When is a seller required to collect New York sales tax on renting or licensing a mailing list to a business or a college?

Plain-English summary

A law firm asked, on behalf of a mailing-list provider ("Seller") and its customers ("Buyers"), how New York sales tax applies to renting or licensing mailing lists. Buyers use the lists to mail promotional materials to their own customers or prospective customers in New York — sometimes as a printer/mailer, sometimes as a business mailing its own advertising, and sometimes as a college or university providing an Exempt Organization Certificate.

The Department's starting point is that renting a mailing list is a taxable sale of tangible personal property or information service, and — because New York presumes all receipts are taxable until proven otherwise — the seller must collect tax unless the buyer furnishes a proper exemption document within 90 days. From there, several distinct paths lead to exemption: (1) a buyer purchasing the list purely for resale can issue a Resale Certificate; (2) a religious, charitable, educational, or similar exempt organization (including a public college that is itself the direct purchaser and payer, backed by an Exempt Organization Certificate) can buy tax-free; and (3) New York's separate "promotional materials" exemption reaches mailing lists used in conjunction with promotional materials that themselves qualify — either because they're mailed for free from New York to customers located outside the state for use outside the state, or because they're free printed promotional materials mailed anywhere (in or out of state) by common carrier, USPS, or a similar delivery service. That promotional-materials exemption for the mailing list itself applies even when the promotional pieces being mailed were produced in-house by the buyer rather than bought from a third party — as long as the mailed materials independently qualify.

What doesn't qualify: mailing lists used to send things that aren't really "promotional material" at all — political mailings to the electorate, stockholder proxy solicitations, invoices, and the like — stay fully taxable, as does a list used to mail non-exempt promotional materials to recipients still located in New York. And an organization can only claim the exempt-organization exemption for its own use — a non-exempt vendor buying a list to perform mailing services for an exempt organization doesn't get that exemption itself.

What this means for you

Mailing list brokers and sellers

Collect sales tax on every mailing-list rental by default, and only relieve yourself of that duty when you receive, in good faith, a properly completed exemption document (a Resale Certificate, an Exempt Organization Certificate, or a Certificate of Exemption for Purchases of Promotional Materials, Form ST-121.2) within 90 days of the sale. If a buyer later turns out to have overstated its exempt percentage or used a fraudulent document, that liability shifts to the buyer, not you.

Businesses and printer/mailers renting lists for their own advertising

Whether your mailing-list purchase is exempt tracks whether the promotional materials you're mailing with it are themselves exempt — free printed materials mailed anywhere, or any promotional materials mailed free to out-of-state recipients, carry the list exemption along with them. Materials that aren't genuinely "promotional" (billing statements, proxy solicitations, political mail) don't carry any exemption, no matter how the mailing list is used.

Colleges, universities, and other exempt organizations

To buy a mailing list tax-free, your organization must be the direct purchaser and payer of record — furnish the seller a properly completed Exempt Organization Certificate (Form ST-119), or, if you're a state governmental entity like a SUNY campus, your governmental purchase order itself serves as the exemption document.

Common questions

Q: Is renting a mailing list always taxable?
A: By default, yes, until the buyer furnishes the seller a valid exemption document — a resale certificate, exempt-organization certificate, or promotional-materials exemption certificate, as applicable — within 90 days of the sale.

Q: Does it matter whether the promotional materials mailed with the list were bought from a third party or made in-house?
A: No. A mailing list used with in-house-produced promotional materials can still qualify for the exemption, as long as those promotional materials themselves meet the criteria for exemption (free mailing to out-of-state recipients, or free printed materials mailed anywhere).

Q: Can a printer or mailing company claim an exemption on a list it buys to serve an exempt organization's mailing needs?
A: No — the exempt-organization exemption is only available when the exempt organization itself is the direct purchaser and payer of record, not when a non-exempt vendor buys the list to perform services for that organization.

