Are the fees from a web-based job search and posting platform taxable as software, information services, or are they exempt advertising?

Plain-English summary

A company offers a web-based job search and posting platform that customers (like chambers of commerce or schools) embed on their own websites for free, using a link. Once embedded, the platform aggregates job postings from third-party job boards and lets the customer's website users search by title or location, click postings, and apply. The operator makes money two ways: a pay-per-click (PPC) fee from third-party job-search sites when a user clicks one of their postings, and a job-posting fee when a user posts/manages a job (that fee is split with the customer). The company asked how to classify its charges — sale of software, taxable information service, or advertising? The Department concluded the charges are not taxable: they're for an advertising service.

The Department worked through three possibilities:

1. Sale of software (TPP)? The platform is computer software, which is tangible personal property (Tax Law § 1101(b)(6)). But a "sale" requires consideration (§ 1101(b)(5)), and the operator gives customers the platform free of charge. No consideration means no sale, so there's nothing to tax on the software side.

2. Taxable information service? New York taxes furnishing information — collecting, compiling, or analyzing information and furnishing reports (Tax Law § 1105(c)(1), (9)). But advertising services are expressly excluded from that tax (§ 1105(c)(1)).

3. Advertising service (the answer). Advertising is "consultation and development of advertising campaigns, and placement of advertisements with the media" (20 NYCRR 527.3(b)(5)), and an advertisement is "a calling to the attention of the public." The platform makes available jobs known to job seekers and lets customers and users promote their postings; by aggregating third-party postings it increases the visibility of everyone's listings. So the PPC and job-posting fees are charges for advertising, and not subject to sales tax.

This sits alongside the directory opinion TSB-A-24(31)S — both treat fees for putting listings in front of the public as nontaxable advertising rather than a taxable information service.

What this means for you

Job boards, listing platforms, and classifieds operators

Revenue from putting listings (jobs, offers, profiles) in front of the public — pay-per-click fees, posting/promotion fees, featured-listing charges — generally reads as nontaxable advertising in New York, even when delivered through software. The platform's core function here was increasing visibility of postings, which is advertising, not selling compiled information.

"Free software" isn't a taxable sale

Giving customers access to your software with no charge is not a taxable sale — a sale needs consideration (Tax Law § 1101(b)(5)). If you don't bill customers for using the embedded platform, there's no software sale to tax. (Charge for the software and the analysis would change — it could become taxable prewritten software.)

Where it could flip to taxable

If instead you sell compiled data or reports (e.g., paid access to candidate databases, analytics, or screening reports), that's likely a taxable information service under § 1105(c)(1). And if you start charging users to access the software/platform itself, those charges could be taxable prewritten-software receipts. The non-taxable result here depended on (a) free platform access and (b) fees that are genuinely for advertising/visibility.

Accountants and tax professionals

The opinion stacks three determinations: no taxable software sale for lack of consideration (§ 1101(b)(5)/(6)); the information-service tax (§ 1105(c)(1), (9)); and the advertising exclusion (§ 1105(c)(1); 20 NYCRR 527.3(b)(5); United Parcel Serv. v. Tax Appeals Trib., 98 AD3d 796). The classifying question is the platform's primary function — calling listings to the public's attention (advertising) vs. furnishing compiled information (taxable).

Common questions

Q: Are job-posting and pay-per-click fees taxable in New York?
A: On these facts, no. They're charges for an advertising service — increasing the visibility of job postings and calling them to the public's attention — which is excluded from the tax on information services (Tax Law § 1105(c)(1)).

Q: Isn't the platform taxable software?
A: It is software, but the operator provides it to customers for free. Without consideration there's no taxable "sale" (Tax Law § 1101(b)(5)). If it were sold for a charge, it could be taxable prewritten software.

Q: When would a job/listing platform be taxable?
A: If it sells compiled data or reports (a taxable information service) or charges users for access to the software itself (potentially taxable prewritten software). The advertising exclusion covers fees for visibility/promotion, not the sale of information or software.

Q: Can I rely on this opinion?
A: No. An Advisory Opinion binds the Department only as to the petitioner and the facts presented. It illustrates the Department's reasoning but cannot be relied on by another taxpayer.

