Is an on-line financial news service an exempt newspaper/periodical, or a taxable information service, and is the delivery equipment taxable?

Plain-English summary

Market News Service, Inc. provides a 24-hour on-line international financial news service — monetary/fiscal policy news, market reporting, and economic data, written by staff reporters in New York, Washington, London, and Frankfurt, with subscribers including traders, portfolio managers, newspapers, and other wire services. It is a credentialed news organization (White House, U.S. Treasury, Senate press gallery) competing with Dow Jones, Knight Ridder, and Reuters. Subscribers receive the service electronically (over phone lines, FM radio, or via Telerate) as a readout/display on a computer screen, which they can print. Market News asked whether the service is an exempt newspaper/periodical under § 1115(a)(5), whether the delivery equipment it provides is exempt, whether its billing method matters, whether hookup charges are exempt, and raised a constitutional argument.

The Department's holdings:

• Not a newspaper or periodical. To be a newspaper or periodical under § 528.6, a publication must be published in printed or written form. Because Market News's service is delivered as an electronic readout/display, not in printed/written form, it is not a newspaper or periodical and doesn't qualify for the § 1115(a)(5) exemption (following Mark S. Klein, TSB-A-91(53)S). The § 1115 exemptions apply only to receipts that would otherwise be taxable as tangible personal property — and electronic delivery isn't a sale of TPP.
• It is a taxable information service. Receipts from the on-line news service are receipts from an information service taxable under § 1105(c)(1) (and § 527.3(a)(1)), citing Murphy Heating Service v. Chu and Klein. Subscribers' ability to print the electronic display doesn't turn it into a published newspaper.
• Provided equipment is a taxable rental. Where Market News provides dedicated computers/printers for an additional charge, that's a rental of tangible personal property, taxable under § 1105(a); it isn't covered by § 1115(a)(5).
• Billing method is irrelevant. Whether Market News bills lump sum or itemized doesn't change the tax status — the tax follows the nature of the service and equipment.
• Hookup charges. A charge to hook up Market News's own provided computer is part of the taxable equipment rental (§ 1105(a)); a charge to hook up a subscriber's own computer is taxable installation of tangible personal property under § 1105(c)(3).
• Constitutionality. The Department presumes the law/regulations constitutional and has no jurisdiction at the advisory-opinion level to rule otherwise.

What this means for you

The newspaper/periodical exemption requires printed or written form

New York's § 1115(a)(5) exemption is tied to a published, printed/written product. An electronically delivered news or data feed — even genuine journalism from a credentialed news organization — falls outside the exemption because it isn't published in printed/written form.

Electronic news and data feeds are taxable information services

Delivering news/data as an on-screen readout is treated as a taxable information service under § 1105(c)(1). The subscriber's ability to print it doesn't convert the service into an exempt publication or a sale of tangible property.

Equipment, hookups, and billing follow their own rules

Dedicated devices you provide for a charge are a taxable rental; hooking up your equipment is part of that rental, while hooking up the customer's own equipment is taxable installation. And you can't change any of these results by how you bill — lump sum vs. itemized doesn't matter; the tax follows the nature of what's provided.

Common questions

Q: Is an on-line/electronic news service an exempt newspaper or periodical in New York?
A: No. The exemption requires a publication in printed or written form; an electronic screen readout doesn't qualify (§ 528.6; § 1115(a)(5)).

Q: How is the on-line news taxed then?
A: As a taxable information service under § 1105(c)(1).

Q: Is the computer/printer the provider supplies taxable?
A: Yes. Providing dedicated equipment for an extra charge is a taxable rental of tangible personal property under § 1105(a).

Q: Does itemizing vs. lump-sum billing change the tax?
A: No. The tax follows the nature of the service and equipment, not the billing format. (And the Department can't rule on the constitutional challenge at the advisory-opinion level.)