Citations and references

Statutes and rules:

• Tax Law § 1101(b)(4), (7), (12) (retail sale; use; promotional material definition)
• Tax Law § 1105(a), (c)(1) (retail sales; furnishing of information services)
• Tax Law § 1115(n) (promotional materials and mailing list services exemption)
• Tax Law § 1116(a)(1), (4) (exemption for government and religious/charitable/educational organizations)
• Tax Law § 1119(a) (bulk-purchase refund for property reshipped out of state)
• Tax Law § 1132(c)(1) (presumption of taxability; burden of proof)
• 20 NYCRR 529.7(h)(2) (exempt organization must be direct purchaser and payer of record)
• TSB-M-97(6)S (expanded promotional materials exemption, effective March 1, 1997)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2004.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a04_20s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-04(20)S
Sales Tax
September 2, 2004

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S030912D

On September 12, 2003, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Metsky & Associates, P.C., 2399 Route 10 East, Morris Plains, New Jersey,
07950.
The issue raised by Petitioner, Metsky & Associates, P.C., is whether, under the facts
presented, the sale of mailing lists would qualify for exemption from sales and compensating use
tax under section 1115(n)(2) or 1116(a)(4) of the Tax Law.
Petitioner submits the following facts as the basis for this Advisory Opinion.
Seller, a provider of mailing lists, is a registered New York State vendor licensed to conduct
business and charge sales tax within the state of New York. The user of the mailing lists is Buyer.
Buyer conducts business and maintains an office within the state of New York. Buyer proposes to
rent or license the mailing lists from Seller for the purpose of delivering promotional materials to
its customers or prospective customers within the state of New York. Buyer will be obtaining from
Seller only the right to use the mailing lists. The promotional materials, printed promotional
materials or promotional materials upon which producing, fabricating, processing or imprinting
services will have been directly performed will be produced by Buyer or obtained from parties other
than Seller.
Petitioner indicates that Buyer may be a printer/mailer or a business printing and mailing its
own promotional materials. In other instances, Buyer may be a college or university which may
provide Seller with an Exempt Organization Certificate, Form ST-119.
Applicable law and regulations
Section 1101(b) of the Tax Law provides, in part:
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:
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(4) Retail sale. (i) A sale of tangible personal property to any person for any purpose,
other than (A) for resale as such or as a physical component part of tangible personal
property, or (B) for use by that person in performing the services subject to tax under
paragraphs (1), (2), (3), (5), (7) and (8) of subdivision (c) of section eleven hundred five

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where the property so sold becomes a physical component part of the property upon which
the services are performed or where the property so sold is later actually transferred to the
purchaser of the service in conjunction with the performance of the service subject to tax.
. . . (Emphasis added)
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(7) Use. The exercise of any right or power over tangible personal property or over
any of the services which are subject to tax under section eleven hundred ten of this article
or pursuant to the authority of article twenty-nine of this chapter, by the purchaser thereof
. . . . Without limiting the foregoing, use also shall include the distribution of only tangible
personal property, such as promotional materials, or of any such service subject to tax under
such section eleven hundred ten or pursuant to the authority of such article twenty-nine.
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(12) Promotional material. Any advertising literature, other related tangible personal
property (whether or not personalized by the recipient’s name or other information uniquely
related to such person) and envelopes used exclusively to deliver the same. Such other
related tangible personal property includes, but is not limited to, free gifts, complimentary
maps or other items given to travel club members, applications, order forms and return
envelopes with respect to such advertising literature, annual reports, prospectuses,
promotional displays and Cheshire labels but does not include invoices, statements and the
like. Promotional materials shall also include paper or ink furnished to a printer for use in
providing the services of producing, printing or imprinting promotional materials or in
producing, printing or imprinting promotional materials, where such paper and ink become
a physical component part of the promotional materials and such printer sells such services
or such promotional materials to the person who furnished the paper and ink to such printer.
Section 1105 of the Tax Law imposes sales tax, in part, on:
(a) The receipts from every retail sale of tangible personal property, except as
otherwise provided in this article.
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(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, including the services of
collecting, compiling or analyzing information of any kind or nature and furnishing reports
thereof to other persons, but excluding the furnishing of information which is personal or

