Are a research firm's customized audience-estimate reports a taxable information service, and does it matter whether they reuse the firm's shared survey data?

Plain-English summary

The Arbitron Company, a survey research firm, develops radio and television audience estimates. It sells standardized syndicated reports (whose taxability it did not contest) and also prepares customized, non-syndicated audience estimates for individual subscribers. It asked whether those customized reports are a taxable information service under § 1105(c)(1).

The Department drew a line based on whether the underlying survey data is shared or unique to the subscriber.

• The statute taxes information services, except personal or individual ones. Section § 1105(c)(1) taxes collecting, compiling or analyzing information and furnishing reports, but excludes information that is "personal or individual in nature" and not (or not to be) substantially incorporated in reports furnished to other persons (it also excludes news-gathering by broadcasters and certain agents).
• Reports built from shared data are taxable. When Arbitron produces a customized report by applying a different analysis to the same raw data it uses for its syndicated reports, the two only differ in the degree of generalization or refinement — the customized report's information "is or may be substantially incorporated" in reports furnished to others. So it is not personal or individual, and it is a taxable information service. (Arbitron's reliance on New York Life Insurance Co. v. State Tax Commission, 80 A.D.2d 675, was misplaced because, unlike that case, Arbitron reuses the shared survey data.)
• Reports built from a fresh, unique survey are exempt. When Arbitron instead gathers a separate audience sample (or asks different questions to build a new data base) used solely for that one subscriber — so the report, or a substantial part of its information, cannot be duplicated or incorporated into a report for a second subscriber — it is a personal, individual information service and is not taxable.

What this means for you

Reused data usually means a taxable information service. If your "custom" report is really a different cut of the same data set you sell to others, New York treats it as taxable because the information can be incorporated into reports for other customers.

A genuinely one-off study for a single client can be exempt. The personal/individual exclusion applies when you run a separate survey (or gather unique data) used solely for one subscriber and not reusable in another's report.

The dividing line is reusability, not the "custom" label. Calling a report customized doesn't exempt it; what matters is whether the underlying data or results are, or may be, substantially incorporated into reports furnished to others.

Common questions

Q: I sell customized reports pulled from my standard data set. Are they taxable?
A: Generally yes. Reports built from data you also use for other customers are taxable information services, because the information may be substantially incorporated into reports furnished to others.

Q: When is a customized report exempt?
A: When you gather a separate, unique sample used solely for that one client and the report (or a substantial part of it) can't be duplicated or incorporated into another client's report.

Q: Doesn't the New York Life Insurance case make my custom reports exempt?
A: Not if you reuse shared data. The Department distinguished that decision precisely because Arbitron reused the survey data behind its syndicated reports.

Citations and references

Statute and case:

• Tax Law § 1105(c)(1) — information service; "personal or individual" exclusion
• New York Life Insurance Co. v. State Tax Commission, 80 A.D. 2d 675 (distinguished)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1981.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a81_59s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-81(59)S
Sales Tax
November 27, 1981

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S810803A

On August 3, 1981 a Petition for Advisory Opinion was received from the Arbitron
Company, 1350 Avenue of the Americas (Suite 1105), New York, New York 10019.
The issue raised is whether the preparation by Petitioner of customized audience estimates
for individual subscribers is a taxable information service under section 1105(c)(1) of the Tax
Law.
Petitioner is a specialized survey research company. Broadcasters, advertisers, and others
contract with Petitioner to develop estimates of radio listening and television viewing audiences.
Some of the audience estimates and data which Petitioner develops are contained in standardized
syndicated printer reports. New York sales taxes have been collected on these syndicated reports
for many years and Petitioner is not contesting the taxability of such syndicated reports. However,
in addition to providing subscribers with syndicated market reports, Petitioner also develops
customized, individualized audience estimates in response to the specific needs of particular
subscribers.
Petitioner's first step in developing its syndicated audience estimates service and many of its
non-syndicated services is the selection of an appropriate sample of potential radio listening and
television viewing audiences. In selecting this sample, Petitioner applies professional survey
research methodology which it has developed over many years and is in the continuous process of
revision. Each person selected as a sample member is telephoned by a representative of Petitioner
and asked to participate in an audience survey. Each person or household consenting is mailed a
week-long diary in which to record his or her television viewing or radio listening for the survey
week. Completed diaries are mailed to Petitioner for analysis.
The first step in the analysis of the survey diaries is the transfer of the information contained
in the diaries into a computerized raw data base. Many times the diary entries are unclear or
suspect for some reason. In some cases, Petitioner telephones the participant to review the diary
entries. Based on this further contact and/or other specialized research procedures, Petitioner's
staff makes judgments as to the reliability and usability of the information.
By performing a series of complex calculations, using the raw data base, Petitioner may
project audience estimates. Estimates may be made not only of the size of the total audience
represented by the sample but also of the size of subgroups of the total audience, based on such
factors as age, race and sex.

