Are marketing consultation services subject to New York sales or use tax?

Plain-English summary

Alan/Anthony, Inc. provides marketing consultation — advice and counseling to companies about their marketing. A typical engagement includes consulting with the client and its staff on marketing issues, developing a written marketing plan, developing customer questionnaires and telemarketing scripts, reviewing existing sales literature with verbal and written recommendations, and advising on the selection and installation of marketing information systems. No tangible personal property is created. It asked whether these services are taxable.

The Department's answer:

• Marketing consultation is not an enumerated taxable service. Tax Law § 1105(c) taxes only certain specifically listed services; marketing consultation is not on the list, so it is not subject to sales or use tax. This follows Greenstone & Rabasca Advertising Inc., TSB-A-86(35)S (consulting and public relations services are nontaxable).
• No goods may change hands. The firm need not collect tax provided no tangible personal property is transferred to the customer or its designees in connection with the service.
• The firm pays tax on its own inputs. All purchases the firm makes — for its own account or as an agent for a principal — of materials or taxable services used to perform the work are subject to sales tax.
• Bundling caveat. If the marketing consultation cannot be purchased separately from other taxable services the firm provides, the items are treated as one and the entire charge is taxable.

This is the consulting counterpart to the same petitioner's public-relations opinion, TSB-A-92(55)S, and its market-research opinion, TSB-A-92(51)S — all decided the same term. Consultation and PR fall outside § 1105(c) entirely; market research is a listed information service that can still be exempt as "personal or individual."

What this means for you

Marketing consultants and strategists

Your core advisory work — marketing plans, questionnaires, scripts, literature reviews, systems advice — is not taxable in New York because it isn't on the § 1105(c) list of taxable services. You generally don't collect sales tax on those fees.

Keep it a pure service

The nontaxable treatment assumes no tangible personal property is transferred to the client. Handing over taxable goods can change the analysis, so keep the deliverable advisory.

You still pay tax on your supplies

Being a nontaxable service provider doesn't exempt your purchases. Materials and taxable services you buy to do the work — for yourself or as an agent — are taxable to you.

Invoice consulting separately from taxable services

If you also sell taxable services and the consultation can't be bought on its own, the state taxes the whole combined charge. Price and invoice the consultation as a separately purchasable item.

Accountants and tax professionals

This is the enumerated-services rule again: § 1105(c) is a closed list, and services outside it (marketing consultation, per Greenstone & Rabasca) are nontaxable, subject to the no-goods-transferred condition, the vendor's own use-tax exposure on inputs, and the bundling rule.

Common questions

Q: Is marketing consultation taxable in New York?
A: No. It isn't one of the enumerated services taxed under § 1105(c), so the charges aren't subject to sales or use tax, provided no tangible personal property is transferred to the client.

Q: What if the consultant hands the client physical deliverables?
A: The nontaxable treatment depends on no tangible personal property being transferred to the client or its designees. Transferring goods can change the result.

Q: Does the consultant pay sales tax on anything?
A: Yes. The firm owes sales tax on its own purchases of materials and taxable services used to perform the work.

Q: When could the charges become taxable?
A: If the consultation can't be purchased separately from other taxable services the firm provides, the entire combined charge is taxable.

Q: How is this different from marketing research?
A: Marketing research (see TSB-A-92(51)S) is a listed information service under § 1105(c)(1) — taxable unless it qualifies for the "personal or individual" exclusion. Consultation isn't a listed service at all.

Citations and references

Statutes and authorities:

• Tax Law § 1105(c) (imposes tax only on specifically enumerated services; marketing consultation is not listed)
• Greenstone & Rabasca Advertising Inc., Adv. Op. St. Tx. Comm., Sept. 9, 1986, TSB-A-86(35)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1992.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a92_47s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-92 (47) S
Sales Tax
June 18, 1992

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S920116A

On January 16, 1992, a Petition for Advisory Opinion was received from Alan/Anthony, Inc.,
145 Avenue of the Americas, 2nd Floor, New York, New York 10013.
The issue raised by Petitioner, Alan/Anthony, Inc., is whether the providing of the marketing
consultation as described below is subject to sales and use taxes.
Petitioner provides advice and counseling to companies with regard to their marketing
efforts. No tangible personal property is created. The specific services provided, as indicated in a
sample of its typical marketing consultation agreement, include:
1.

Consultation with a customer and its staff on marketing issues.

2.

Development of a written marketing plan.

3.

Development of customer questionnaires and telemarketing scripts for use by them.

4.

Review of existing sales literature and the submission of verbal and written
recommendations for its improvement.

5.

Advice and counsel on the selection and installation of marketing information
systems.

Section 1105(c) of the Tax Law imposes tax upon the receipts from every sale, except for
resale, of certain enumerated services. The service of providing marketing consultation is not one
of the services enumerated under Section 1105(c) of the Tax Law and, therefore, such service is not
subject to sales or use tax.
In Greenstone & Rabasca Advertising Inc., Adv Op St Tx Comm, September 9, 1986, TSBA-86(35)S the State Tax Commission opined as follows:
A.

Consulting and public relations services; planning and preparing advertising
budgets, news releases, and publicity campaigns.

Petitioner is not required to collect tax on its charges to the client, provided
no tangible personal property is transferred to the customer or its designees in
connection with this service. All purchases by Petitioner, either for its own account
or as agent for a principal, of material or taxable services to be used in performing
these services are subject to sales tax. . . .
TP-9 (9/88)

-2­
TSB-A-92 (47) S
Sales Tax
June 18, 1992

Accordingly, pursuant to Section 1105(c) of the Tax Law and Greenstone & Rabasca
Advertising Inc., supra, the marketing consultation services provided by Petitioner as set forth above
are not subject to sales and use taxes.
It is noted that if the marketing consultation services furnished to its clients cannot be
purchased separately from the sale of other taxable services provided by Petitioner, the combination
of the items listed must be considered as one, and the entire charge for all items would be subject
to sales tax.

DATED:

June 18, 1992

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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