Are a company's two online government-RFP services — one that distributes RFPs and one that notifies contractors of bid opportunities — subject to New York sales tax?

Plain-English summary

A company sells two online services tied to government requests for proposals (RFPs) and asked whether each is taxable.

• Procurement Service — lets a government agency build its RFPs on the company's site and distribute them to a wide pool of potential bidders, then review and compare the proposals it gets back. The Office of Counsel held this is not taxable: its primary function is helping agencies distribute RFPs to increase competition, which is not one of the enumerated taxable services.

• Notification Service — gives contractor customers a searchable database of RFP bid opportunities matched to their capabilities, geography, and qualifications, sold in free and paid tiers (the tiers differ only by database size). This is a taxable information service. New York taxes information services, and although it excludes information that is "personal or individual in nature," that exclusion doesn't apply here because the information is drawn from a common database that is widely accessible, not confidential or specific to one customer (citing ADP Automotive Claims Service and treating it like the taxable "employment databases" in TSB-M-10(7)S).

The deciding factor is the source of the information: a common, shared data repository makes the service taxable; truly individualized, confidential information would not.

What this means for you

Online database, lead, and notification services

If your product furnishes information drawn from a common/shared database (bid leads, listings, employment or sales databases), it's likely a taxable information service — even if each customer runs filtered searches. A service whose core function is to distribute or transmit a customer's own content (rather than furnish compiled information) is more likely non-taxable.

Government contractors subscribing to bid-alert tools

Expect sales tax on paid RFP/bid-notification subscriptions sourced from a common database.

Accountants and tax professionals

The hinge is the § 1105(c)(1) "personal or individual" exclusion, which fails when the data comes from a common, widely accessible source (ADP Automotive). Compare with TSB-A-20(38)S, where customer-siloed, own-data reporting was non-taxable.

Common questions

Q: Why is one service taxable and the other not?
A: The distribution (Procurement) service isn't an enumerated taxable service. The notification service furnishes information from a common database, making it a taxable information service.

Q: We let each customer filter the data — doesn't that make it "personal or individual"?
A: No. The exclusion looks at the source: information from a common, widely accessible database isn't personal or individual, even with per-customer filtering.

Q: How is this different from TSB-A-20(38)S?
A: There, each customer could only report on its own data, walled off from others — that's personal/individual and non-taxable. Here, the data comes from a shared database.

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 § 1105(c)(1) (tax on information services; exclusion for personal or individual information)
• Tax Law § 1101(b)(6); 1105(a), (b) (prewritten software; tangible personal property)
• Matter of ADP Automotive Claims Service Inc., 188 AD2d 245 (3d Dep't 1993) (information from a common, widely accessible source is taxable)
• TSB-M-10(7)S (employment databases taxable as information services)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales-ao-2020.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a20-48s.pdf

Original ruling text

New York State Department of Taxation and Finance
Office of Counsel

TSB-A-20(48)S
Sales Tax
October 27, 2020

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION
The Department of Taxation and Finance received a Petition for Advisory Opinion from
[ REDACTED ]. Petitioner asks whether two online services it sells relating to government
requests for proposals are subject to sales tax. We conclude that Petitioner’s Procurement
Service is nontaxable, but that its Notification Service is taxable as an information service.
Facts
Petitioner sells two automated services related to government request for proposals
(RFPs).
The first is its Procurement Service. This service automates government contract
procurement formulation and distribution on behalf of federal, state, municipal, and county
governmental entities. Specifically, a governmental customer creates RFPs by accessing its
account on Petitioner’s website. When the RFP is complete, Petitioner releases it for distribution
to potential bidders, including through its own RFP notification channel described below. In
response to the RFP notification, governmental contractors then submit “Proposals” through
Petitioner’s website. The governmental customer is able to access Petitioner’s website to review,
compare, and decide between the Proposals, using the functionality of Petitioner’s proprietary
system. Petitioner’s website advertises that the principal benefits that governmental customers
will realize from using the service are “[a]ccess to almost 1 million motivated, qualified
suppliers from a single location” and “[i]ncrease[d] competition for improved pricing and
services.”
Petitioner’s Notification Service enables Petitioner’s contractor customers to identify,
respond to, and potentially win more bid opportunities. Petitioner provides government contract
notification services to small, medium and large government contractors by constantly
monitoring all known government RFP releases and inputting them into its database via
automated and manual inputs. Based on the capabilities, geographies, qualifications and other
criteria, these customers are notified via email of potentially applicable RFPs. Contractor
customers may access Petitioner’s online servers to obtain full details of the RFPs that interest
them. Contractor customers may submit their bids using Petitioner’s website. These customers
may also call and consult with Petitioner’s representatives to obtain further assistance and
consultations on the bid process.
Petitioner sells four levels of its Notification Service, one free level and three paid levels.
The free level includes information about RFPs issued only by Petitioner’s Procurement Service
partners, i.e., those governmental entities that use Petitioner’s Procurement Service. The three

-2-

TSB-A-20(48)S
Sales Tax
October 27, 2020

levels of paid service differ from each other only in the size of the database of bid opportunities
that the service provides.
Analysis
The Tax Law imposes sales and use tax on retail sales of tangible personal property,
including prewritten software, and the sale, except for resale, of certain services. See Tax Law §§
1101(b)(6); 1105(a), (b), (c). One of the services enumerated for taxation are information
services, except for “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. See
Tax Law § 1101(c)(1), (9).
The primary function of Petitioner’s Procurement Service appears to be to provide
government customers with an ability to distribute their RFPs to a wide audience of contractors in
order to increase the number of competitive bids that they receive. That is not one of the
enumerated services and is thus not taxable.
The primary function of Petitioner’s Notification Service is to provide contractor
customers with a database of information about RFPs on which they might want to bid. Such a
service constitutes an information service. See Tax Law § 1105(c)(1), (9). It is a taxable
information service because the exclusion for “personal or individual” information does not
apply, given that the information is derived from a common database. See Matter of ADP
Automotive Claims Service Inc., 188 AD2d 245, 248 (3d Dep't 1993) (information services
derived from a common source or a data repository that is not confidential and is widely
accessible is not personal or individual in nature); TSB-M-10(7)S (listing “employment
databases” as one of the services subject to tax as an information service).
DATED: October 27, 2020

/S/
DEBORAH R. LIEBMAN
Deputy Counsel
NOTE:

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.