Citations and references

Statutes, regulations, and authorities:

• Tax Law § 1105(c)(1) (tax on information services) and 20 NYCRR § 527.3(a)(1) (information furnished by tapes, discs, electronic readouts or displays)
• Tax Law § 1115(a)(5) (exemption for newspapers and periodicals) and 20 NYCRR § 528.6 (definitions requiring printed or written form)
• Tax Law § 1105(a) (tax on retail sales/rentals of tangible personal property) and § 1101(b)(5) (rental is a sale)
• Tax Law § 1105(c)(3) (taxable installation of tangible personal property)
• Mark S. Klein, TSB-A-91(53)S; Murphy Heating Service, Inc. v. Chu, 124 AD2d 907 (electronically delivered information is a taxable information service, not an exempt publication)

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_60s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-91 (60)S
Sales Tax
August 20, 1991

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK

COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S910412A

On April 12, 1991 a Petition for Advisory Opinion was received from Market News Service,
Inc., 90 John Street, New York, NY 10038.
The issues raised by Petitioner, Market News Services, Inc., are:
1.a.) Whether Petitioner's news service constitutes a newspaper or periodical exempt from
the imposition of sales tax under Section 1115(a)(5) of the Tax Law?
b.) Whether Petitioner's news service is taxable under the Tax Law?
2.a.) Whether Petitioner's providing of personal computer equipment and printers as a means
for its customers to receive and print the news is exempt from the imposition of sales tax under the
provisions of Section 1115(a)(5) of the Tax Law?
b.) Whether Petitioner's method of billing (e.g., lump sum versus separately stated charges)
is determinative of the exempt status of such equipment or of the news service?
c.) Whether Petitioner's separate charges for the hookup of its system are exempt from the
imposition of sales tax?
3.a.) Whether failure to classify Petitioner's news service as either a newspaper or periodical
is unconstitutional?
Petitioner provides a 24-hour on-line international financial news service. The news service
combines a blend of monetary and fiscal policy news and market reporting, plus comprehensive
financial and economic data relating to world interest rate and currency markets. It provides stories
and interviews with market and government officials written by its staff of reporters who are located
in New York, Washington, D.C., London and Frankfurt. It also provides general news reports on
politics and government from the perspective of the financial markets. Its subscribers include traders,
portfolio managers, financial sales personnel, economists, newspapers, other wire services and
television.
Petitioner is an internationally credentialed news organization. Petitioner is credentialed by
the White House, the United States Treasury, the defense department and a number of embassies.
Petitioner also has United States legislative credentials granted by the Senate press gallery which are
needed to cover Congress and which grant advance access to embargoed press releases. The Senate
press credentials are obtained through the process of obtaining approval from a board of

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experts (typically newspaper editors) who rule on the appropriateness of the petitioning organization
having access to sensitive information.
Petitioner's staff of writers are experienced journalists with specialization in the subject areas
they cover, including: U.S. monetary policy, international exchange rate coordination, U.S.
legislative and budget processes, etc. Its writers are news reporters who cover news events and
conduct interviews to originally prepare articles, some of which are signed articles. The writers are
full-time employees of Petitioner with the exception of an independent contractor in Frankfurt. There
is no advertising and there are occasionally some editorial opinions by the writers.
Petitioner also includes in its news service reports which cover comments, opinions, advice
and articles of individuals known in the areas of specialization reported by Petitioner. Petitioner
neither renders advice nor provides consultation services. Its news service is much more than the
mere compilation of raw financial statistics. Petitioner's news service is written daily and it is
updated throughout the day through its 24-hour on-line system. The daily editions do not, either
singly or when successively combined, constitute a book. Petitioner's news service is available to
the general public through paid subscriptions. Some of Petitioner's direct competitors include Dow
Jones, Knight Ridder and Reuters.
Petitioner's subscribers in New York receive the news service in one of the following two
ways:
(1) Direct Distribution:
Subscribers purchase the news service which is provided either over telephone lines or FM
radio transmissions. The subscription price is a monthly fee which is higher if Petitioner provides
the personal computer to receive the transmission. The monthly fee also will vary depending on
whether the subscriber pays for the printing feature and whether Petitioner provides the printer.
There is also a separate monthly communication charge which depends on the method of
transmission. Finally, there is a one-time installation charge which primarily represents the hookup
of Petitioner's system to the dedicated equipment provided by the customer or by Petitioner to
receive and print the news service. The prices charged to subscribers for the direct distribution are
currently:

Monthly
PC provided by subscriber
PC and Dedicated Printer provided by subscriber
PC provided by Petitioner
PC and Dedicated Printer provided by Petitioner
Generic Teleprinter provided by Petitioner
FM Communication charge, or
Data Line Communication charge

