Are the services of recruiting temporary employees, drafting training-program manuscripts, and rewriting technical process sheets to a simpler reading level subject to New York sales tax?

Subject

Whether the service of recruiting temporary employees through interviews and evaluations is subject to sales and use taxes.

What this means for you

An independent contractor provides three services to one client company: (1) recruiting temporary employees -- reviewing applications, conducting a written skills test and personal interviews (both developed by the client), and recommending candidates who pass; (2) drafting manuscripts of employee training materials, working under the client's own Human Resources/Quality Assurance/Industrial Engineering review team, with the client doing all typesetting, printing, and labeling the final product as its own; and (3) rewriting the client's process and inspection sheets to a simpler fourth-to-sixth-grade reading level, again with the client doing any printing or copying and owning the revised sheets as its own intellectual property.

New York's sales tax under Section 1105(c) only reaches a specific enumerated list of services -- a referral/recruiting service recommending temporary employees isn't on that list, so it's untaxed. For the writing and editing work, the Department applied its own prior rulings treating manuscript-writing and editorial services as producing intangible personal property (not a taxable service) when the writer supplies only a manuscript that the client's own team reviews, revises, and produces into a final product under the client's name. Since this contractor's training-material drafting and process-sheet rewriting fit that same pattern -- manuscripts handed to the client, who does the actual production and owns the result -- none of the three services are subject to sales or use tax.

Q&A

Q: We run a staffing/recruiting service that interviews and screens candidates for a client -- is our fee taxable?
A: Per this opinion, no -- recruiting/referral services recommending candidates for employment aren't among the services enumerated as taxable under Tax Law § 1105(c).

Q: We're a freelance writer/consultant who drafts manuscripts, training materials, or technical documents for a client who then produces and owns the final product -- is that taxable?
A: Not per this opinion and the Alan/Anthony, Inc. precedents it applies -- manuscript-writing and editorial services are treated as producing intangible personal property, untaxed, as long as the writer isn't also the one producing/printing the final tangible product and the client owns the result.

Q: Would the answer change if we also typeset, printed, or physically produced the final materials ourselves?
A: This opinion doesn't address that scenario -- it turned specifically on the client doing all typesetting/printing/production itself. A writer who also handles physical production of the final product should get separate confirmation rather than assume this ruling covers that different fact pattern.

Citations

• Tax Law § 1105(c) -- imposes sales tax only on specifically enumerated services; recruiting/referral and manuscript-writing/editorial services aren't among them.
• Alan/Anthony, Inc., Adv Op Comm T&F, April 6, 1992, TSB-A-92(32)S -- writing abstracts summarizing a client's conference proceedings was untaxed, treated as an intangible manuscript.
• Alan/Anthony, Inc., Adv Op Comm T&F, May 27, 1992, TSB-A-92(42)S -- writing/editorial services for a client's membership directory were untaxed, provided separable from other taxable services, with the client's own graphics department handling typesetting/production.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1994.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a94_42s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-94 (42)S
Sales Tax
September 16, 1994

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S940601D

On June 1, 1994, a Petition for Advisory Opinion was received from Tracye Ogle McElveen,
119 Talcott Street, Owego, New York 13827.
The issues raised by Petitioner, Tracye Ogle McElveen, are:
1.

Whether the service of recruiting temporary employees through interviews and
evaluations is subject to sales and use taxes.

2.

Whether the development of temporary employee training programs and materials
is subject to sales and use taxes.

3.

Whether the rewriting of process and inspection sheets to a fourth to sixth grade
reading level of understanding is subject to sales and use taxes.

