Is a process-serving business's court-record research, photocopying, faxing, and delivery of legal documents subject to New York sales tax?

Subject

Issue raised by Petitioner, Linda Kavanagh, is whether certain services performed by a taxpayer about to begin a process serving business in New York will be subject to sales tax.

What this means for you

A New York process-serving business planned to offer, alongside its core process-serving work, several add-on services billed separately: researching and retrieving legal documents (complaints, motions, and other filings unique to each case) from court records; photocopying those documents; faxing copies to clients; and delivering photocopies, filed originals, and affidavits, sometimes within New York and sometimes to points outside the state.

New York doesn't tax process serving itself -- it isn't one of the state's enumerated taxable services, so neither is picking up documents, filing them, delivering a receipted copy of a court filing, or delivering an affidavit prepared as part of the process-serving job, since delivery charges are only taxable when the underlying property or service being delivered is itself taxable. But the other add-ons ARE each independently taxable: faxing copies of documents counts as a telegraphy service under the sales tax law; photocopying documents and delivering those copies is a sale of tangible personal property, taxable when delivered to a point within New York State; and researching and retrieving the legal documents from court records is a taxable information service, even though each document is unique to one case and won't be compiled into any shared report.

Q&A

Q: Is process serving itself subject to New York sales tax?
A: No, per this opinion -- process serving isn't among the state's enumerated taxable services.

Q: We fax copies of court documents to our clients as part of our business -- is that taxable?
A: Yes, per this opinion. Facsimile transmission is treated as a telegraph service, taxable under Tax Law § 1105(b).

Q: We photocopy court documents and deliver the copies to clients -- is that taxable?
A: Yes, per this opinion, when delivered to a point within New York State -- it's a sale of tangible personal property under § 1105(a), and delivery charges ride along with a taxable sale.

Q: We research and retrieve unique, case-specific legal documents from court records for clients -- is that taxable, even though each document is personal to one case?
A: Yes -- this opinion holds that research and retrieval of legal documents from court records is taxable as an information service under § 1105(c)(1).

Q: We pick up documents at a client's office, file the originals with the court, and deliver a receipted copy back, or deliver an affidavit as part of process serving -- is that taxable?
A: No, per this opinion -- delivery charges are only taxable when the property or service being delivered is itself taxable, and these deliveries are performed in connection with the untaxed process-serving service.

Q: Can another process-serving business rely on this opinion?
A: No. This advisory opinion binds the Department only as to the petitioner and the facts described here; another taxpayer cannot rely on it.

Citations

• Tax Law § 1105(a) and § 1101(b)(3) -- impose tax on retail sales of tangible personal property, including delivery charges billed in connection with a taxable sale.
• Tax Law § 1105(b) -- imposes tax on telephony and telegraphy service.
• Sales and Use Tax Regulations § 527.2(d)(2), Example 4 -- treats facsimile transmission services as taxable telegraph services.
• Tax Law § 1105(c)(1) -- imposes tax on the furnishing of information, including collecting or compiling information and furnishing reports of it to others.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1993.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a93_67s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-93 (67) S
Sales Tax
December 29, 1993

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S930927A

On September 27, 1993 a Petition for Advisory Opinion was received from Linda Kavanagh,
40 Fulton Avenue, Garden City Park, New York 11040-5106.
The issue raised by Petitioner, Linda Kavanagh, is whether certain services performed by a
taxpayer about to begin a process serving business in New York will be subject to sales tax.
The taxpayer will be conducting a process serving business. In addition to process serving,
Petitioner will provide the following services:
1)

Research and retrieval of legal documents from federal, state and municipal court
records.

2)

Photocopying documents.

3)

Transmittal by facsimile machine (Fax) of copies of documents from court records
to clients.

4)

Delivery of photocopies.

The documents will include complaints, legal proceedings, motion papers, etc. Each
document is of a uniquely personal and individual nature and for a specific case, without trends,
patterns or generic material. The documents will not be altered or analyzed in any way by the
taxpayer, will not be issued with a cover letter or report and will not be published by the taxpayer
or issued in reports furnished to the taxpayer's clients. The taxpayer will provide the service of
finding the documents, photocopying them and sending them to the taxpayer's clients, the majority
of whom will be law firms. The charges for the research and retrieval will be separately stated on the
taxpayer's billings.
The taxpayer will list the photocopy charge and fax charges separately on the bill to the
client. Delivery of the photocopies will be to various points within and outside of New York State.
There will be different types of delivery services that will be provided by the taxpayer.
a.)

It will deliver photocopies of documents retrieved described above to its client.

b.)

It will pick up documents at a client's office, file the originals of these documents at
court and deliver a receipted copy of the filing to the client.

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c.)

TSB-A-93 (67) S
Sales Tax
December 29, 1993
It will deliver an affidavit prepared by the taxpayer as a component of the process
serving charge.

The taxpayer will separately state in its billings the type of service rendered, whether it is
process serving, delivery of photocopies of court documents, or research and retrieval services.
Section 1105(a) of the Tax Law imposes a tax upon "[T]he receipts from every retail sale of
tangible personal property . ."
Section 1101(b)(3) of the Tax Law defines a receipt as:
"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, including any charges
by the vendor to the purchaser for shipping or delivery regardless of whether such charges
are separately stated in the written contract, if any, or on the bill rendered to such purchaser
and regardless of whether such shipping or delivery is provided by such vendor or a third
party . " (Emphasis supplied)
Section 1105(b) of the Tax Law imposes a tax upon the "[r]eceipts from every sale of
telephony and telegraphy and telephone and telegraph service .
Section 527.2(d)(2) of the Sales and Use Tax Regulations states that:
(2) The term telephony and telegraphy includes use or operation of any apparatus for
transmission of sound, sound reproduction or coded or other signals.
*
Example 4:

*

*

Facsimile transmission services are telegraph services subject to the tax
imposed under section 1105(b) of the Tax Law.
*

*

*

Section 1105 of the Tax Law does not impose tax upon the process-serving service to be
provided by the taxpayer. The Fax charges will be subject to sales tax in accordance with Section
1105(b) of the Tax Law and Section 527.2(d)(2) of the Sales and Use Tax Regulations. The
taxpayer's charges for Photocopies and delivery thereof will be subject to sales tax in accordance
with Section l105(a) and l101(b)(3) of the Tax Law when they are delivered to a point within New
York State. The research and retrieval of legal documents from federal, state and municipal court
records will be subject to sales tax under Section 1105(c)(1) of the Tax Law.

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TSB-A-93 (67) S
Sales Tax
December 29, 1993
It should be noted that delivery charges are taxable only where the tangible personal property
or service sold is subject to tax. Thus, picking up of documents, filing copies and obtaining a
receipted copy of such, and delivering affidavits in connection with process serving will not be
subject to tax.

DATED: December 29, 1993

/s/
PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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