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individual in nature and which is not or may not be substantially incorporated in reports
furnished to other persons. . . .
(2) Producing, fabricating, processing, printing or imprinting tangible personal
property, performed for a person who directly or indirectly furnishes the tangible personal
property, not purchased by him for resale, upon which services are performed.
Section 1115(n) of the Tax Law provides, in part:
(1) Except as otherwise provided in this subdivision, promotional materials mailed,
shipped or otherwise distributed from a point within the state, by or on behalf of vendors or
other persons to their customers or prospective customers located outside this state for use
outside this state 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 of this article.
(2) Services otherwise taxable under paragraph one or two of subdivision (c) of
section eleven hundred five of this article relating to mailing lists or activities directly in
conjunction with mailing lists shall be exempt from tax under this article if such services are
performed on or directly in conjunction with promotional materials exempt under paragraph
one or four of this subdivision.
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(4) Notwithstanding any contrary provisions of paragraph one of this subdivision,
promotional materials which are printed materials and promotional materials upon which
services described in paragraph two of subdivision (c) of section eleven hundred five have
been directly performed shall be exempt from tax under this article where the purchaser of
such promotional materials mails or ships such promotional materials, or causes such
promotional materials to be mailed or shipped, to its customers or prospective customers,
without charge to such customers or prospective customers, by means of a common carrier,
United States postal service or like delivery service.
(5) Services otherwise taxable under paragraph two of subdivision (c) of section
eleven hundred five performed on promotional materials exempt under paragraph four of this
subdivision shall be exempt from tax under this article.
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(8) Nothing in this subdivision shall be construed to exempt tangible personal
property (i) purchased by a person (other than exempt promotional materials described in
paragraph four of this subdivision) or (ii) manufactured, processed or assembled by the
manufacturer, processor or assembler, who furnishes such property to the vendor of

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promotional materials exempt under paragraph one or four of this subdivision to be included
as free gifts with such exempt promotional materials to be mailed or shipped to such
purchaser’s or such manufacturer’s, processor’s or assembler’s customers or prospective
customers or who otherwise uses such property in this state, for example, by giving or
donating the property as free gifts to another person, unless such tangible personal property
is mailed, shipped or otherwise distributed from a point within this state to such customers
or prospective customers located outside this state for use outside this state.
Section 1116 of the Tax Law provides, in part:
(a) Except as otherwise provided in this section, any sale or amusement charge by
or to any of the following or any use or occupancy by any of the following shall not be
subject to the sales and compensating use taxes imposed under this article:
(1) The state of New York, or any of its agencies, instrumentalities, public
corporations (including a public corporation created pursuant to agreement or compact with
another state or Canada) or political subdivisions where it is the purchaser, user or consumer,
or where it is a vendor of services or property of a kind not ordinarily sold by private
persons;
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(4) Any corporation, association, trust, or community chest, fund, foundation, or
limited liability company, organized and operated exclusively for religious, charitable,
scientific, testing for public safety, literary or educational purposes, or to foster national or
international amateur sports competition (but only if no part of its activities involve the
provision of athletic facilities or equipment), or for the prevention of cruelty to children or
animals. . . ;
Section 1119(a) of the Tax Law provides, in part:
Subject to the conditions and limitations provided for herein, a refund or credit shall
be allowed for a tax paid pursuant to subdivision (a) of section eleven hundred five or
section eleven hundred ten . . . (2) on the sale or use of tangible personal property purchased
in bulk, or any portion thereof, which is stored and not used by the purchaser or user within
this state if that property is subsequently reshipped by such purchaser or user to a point
outside this state for use outside this state. . . .
Section 1132(c)(1) of the Tax Law provides, in part:
For the purpose of the proper administration of this article and to prevent evasion of
the tax hereby imposed, it shall be presumed that all receipts for property or services . . . are
subject to tax until the contrary is established, and the burden of proving that any receipt,