$550
600
650
750
675
75
125

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(2) Through Telerate:
Telerate is a separate company which itself provides various services. Telerate customers
may subscribe to Petitioner's news service through their Telerate service. Telerate charges Petitioner
a fee for sending its signal through Telerate's central system and it allocates certain amount of space
for Petitioner's use. Petitioner is allocated pages 1400-1550 on Telerate for news stories and pages
34150-34299 for economic release information such as GNP and government information.
Petitioner's news service provided over Telerate is the same as that provided to its direct distribution
subscribers. The customer has no capability to store or retrieve the information transmitted through
Telerate but it can be printed out. Telerate customers receiving Petitioner's news stores over pages
1400-1550 are billed directly by Petitioner $290 per month and those receiving the entire news
service over pages 1400-1550 and 34150-34299 are billed $490 per month. A Telerate customer is
unable to receive only pages 34150-34299. Petitioner does not provide any equipment in connection
with the Telerate service.
Petitioner in the earlier years leased from third parties the personal computers and printers
that it provided to its subscribers and paid New York state sales tax on lease receipts to its suppliers.
Later, it acquired all the leased equipment and currently purchases any additional equipment and
pays New York state sales tax. The personal computers provided by Petitioner to its subscribers
cannot be used for other purposes while activated for Petitioner's news service. The information
obtained through the direct distribution method can be accessed by a subscriber for up to five days
which is indistinguishable from access to a stack of newspapers. Petitioner is informed that a
subscriber receiving its news service through Telerate generally has no storage capability but could
print out everything appearing on the screen.
Section 1101 of the Tax Law states in part:
Definitions.-­
(b) When used in this article for the purposes of the taxes imposed by subdivisions (a), (b),
(c) and (d) of section eleven hundred five and by section eleven hundred ten, the following
terms shall mean:
(3) Receipt. The amount of the sale price of any property and the charge for any service
taxable under this article, valued in money, whether received in money or otherwise. . .
(4) Retail sale. (i) A sale of tangible personal property to any person for any purpose. . .
(5) Sale, selling or purchase. Any transfer of title or possession or both, exchange or barter,
rental, lease or license to use or consume, conditional or otherwise in any manner or by any
means whatsoever for a consideration, or any agreement therefor. . .
Section 1105 of the Tax Law provides, in part:

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Imposition of sales tax. -- . . .there is hereby imposed and there shall be paid a tax. . .upon:
(a) The receipts from every retail sale of tangible personal property, except as otherwise
provided in this article. (emphasis added)
(c) The receipts from every sale, except for resale, of the following services:
(1) The furnishing of information by printed, mimeographed or multigraphed matter or by
duplicating written or printed matter in any other
manner. . . .
(3) Installing tangible personal property, . . .or maintaining, servicing or repairing tangible
personal property,. . .not held for sale in the regular course of business. . .
Section 1115 of the Tax Law provides, in part:
Exemptions from sales and use taxes. -- (a) Receipts from the following shall be exempt
from the tax on retail sales imposed under subdivision (a) of section eleven hundred five and
the compensating use tax imposed under section eleven hundred ten:
(5) Newspapers and periodicals.
Section 527.3 of the Sales and Use Tax Regulations states, in part:
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 528.6 of the Sales and Use Tax Regulations states, in part: Newspapers and
periodicals (Tax Law, 1115[a][5]. (a) Exemption. The sale of newspapers and periodicals
is exempt from sales and compensating use tax.
(b) Definition of newspaper. (1) In order to constitute a newspaper, a publication must
conform generally to the following requirements:
(i) it must be published in printed or written form at stated short intervals, usually
daily or weekly;
(ii) it must not, either singly or, when successive issues are put together, constitute
a book;
(iii) it must be available for circulation to the public; and
(iv) it must contain matters of general interest and reports of current events.

