Is a market-research firm's sale of customized retail sales and inventory reports a taxable information service?

Plain-English summary

Putnam Associates runs a marketing advisory service for manufacturers, selling reports that chart inventory levels and sales of retail products (cosmetics, fragrances, dinnerware) in stores nationwide. Clients pick the retailers, product categories, and time frames; the results come as listings, graphs, and statistics, sometimes with an oral presentation, and subscribers sign a confidentiality agreement. Putnam argued this is a consulting service furnishing personal, individual information, not a taxable information service.

The Department held it is a taxable information service.

• This is an information service. Section 1105(c)(1) taxes furnishing information, including collecting, compiling, or analyzing information and furnishing reports. Product and marketing surveys are specifically information services (20 NYCRR 527.3(a)(3)), and Putnam's charts and statistics are exactly that.
• The "personal or individual" exclusion doesn't apply. The exclusion looks at whether the underlying information is personal or individual — not merely whether the report is customized. Putnam's data is drawn from general sources accessible to its competitors and the raw statistics could be reused in reports for other manufacturers of similar products. That is unlike the confidential character reports about individuals in New York Life, which were genuinely personal.
• A confidentiality clause doesn't save it. An agreement not to share the reports doesn't make general market statistics confidential, because the raw data taken out of the report isn't confidential.
• Oral, written, and subscription fees. Under 527.3(a)(4): a written-report fee is taxable; an oral-report fee is taxable if it's preliminary to a written report; and an annual subscription fee is taxable if it entitles the subscriber to reports (unless only to oral reports).

What this means for you

Selling analyzed data is generally taxable — even when the report is built to order. New York's information-service tax reaches collecting, compiling, and analyzing information and delivering reports. Customizing the report to a client's chosen parameters does not, by itself, make it exempt.

The exclusion is about the data, not the packaging. To fall within the "personal or individual" exclusion, the underlying information must be genuinely personal to the client and not reusable for others — like confidential reports about specific individuals. Market statistics pulled from generally available sources don't qualify.

A confidentiality agreement isn't a tax shield. Promising not to distribute a report doesn't convert general data into personal, confidential information. Don't rely on an NDA to make an information service non-taxable.

Common questions

Q: Our research reports are custom-built for each client. Are they still taxable?
A: Yes. Customizing the report doesn't make it exempt. The tax turns on whether the underlying information is personal or individual, not on report format.

Q: We make clients sign confidentiality agreements. Doesn't that make the information personal?
A: No. A confidentiality clause doesn't make general market statistics personal or confidential, so it doesn't create the exclusion.

Q: We give an oral briefing and sometimes a written report. What's taxable?
A: The written-report fee is taxable, and an oral fee is taxable if the oral report is preliminary to a written one. A subscription entitling you to reports is also taxable.

Citations and references

Statute, regulations, and cases:

• Tax Law § 1105(c)(1) — taxes furnishing information; excludes information that is personal/individual and not substantially incorporated in reports to others
• 20 NYCRR 527.3(a)(3) — product and marketing surveys are information services
• 20 NYCRR 527.3(a)(4) — taxability of written, oral, and subscription report fees
• Matter of New York Life Ins. Co. v. State Tax Commission, 80 AD2d 675 (confidential character reports are personal/individual); Matter of Rich Products Corp.; Towne-Oller and Associates v. State Tax Commission, 120 AD2d 873

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1987.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a87_17s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-87(17)S
Sales Tax
April 22, 1987

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO: S840416A

On April 16, 1984, a Petition for Advisory Opinion was received from Putnam Associates,
12 Pleasant Street, P.O. Box 148, Newburyport, Massachusetts 01950.
The issue raised is whether Petitioner is providing an information service subject to tax under
Section 1105(c)(1) of the Tax Law.
Petitioner operates a marketing advisory service for manufacturers of such retail merchandise
as cosmetics, fragrances or dinnerware. The reports Petitioner sells chart inventory levels and sales
of these products in nationwide retail stores.
On the basis of data gathered from such establishments, Petitioner's researchers prepare
listings, graphs and statistics. This material may be given to the client with a written summary report
or Petitioner may turn it over after an oral presentation which explains and interprets the research
result. The number of reports a customer purchases may range from only one to periodical reports
over several years.
Petitioner maintains its clients do not purchase information but a consulting service where
the written material supplied is merely incidental to the performance of a professional service.
Petitioner's periodical charges for its activities are billed to the client in a single amount.
Since the format of each report and the products studied are determined by the client,
Petitioner asserts that the information furnished is personal and individual.
Furthermore, each subscriber to Petitioner's services must sign an agreement wherein the
parties to the contract affirm they will not divulge, publish or sell copies of the reports or any extracts
therefrom to persons outside the client organization.
Section 1105(c)(1) of the Tax Law imposes a tax on the receipts from every sale, except for
resale, of: "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, 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. . . ."

RODERICK G. W. CHU, COMMISSIONER
GABRIEL B. DiCERBO, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR
TP-8 (3/83)

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TSB-A-87(17)S
Sales Tax
April 22, 1987

Pursuant to the Sales and Use Tax Regulations of the State Tax Commission, product and
marketing surveys are information services. 20 NYCRR 527(a)(3).
Clearly, Petitioner's business is to collect and furnish information. The charts, graphs and
statistics the clients receive consist of data which have been collected, compiled and analyzed. Their
sale therefore constitutes the rendering of an information service within the meaning and intent of
the statutory provisions quoted above.
In determining whether the information Petitioner markets is "personal or individual" it could
be said that Petitioner's research reports are customized and personalized by the clients selection of
the retailers, merchandise categories and time frames of a survey. However, the statutory exclusion
does not require individualized reports; it requires that the underlying information be personal or
individual. Matter of Rich Products Corp., Decision of the State Tax Commission, June 12, 1986,
TSB-H-81(95)S.
In Matter of New York Life Ins. Co. v. State Tax Commission, (80 AD2d 675, affd sub nom.
Matter of Metropolitan Life Ins. Co. v State Tax Comm. 55 NY2d 758), confidential character
reports containing highly personal information about individuals were held to be of the uniquely
personal and individual nature contemplated by the Tax Law.
The data gathered by the Petitioner are not of such a personal and individual character. The
reports are compiled from general sources accessible to any of Petitioners competitors. Moreover,
a comparative study of the market movement of a particular product for one manufacturer
accumulates a substantial amount of reference material potentially useful to Petitioner in the
preparation of reports for other manufacturers of equivalent products. Such use of the raw data
would not be prohibited by Petitioner's agreement to keep reports confidential, since the research
statistics taken out of the context of a report are not confidential information.
In consequence, since Petitioner's marketing surveys meet neither condition for exclusion
from taxation contained in Tax Law 1105(c)(1), quoted above, they are taxable information service.
Cf. Matter of Towne-Oller and Associates v. State Tax Commission, 120 AD2d 873.
Sales and Use Tax Regulation Section 527.3(a)(4) applies the following rules in determining
the taxability of information services that include both oral and written reports:

report.

(i)

Any fee for a written report is taxable.

(ii)

Any fee for an oral report is taxable if the oral report is preliminary to the written

-3­
TSB-A-87(17)S
Sales Tax
April 22, 1987

(iii) An annual fee for subscribing to a service is taxable if it entitles the subscriber to a
certain number of free reports, or to reduced charges on reports, unless the subscriber is entitled only
to oral reports.
Accordingly, Petitioners receipts from the sale of market research reports are subject to the
applicable State and local sales taxes.

DATED: April 22, 1987

s/FRANK J. PUCCIA
Director
Technical Services Bureau

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.