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amusement charge or rent is not taxable hereunder shall be upon the person required to
collect tax or the customer. . . .
Section 529.7(h)(2) of the Sales and Use Tax Regulations provides, in part:
In order to exercise its right to exemption the organization must be the direct
purchaser, occupant or patron of record. It must also be the direct payer of record and must
furnish its vendors with a properly completed exempt organization certification. . . . An
organization is the direct payer of record where direct payment is made by the organization
or from its funds directly to the vendor. (Emphasis added)
Technical Services Memorandum, entitled Expanded Sales and Compensating Use Tax
Exemption for Promotional Materials, August 20, 1997, TSB-M-97(6)S, provides, in part:
Prior to March 1, 1997, promotional materials mailed, shipped, or otherwise
distributed from a point within this state, by or on behalf of vendors or other persons, to their
customers or prospective customers located outside this state, for use outside this state, were
exempt from sales and compensating use taxes.[See TSB-M-92(4)S.] On and after March 1,
1997, the exemption also applies to certain printed promotional materials, as well as certain
other promotional materials, mailed or shipped by a common carrier, the U.S. Postal Service
or a like delivery service within the state.
Please note that purchasers of promotional materials should use new Form ST-121.2,
Certificate of Exemption for Purchases of Promotional Materials, with respect to purchases
of promotional materials exempt under either the old rules or the new rules. . . .
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(For purposes of examples 1, 2, 3, 4, 7, and 8 of this TSB-M, it is assumed that the
purchaser of the exempt promotional materials or exempt services will furnish the seller of
the exempt promotional materials or exempt services a properly completed Form ST-121.2,
Certificate of Exemption for Purchases of Promotional Materials. It is also assumed that the
promotional materials will be delivered to the purchaser’s customers or prospective
customers [ultimate recipients] without charge to those customers or prospective customers.)
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Example 4. A retailer contracts with a printer to purchase advertising brochures
printed by the printer. The retailer also contracts with a mailer for the mailing of the
brochures and for the rental of several mailing lists. Under the terms of the contract
with the mailer, the mailer will perform merge/purge services on the mailing lists,
print address labels, and affix the labels to the brochures. The mailer will store the
brochures for a period of time before mailing them to the retailer’s customers

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throughout the U.S., including New York State, via the U.S. Postal Service. The
brochures are printed promotional materials. (Emphasis added)
The printer’s charges to the retailer for the brochures are exempt from sales and
compensating use taxes. The mailer’s charges to the retailer for the rental of the
mailing lists, and for the printing and affixing of address labels, are exempt from
sales and compensating use tax under section 1115(n)(2) of the Tax Law. The
mailer’s charges to the retailer for storing the brochures before mailing them are also
exempt from tax, since the mailer performed exempt services with respect to the
printed promotional materials being stored. (Emphasis added)
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Tangible Personal Property Purchased for Use in In-House Printing of
Promotional Materials
Purchases of tangible personal property used by the purchaser to print its own
promotional materials in-house, such as paper, ink, and mechanicals, do not qualify for the
exemptions available for promotional materials delivered in the state.
Example 11. A company uses in-house printing equipment and supplies (paper, ink,
etc.) to produce its own promotional materials. The promotional materials consist
of advertising brochures and catalogs. The company will ship the promotional
materials to customers and prospective customers via the U.S. Postal Service,
without charge to the customers. Since the company is purchasing raw materials,
and is not purchasing promotional materials, these purchases are taxable. However,
if the company delivers any of the brochures or catalogs outside the state for use
outside the state, the company will be entitled to a refund of any sales tax or use tax
paid on the raw materials incorporated into those brochures or catalogs, as provided
under section 1119(a)(4) of the Tax Law, with respect only to property upon which
fabricating, processing, printing, or imprinting was performed.
Opinion
Seller intends to rent or license mailing lists to various Buyers. The Buyers intend to use the
mailing lists purchased from Seller for the purpose of delivering promotional materials to their
customers or prospective customers, or the customers or prospective customers of the Buyers’
customers within the state of New York. Buyer will be obtaining from Seller only the right to use
the mailing lists. Buyer may be a printer/mailer, a business printing and mailing its own
promotional materials, or a college or university. Buyer may provide Seller with documentation
establishing its exempt status.