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(2) Notwithstanding the fact that a publication may be devoted primarily to matters of
specialized interest, such as legal, mercantile, financial, theatrical, political, religious or sporting
matters, nevertheless, if, in addition to the special interest it serves, the publication contains general
news, it is entitled to the classification of a newspaper. . . .
(c) Definition of a periodical. (1) In order to constitute a periodical, a publication must conform
generally to the following requirements:
(i) it must be published in printed or written form at stated intervals, at least as frequently
as four times a year;
(ii) it must not, either singly or, when successive issues are put together, constitute a book;
(iii) it must be available for circulation to the public;
(iv) it must have continuity as to title and general nature of content from issue to issue; and
(v) each issue must contain a variety of articles by different authors devoted to literature, the
sciences or the arts, news, some special industry, profession, sport or other field of endeavor.
(2) A publication which may be known as or considered to be a newsletter may qualify as a
periodical if it conforms to the above standards. Where a newsletter has no signed articles,
but has a staff of writers who originally prepare articles, such publication will be considered
to have articles by different authors. If a publication has been classified by the United States
Postal Service as one which is entitled to second class mailing privileges, that fact will be
considered in determining whether or not the publication is a periodical. . . .
In order to be considered a newspaper or periodical for sales tax purposes, a publication must
meet the requirements enumerated in Section 528.6(b)(1) and (c)(1), respectively, of the Sales and
Use Tax Regulations. One requirement for either classification is that the publication must be
published at certain stated intervals in printed or written form.
Because Petitioner's on-line news service is made available to subscribers in the form of an
electronic readout or display on a computer screen rather than being made available in a published
printed or written form the on-line news service is not considered to be a newspaper or periodical
for the purposes of the exemption contained in Section 1115(a) of the Tax Law. Additionally such
services does not fall within the definition of a newspaper or a periodical as provided in Section
528.6 of the Sales and Use Tax Regulations since the service is not a publication in printed or written
form. Mark S. Klein, Adv Op Comm T & F, July 29, 1991, TSB-A-91(53)S.
It is noted that the exemptions afforded under Section 1115 of the Tax Law are only
applicable to receipts from sales of tangible personal property which would be subject to the tax
imposed under Section 1105(a) of the Tax Law except for the provisions of Section 1115. Mark S.
Klein, supra.

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Because Petitioner's on-line news service is delivered to customers by means of an electronic
readout or display rather than in printed, or written form, Petitioner is not considered to be selling
tangible personal property. The use of dedicated systems, whether provided by the subscribers or by
Petitioner, enabling subscribers to print-out the news received from Petitioner's service via an
electronic readout or display does not effect the nature of the service provided by Petitioner and does
not result in subscribers taking delivery of a newspaper or periodical which petitioner has published
in printed or written form. Therefore, the receipts from sales of the on-line news service do not fall
within the exemption provided under Section 1115(a)(5) of the Tax Law for newspapers and
periodicals. Mark S. Klein, supra.
However, receipts from Petitioner's sales to its customers of the on-line news services are
considered to be receipts from the sales of an information service and are subject to the tax imposed
under Section 1105(c)(1) of the Tax Law and Section 527.3(a)(1) of the Sales and Use Tax
Regulations. Murphy Heating Service, Inc. v Chu, 124 AD2d 907, Mark S. Klein, supra.
In instances where Petitioner provides dedicated equipment to a subscriber at an additional
charge, Petitioner is considered to be renting tangible personal property to such subscriber. Because
the rental of tangible personal property is defined as a sale under Section 1101(b)(5) of the Tax Law,
the receipts from such rentals are considered to be the same as receipts from sales of tangible
personal property and are subject to the tax imposed under Section 1105(a) of the Tax Law. Such
receipts do not fall within the exemption provided under Section 1115(a)(5) of the Tax Law.
Petitioner's method of billing (e.g., lump sum versus separately stated charges) will not effect
the sales tax status of the news service or the personal computer equipment as the application of sales
tax will be determined by the nature of the service or equipment provided.
Petitioner's receipts from the separate charges for the hookup of a personal computer system
provided by Petitioner are considered to be part of the charges for the rental of such equipment and
are also subject to the tax imposed under Section 1105(a) of the Tax Law. Petitioner's charges to
subscribers for the hookup of a personal computer system provided by the subscriber will be
considered as charges for installing tangible personal property and the receipts from such charges
will be subject to the tax imposed under Section 1105(c)(3) of the Tax Law.
The laws of New York State and the Regulations of the Commissioner of Taxation and
Finance are presumed to be constitutional by the Commissioner. There is no jurisdiction at the
advisory opinion level to declare such laws or regulations unconstitutional.

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Therefore, it must be presumed that the relevant sections of the law are constitutional to the extent
that they relate to the imposition of the tax liability on Petitioner. Mark S. Klein, supra.

DATED: August 20, 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.