Petitioner recruits temporary employees through interviews and evaluations for her client.
This is done by candidates submitting employment applications to the client company. Candidates
then take a written skills test developed by the client company. Personal and individual interviews
are conducted by the Petitioner with the candidates. When Petitioner feels a candidate has
satisfactorily answered the interview questions, a color awareness test, developed by the client
company is administered. If the candidate passes all the components of the hiring process, a
recommendation of employment is made to the client company.
Petitioner also drafts manuscripts of training materials to be used by its client company.
Petitioner is accountable to client company's Core Training Team ("CTT") which consists of the
Human Resources Manager, Quality Assurance Manager and Industrial Engineering Manager who
review such materials for the required content. Petitioner serves as a training expert to ensure that
materials are academically sound and revises materials to agree with the consensus of the CTT.
Petitioner only supplies one copy of the draft manuscript to the client company. The final
product (training materials) is a joint effort of the CTT. The client uses its computers, copiers, etc.
to produce the final product. The training materials are labeled with the company's name. Petitioner
is not referenced in any of the documents as an author or a contributor to the training materials.
The training materials are the intellectual and personal property of the client company. The
material is a resource to help keep the client company's effort focused on the project and to facilitate
the day-to-day administrative tasks associated with executing the project.

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Sales Tax
September 16, 1994

Petitioner is also responsible for the rewriting of process and inspection procedure sheets.
Petitioner works with manufacturing engineers and technicians to ensure that their process sheets
and inspection procedure sheets are written to a fourth to sixth grade level of understanding.
Petitioner's responsibilities include reviewing existing process and inspection sheets; making
recommendations to simplify the sheets and increase reader understanding; and train engineers and
technicians to apply elementary writing principles to their work. The revised process and inspection
sheets are the intellectual and personal property of the client company, and the company is
responsible for doing any printing or copying of such sheets.
Section 1105(c) of the Tax Law imposes sales tax upon the receipts from every sale, except
for resale, of certain enumerated services. The providing by Petitioner of a referral service
recommending temporary employees for employment is not one of the services enumerated under
Section 1105(c) of the Tax Law and, therefore, such service is not subject to sales tax.
In Alan/Anthony, Inc., Adv Op Comm T&F, April 6, 1992, TSB-A-92(32)S, the petitioner
received from its client copies of the proceedings from the annual conference held by its client.
From the proceeding, Petitioner wrote a one-page abstract summarizing the contents of each speech
or paper presented at the conference. The Commissioner opined that the receipts from writing
abstracts summarizing the content of presentations and speeches given at its client's annual
conferences were not subject to sales and use taxes since such abstract constituted a manuscript and,
as such, was considered intangible personal property.
In Alan/Anthony, Inc., Adv Op Comm T&F, May 27, 1992, TSB-A-92(42)S, the petitioner
provided a writing and editorial service in connection with the publication of an annual membership
directory. The service provided by Petitioner included the writing of member listings based on
information provided by the client, submission of manuscripts to the client's graphic department,
proofreading and copy editing of the typeset pages before submission of the manuscripts to the client
for approval. All typesetting and page layout was performed by the graphics department and the cost
thereof paid directly by the client. The Commissioner opined that the manuscript and editorial
services performed in connection therewith were not subject to sales and use taxes, provided such
services could be purchased separately from other taxable services performed by Petitioner.
Accordingly, with respect to issue "1", the providing by Petitioner of a referral service
recommending temporary employees for employment is not one of the services enumerated under
Section 1105(c) of the Tax Law. Therefore, such service is not subject to sales and use taxes.
Concerning issues "2" and "3", Petitioner drafts manuscripts of training materials to be used
by its client company, as well as, serves as a training expert to ensure that the materials are
academically sound and revise materials to agree with the consensus of the CTT. In addition,
Petitioner works with manufacturing engineers and technicians of its client's company to ensure that

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TSB-A-94 (42)S
Sales Tax
September 16, 1994

their process sheets and inspection procedure sheets are written to a fourth to sixth grade level of
understanding. Pursuant to the two Alan/Anthony, Inc., opinions supra, the writing of manuscripts
summarizing the content of material provided by the client and the proofreading and editing of
material provided by the client are not services subject to sales and use taxes. Therefore, since
Petitioner is merely writing manuscripts of training material and editing process sheets and
inspection sheets to a level of understanding for its client company's use, such services are not
subject to sales and use taxes.

DATED: September 16, 1994

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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