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Purchases of the use of a mailing list are sales of tangible personal property or information
services subject to sales and use tax under section 1105(a) or (c)(1) of the Tax Law. See Alan Drey
Company, Inc., 67AD2d 1055; Harold E. Mertz v. State Tax Comm., 89 AD2d 396. Accordingly,
Seller is required to collect sales tax on all mailing lists sold to Buyer in New York State, unless
Buyer furnishes a properly completed exemption document within 90 days of the sale. Seller’s
timely acceptance, in good faith, of a properly completed exemption document relieves Seller from
the duty to collect sales tax on the sale of its mailing list. The Tax Law presumes receipts for
property or services described in section 1105 of the Tax Law are subject to tax until the contrary
is established. The burden of proving that any receipt is not taxable is upon the vendor or the
customer. Where a properly completed exemption document is furnished to the vendor, and
accepted in good faith by the vendor, the burden of proving that the sale is not taxable rests solely
upon the customer. See section 1132(c)(1) of the Tax Law.
The Tax Law provides exemptions for tangible personal property or services purchased for
resale or purchased by exempt organizations. See sections 1101(b)(4)(i), 1105(c) and 1116 of the
Tax Law.
Thus, to the extent that Buyer is purchasing mailing lists from Seller exclusively for resale
as such, such purchases may be made without payment of tax. In such instances, Buyer may issue
a Resale Certificate, Form ST-120, to relieve Seller of responsibility for collecting the sales tax. See
sections 1101(b)(4)(i) and 1132(c) of the Tax Law.
Sales of mailing lists to colleges or universities may also be exempt from tax. Where Buyer
has established its exempt status as a religious, charitable, educational, etc., institution or
organization under section 1116(a)(4) of the Tax Law, and Buyer is the purchaser of the mailing list
and payer of record, the receipts from such sale are not subject to tax. The organization should
furnish, and Seller should maintain for its records, a properly completed Exempt Organization
Certificate, Form ST-119. See section 1116(a)(4) of the Tax Law. Colleges or universities which
are governmental entities, (e.g., SUNY at Albany) and are the purchaser, user and consumer of the
mailing lists, are likewise exempt from tax under section 1116(a)(1) of the Tax Law. In such
instance, the governmental purchase order for the mailing list is the appropriate exemption
document for Seller to maintain to confirm the exemption. Section 529.7(h) of the Sales and Use
Tax Regulations.
It should be noted that the exemptions provided in section 1116 of the Tax Law are only
applicable to purchases by an exempt organization for its own use and consumption. A purchase
of mailing lists by Buyer, which is not itself a qualifying exempt organization, for Buyer’s use in
performing services for an exempt organization is not exempt pursuant to section 1116.
In addition, section 1115(n) of the Tax Law in certain circumstances provides specific
exemptions for mailing lists and services performed on mailing lists consumed in conjunction with
the delivery of promotional materials.