JAMES H. TULLY, JR., COMMISSIONER
TP-8 (4/80)

LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA. DIRECTOR

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TSB-A-81(59)S
Sales Tax
November 27, 1981
Petitioner performs a certain series of calculations upon the data base to obtain the estimates
included in its syndicated reports. These estimates are intended to satisfy the general
informational needs of Petitioner's subscribers.
Individual subscribers sometimes request Petitioner to furnish different audience estimates
than those contained in the syndicated reports. These estimates pertain to subgroups of the total
audience different from the subgroups treated in the estimates contained in the syndicated reports.
For example, a subscriber may request an audience estimate with respect to a geographic area or
an age group not covered in the syndicated reports. In many instances Petitioner furnishes these
individualized audience estimates by using the same raw data base it uses to prepare the
syndicated reports. Petitioner merely applies a different analytic procedure to the same raw data
base to project the audience estimates requested by a subscriber. The estimates will then be
furnished to the subscriber making the request.
In some cases, Petitioner does not use the raw data base used in preparing the syndicated
reports to prepare a customized report for an individual subscriber. Petitioner may gather data
from a different audience sample; or may ask different questions of the audience sample used in
connection with the syndicated reports in order to obtain a new data base. The data complied by
Petitioner in these instances are used solely in connection with a particular subscriber's
information request. Such data is not used in preparing reports for other subscribers.
Petitioner contends that its customized non-syndicated reports are analogous to the type of
reports which were determined to be exempt in a recent decision of the Appellate Division (New
York Life Insurance Co. v. State Tax Commission, 80 AD 2d 675) and reasons, accordingly, that
its non-syndicated reports are also exempt from sales and use tax.
Section 1105(c)(1) of the Tax Law imposes a tax on the following service:
"The furnishing of information by printed, mineographed 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, but excluding 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, and excluding the services of advertising or other agents, or
other persons acting in a representative capacity, and information services used by
newspapers, radio broadcasters and television broadcasters in the collection and
dissemination of news."
Customized reports furnished by Petitioner which are developed from the raw data used in
preparing the syndicated reports are subject to sales tax. Petitioner's reliance on the New York
Life Insurance Co. decision is misplaced. Unlike the facts in that case, Petitioner in many
instances uses the raw data obtained for the syndicated reports to develop other customized, non­
syndicated reports for its customers. Except as discussed below, both types of reports reflect the

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TSB-A-81(59)S
Sales Tax
November 27, 1981
data obtained through the audience survey diaries. It is only the degree of generalization or
refinement which distinguishes the syndicated and non-syndicated reports. On one hand, the
generalized syndicated reports reflect the information in the customized non-syndicated reports
and on the other hand, the non-syndicated report data is a component of the syndicated reports.
Thus, except as noted below, these non-syndicated reports are not "personal or individual in
nature" because the information therein is or may be substantially incorporated in reports
furnished by Petitioner to other persons within the meaning and intent of section 1105(c)(1) of the
Tax Law.
Accordingly, in furnishing customized non-syndicated reports developed from the raw
data used in preparing the syndicated reports, Petitioner is providing a taxable information service
pursuant to section 1105(c)(1) of the Tax Law.
However, a customized non-syndicated report based on data gathered for use solely in
connection with that particular report is not subject to sales tax provided such report (or a
substantial portion of the information therein) prepared for one subscriber may not be duplicated
or incorporated into a report for a second subscriber who requests similar information. In every
instance where this type of customized non-syndicated report is furnished, Petitioner conducts a
separate audience survey and prepares a separate report.
Accordingly, provided such information furnished to one subscriber may not be
incorporated in reports provided by Petitioner to other subscribers, this type of service is a
personal or individual information service within the meaning of section 1105(c)(1) of the Tax
Law and, as such, is not subject to sales and use tax.

DATED: November 12, 1981

s/LOUIS ETLINGER
Deputy Director
Technical Services Bureau