Citations and references

Statutes and regulations:
- Tax Law § 1101(b)(5) (sale = transfer of title/possession for consideration)
- Tax Law § 1101(b)(6) (prewritten software is tangible personal property)
- Tax Law § 1105(c)(1), (9) (tax on information services; advertising services excluded)
- 20 NYCRR 527.3(b)(5) (definition of advertising services)

Authority and related opinions: Matter of United Parcel Serv. Inc. v. Tax Appeals Trib., 98 AD3d 796 (3d Dep't 2012) (defining "advertisement"); compare TSB-A-24(31)S (online directory listing fees as nontaxable advertising).

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao.htm
• Opinion: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales/24-46s.htm
• Printer-friendly PDF: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a24-46s.pdf

Original ruling text

TSB-A-24(46)S
Sales Tax
October 10, 2024

The Department of Taxation and Finance received a Petition for Advisory Opinion from { REDACTED } (“Petitioner”). Petitioner asks whether its charge for the use of its web-based job search and posting platform is a sale of tangible personal property, a sale of information services, or a sale of advertising services.

We conclude that Petitioner’s charges for the use of its platform do not constitute the sale of tangible personal property or the sale of a taxable information service. Rather, Petitioner’s charges to third-party job-search website providers, customers and users for job postings are charges for an advertising service, the receipts from which are not subject to sales tax.

Facts

Petitioner’s business consists of providing customers fully-integrated job search and posting functionality on a single web-based platform (“platform”). The platform allows a customer to quickly and easily integrate job searching and job posting functionality within its own website. Customers may include local chambers of commerce or professional, technical or undergraduate schools. The platform is provided to a customer free of charge using a link provided by Petitioner, with which the customer can embed the platform on its website. Once the platform is embedded on a customer’s website, the platform will aggregate job postings from third-party job-search websites and allow for the posting of jobs on the customer’s website. A user of the customer’s website can search for jobs by job title and/or geographic location. Users can click on a job posting and apply for the posted jobs.

If a user of the customer’s website clicks on any job posting from a third-party website, Petitioner receives a pay-per-click fee (“PPC fee”) from the third-party website. The platform also allows the users of the customer’s website to post jobs and manage the job postings for a fee (“posting fee”). Petitioner receives a fee directly from the user for each such job posting and that fee is split between Petitioner and the customer. The embedded platform also facilitates Petitioner’s PPC and posting fees, as described above.

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), (c). Tax Law § 1101(b)(5) defines sale as the transfer of title or possession or both for a consideration. Tax Law § 1101(b)(6) defines tangible personal property as “corporeal personal property of any nature.” That term also includes pre-written computer software, whether sold as part of a package, as a separate component, or otherwise, and regardless of the medium by means of which such software is conveyed to a purchaser.

While Petitioner’s platform is computer software that falls within the definition of tangible personal property, Petitioner’s provision of access to the platform to its customers is not a sale, because Petitioner does not charge customers for such use. Because there is no consideration for the use of the platform, no sale occurs on which tax would be due.

Sales tax is imposed on the service of furnishing information to purchasers, regardless of whether the information is furnished in a printed report or electronically. Tax Law § 1105(c)(1), (9). An information service 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. Tax Law § 1105(c)(1); 20 NYCRR 527.3(a)(2).

Advertising services are excluded from the tax on information services. See Tax Law §1105(c)(1). For purposes of this exclusion, “[a]dvertising services consist of consultation and development of advertising campaigns, and placement of advertisements with the media without the transfer of tangible personal property. Advertisements have been defined as “the action of making generally known; a calling to the attention of the public." Matter of United Parcel Serv. Inc. v Tax Appeals Trib. of State of N.Y., 98 AD3d 796, 798 (3d Dept. 2012) (internal quotations omitted). Here, Petitioner’s service makes available jobs known to job seekers using the customer’s website. It also calls public attention to available jobs by allowing customers and users to promote their own job postings. By aggregating the postings of third-party job search websites, Petitioner’s site increases the visibility of customers’ and users’ postings, as well as the third-party postings. Accordingly, the fees Petitioner receives from third-party job-search websites and from user job postings are charges for an advertising service, are not subject to sales tax. See 20 NYCRR 527.3(b)(5).

DATED: October 10, 2024

MARY ELLEN LADOUCEUR
Principal Attorney

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.