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The exemption from sales tax provided by section 1115(n)(1) of the Tax Law provides that
promotional materials mailed, shipped or distributed from within New York State by or on behalf
of vendors to their customers or prospective customers located outside New York State qualify
for exemption from sales and compensating use tax. See TSB-M-97(6)S, supra, Example 4;
TSB-M-92(4.1)S, supra. Section 1115(n)(4) of the Tax Law provides that printed promotional
materials, furnished free of charge to customers or prospective customers of the person purchasing
the materials, and delivered to such customers or prospective customers by common carrier, the
United States postal service or like delivery service are exempt from the sales and compensating use
tax. See TSB-M-97(6)S, supra.
Section 1115(n)(2) of the Tax Law provides that services relating to mailing lists or activities
directly in conjunction with mailing lists are not taxable when performed on or directly in
conjunction with exempt promotional materials. Section 1101(b)(12) provides that the Cheshire
labels consumed in the delivery of promotional materials are themselves promotional materials that
may qualify for exemption from tax.
When Buyer is claiming the exemption for mailing lists used in conjunction with printed
promotional materials meeting the criteria established under section 1115(n)(4) of the Tax Law, a
Certificate of Exemption for Purchases of Promotional Materials, Form ST-121.2, should be
properly completed by Buyer indicating 100% exempt in Part II, section E, for mailing list services
directly in conjunction with printed promotional materials.
To the extent that the promotional materials do not meet the criteria of section 1115(n)(4)
of the Tax Law, but are promotional materials mailed or otherwise distributed from a point within
New York State by or on behalf of vendors to their customers or prospective customers located
outside this state, the exemption provided by section 1115(n)(1) of the Tax Law would apply. The
mailing lists used in conjunction with such promotional materials would also be exempt based on
the percentage of customers located outside New York State. Buyer should indicate that percentage
in section E of Form ST-121.2. To the extent that the promotional materials do not meet the criteria
of section 1115(n)(4) of the Tax Law (e.g., they are not printed) and are mailed or otherwise
delivered to customers or prospective customers located in New York State, the mailing lists used
in conjunction with such promotional materials would be taxable to the extent of the addressees
located within New York State.
Seller's timely acceptance, in good faith, of a properly completed exemption document
relieves Seller from the duty to collect sales tax on its sale of mailing lists to Buyer. See section
1132(c)(1) of the Tax Law. To the extent that Buyer issues a fraudulent exemption document or
indicates an exempt percentage higher or lower than is warranted on Form ST-121.2, Buyer would
owe sales and use tax or be entitled to a credit or refund of the tax, as the case may be. See
Automobile Club of New York, Inc., Adv Op Comm T & F, April 14, 1998, TSB-A-98(28)S.
Since promotional materials are defined in section 1101(b)(12) of the Tax Law as advertising
material, and the exemption provided by section 1115(n) applies to promotional materials sent to

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customers or prospective customers free of charge, the interpretations of what is advertising material
and who are considered to be customers become particularly relevant. Thus, it has been determined
that mailings of political advertising materials to the electorate, or mailings of promotional materials
to persons who are not the ultimate consumers of the product being advertised are not exempt from
sales and compensating use tax under section 1115(n)(1) and (4). See Town of Islip Republican
Committee, Adv Op Comm T&F, March 3, 1999, TSB-A-99(15)S; Promex Medical, Inc., Adv Op
Comm T&F, April 8, 1999, TSB-A99(23)S. Similarly, printed materials which are not soliciting
purchases by customers or prospective customers (such as corporate stockholder proxy solicitations,
invoices and billing statements) are not advertising materials and thus not promotional material for
purposes of the exemptions provided in section 1115(n). See Bowne of New York City, LLC, Adv
Op Comm T&F, July 11, 2002, TSB-A02(26)S; KPMG LLP, Adv Op Comm T&F, June 3, 2002,
TSB-A02(10)S. The receipts from the sale or use of mailing lists consumed or used to mail
nonexempt materials, and not consumed or used in conjunction with exempt promotional materials,
are subject to New York sales and use tax.
Lastly, Buyer’s purchase of mailing lists used to distribute the promotional materials or
printed promotional material can qualify for the exemption under section 1115(n)(2) of the Tax Law
notwithstanding that the promotional materials being mailed were self produced by Buyer (i.e., the
property to be mailed was produced, fabricated, printed, etc., in-house) rather than purchased from
a third party. The promotional materials would have to be exempt under section 1115(n)(1) or (4)
in order for the mailing lists to be exempt.

DATED: September 2, 2004

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Technical Services Division

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