When a company buys taxable information reports delivered to offices both inside and outside New York, how much sales tax applies?

Plain-English summary

Bristol-Myers Squibb Company buys information-service reports — professional research and marketing advice — from outside vendors. The vendors collect and synthesize data into reports and deliver them to the company's offices throughout the U.S. and the world: some electronically to terminals and databases, some as "hard copy" on paper, disc, or magnetic tape. The parties assumed these are taxable information services under § 1105(c)(1). The company asked how much New York sales tax it owes when the same report goes to offices both inside and outside the state.

The Department's answer rests on the destination-tax rule (§ 525.2(a)(3)): the point of delivery controls both whether tax applies and the rate. So only reports delivered in New York are taxed, and the tax is allocated:

• Electronic reports — allocate by the number of offices within and outside New York that have access to the electronic reports.
• Hard-copy reports (paper, disc, tape) — allocate by the number of copies delivered inside versus outside New York.
• Later brought into New York — if the company subsequently brings some reports into the state, it owes compensating use tax on them under § 531.1(b)(3).

The Department relied on its earlier opinion Paul R. Comeau, TSB-A-90(43)S (Aug. 20, 1990). It issued the same holding the same day to other multistate purchasers, including Pfizer, Inc. (TSB-A-91(13)S), and reached the identical result in TSB-A-91(26)S (Revlon).

What this means for you

For a multistate buyer, information-service tax is split by delivery point

New York does not tax the whole purchase just because your headquarters is in New York (or spare you tax just because it isn't). Because the tax is destination-based, you separate the New York-delivered part from the rest and pay tax only on the New York part.

The allocation method depends on the medium

• Electronic access is allocated by offices with access — count the New York offices that can reach the report against the total.
• Physical copies are allocated by copies delivered — count the copies that land in New York against the total.

Keep records that support whichever count you use.

Watch the use-tax trap on reports moved into New York later

Even a report properly delivered (and untaxed) outside New York becomes a use-tax item if you later bring it into the state. Multistate companies that circulate reports among offices should track cross-border movement into New York.

Common questions

Q: Is my whole information-service purchase taxable if some offices are in New York?
A: No. Only the portion delivered in New York is taxed, allocated by offices-with-access (electronic) or copies-delivered (hard copy).

Q: What if I move a report into New York after buying it out of state?
A: You owe compensating use tax on that report under § 531.1(b)(3).

Q: Does the medium change the answer?
A: The result (only the New York share is taxed) is the same, but the allocation method differs — access-based for electronic, copy-based for hard copy.

Citations and references

Statutes and regulations:

• Tax Law § 1105(c)(1) — tax on information services
• 20 NYCRR § 527.3 — sale of information services
• 20 NYCRR § 525.2(a)(3) — destination-tax rule (point of delivery controls)
• 20 NYCRR § 531.1(b)(3) — compensating use tax on information services
• Paul R. Comeau, TSB-A-90(43)S (Aug. 20, 1990)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1991.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a91_12s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-91 (12)S
Sales Tax
January 16, 1991

Taxpayer Services Division
Technical Services Bureau

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S901207A

On December 7, 1990 a Petition for Advisory Opinion was received from Bristol-Myers
Squibb Company, 345 Park Avenue, New York, New York 10154.
The issue raised by Petitioner, Bristol-Myers Squibb Company, is what is the proper amount
of sales tax to be collected from it on the purchase of information reports that are delivered to
locations that are within and without New York State.
Information service companies (hereinafter "Sellers") provide professional research and
marketing advice to Petitioner who has offices located throughout the United States and the world.
For purposes of this advisory opinion request, it is assumed that these services constitute information
services subject to sales tax pursuant to Section 1105(c)(l) of the Tax Law. As part of the provision
of these professional services, Sellers collect data from various sources. The data is collated and
synthesized into reports. Paper and magnetic tape (hereinafter "hard copy") reports are then mailed
to Petitioner, while electronic reports are transmitted to Petitioner's terminals or data bases.
Petitioner operates on interstate and international levels. It has offices in several different
states and countries. Each report provided to it is delivered to multiple addresses, with some reports
delivered to its New York State offices, and others delivered to its offices located in other states or
countries. In either case, the report, once delivered, may be reproduced by Petitioner and distributed
among its offices in different states and countries.
Section 527.3 of the Sales and Use Tax Regulations provides:
Sale of information services. Tax Law, §1105[c][1]) a) Imposition.
(1) Section 1105(c)(1) of the Tax Law imposes a tax on the receipts
from the service of furnishing information by printed, mimeographed
or multigraphed matter or by duplicating written or printed matter in
any manner such as by tapes, discs, electronic readouts or displays.
Section 525.2(a)(3) of the Sales and Use Tax Regulations provides:
The sales tax is a "destination tax," that is, the point of delivery or
point at which possession is transferred by the vendor to the
purchaser or designee controls both the tax incident and the tax rate.
For special rule relating to motor vehicles, see Part 540 of this Title.

-2­
TSB-A-91 (12)S
Sales Tax
January 16, 1991

Section 531.1 of the Sales and Use Tax Regulations provides in part:
Imposition of compensating use tax
(b)

Taxable uses. The uses enumerated herein are subject to tax.
*

*

*

(3)
Information services which would be subject to tax under
subdivision (1) of section 1105(c) of the Tax Law.
Although Sellers deliver information reports both within and without New York State, only
those reports which are delivered in New York State are subject to sales tax in accordance with
Section 525.2(a)(3) of the Sales and Use Tax Regulations. Therefore when the information reports
are delivered by electronic means to Petitioner, who has offices both within and without New York
State, sales tax should be allocated according to the number of its offices within and without New
York State having access to the electronic reports. However, where such reports are delivered by
hard copy in paper, disc or tape form to Petitioner, sales tax should be allocated according to the
number of copies of the reports delivered to Petitioner within and without New York State. If
Petitioner later brings some reports into New York State, it would be required to pay the
compensating use tax on such reports in accordance with Section 531.1(b)(3) of the Sales and Use
Tax Regulations. Paul R. Comeau, Adv Op Comm T & F, August 20, 1990, TSB-A-90(43)S.

DATED: January 16, 1991

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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