anonymized average of other websites. The customer never
receives any of the individual competitor website data. In this way, the Ad Sales service uses
anonymized data in the same way the Basic service uses anonymized data. This anonymized
data is once again an extremely small percentage of the overall information provided to Ad Sales
customers. The pricing for Ad Sales varies, but there is no separate charge for the anonymized
data.
4) Rights and Restrictions
To use any of Petitioner's products, customers must agree to the terms of Petitioner's
Master Service Agreement (the "MSA") or Term of Service (The "TOS") and submit a Work
Order, which is the means of implementing the MSA. Under those agreements, Petitioner grants
the customer a non-sublicenseable, nonexclusive, nontransferable, revocable, limited license to
access and use Petitioner's application programming interface ("API") solely in connection with
using Petitioner's services. The API is "the [Product A] application programming interface,
scripts and other tools that allow [the customer] to publish and share Traffic Data." Use of the
Dashboard and the Code by the customer is governed by the API Terms of Use. The API is
licensed to customers for "personal non-commercial use only" at no cost to the customer.
Customers have no ability to change, sublicense, rent, sell or distribute the s oftware associated
with Product A.

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Sales Tax
February 22, 2016

For the term of the agreement, the customer grants Petitioner "all necessary rights to
access and track Traffic Data concerning the [customer's] Website, solely in connection with
providing [Product A].” Customers also authorize Petitioner to compile their own traffic data
with the traffic data of other customers and to provide this data to third parties. However, the
data must be anonymized and Petitioner is precluded from using or distributing the compiled
traffic data in a manner that reveals the identit y of the customer o r i t s website.
The proprietary rights to the compilation of customers' aggregated Traffic Data are
owned exclusively by Petitioner. However, the proprietary rights to the customer's Traffic
Data are owned by the customer.
Analysis
The Tax Law imposes sales and use tax on retail sales of tangible personal property and
the sale, except for resale, of certain services. See Tax Law § 1105(a), (c). Among the
enumerated services subject to tax is 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. Excluded from that tax is 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 (an “information service”). 20 NYCRR §
527.3(a)(2). Excluded from that tax is 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. See Tax Law § 1105(c)(1); see also Tax Law § 1105(c)(9).
Here, for all three of its Product A service packages, Petitioner embeds software on the
customer's website and uses it to gather information about visitors to the website -- how the
customers come to the website, what type of device they are using, and what they do while on
the site. Petitioner then makes this information available to customers on Petitioner’s Dashboard
portal on the Internet. In addition to the information that relates to the customer's website, two of
the service packages also provide the customer with aggregated anonymized data gathered from
various websites to use as benchmark information. In all cases, the benchmark information
represents only a small portion of the information provided to the customer. All three service
packages constitute an information service. However, because the information provided by all
three service packages is personal or individual in nature and may not be substantially
incorporated in reports furnished to other persons, the three service packages qualify for the
“personal or individual” exclusion from tax in Tax Law § 1105(c)(1).
The fact that Petitioner makes available incidental benchmarking statistics to its customer
for two of the packages, at no additional charge, does not make Petitioner’s information service
taxable because the benchmark information is a de minimis part of the overall information

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Sales Tax
February 22, 2016

provided to the customer and Petitioner does not provide customers with the raw data underlying
the bench-marking information. See TSB-A-12(24)S. Moreover, the Dashboard software that
Petitioner makes available to its customers to view the information provided by Petitioner is
incidental to Petitioner’s information service and thus is not taxable. See Matter of DZ Bank,
Tax Appeals Tribunal, May 11, 2009; TSB-A-12(24)S.

DATED: February 22, 2016

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.