New York Advisory Opinion TSB-A-81(11)I: Is a newspaper columnist and freelance writer's income subject to New York's unincorporated business tax under Article 23 of the Tax Law?

Plain-English summary

Anita Summer, a newspaper columnist and freelance writer, asked the Department whether her writing income was subject to New York's unincorporated business tax (UBT) under Article 23 of the Tax Law.

The UBT applies to "the unincorporated business taxable income of every unincorporated business wholly or partly carried on within this state" under section 701(a). But section 703(c) excludes from the definition of "unincorporated business" the practice of law, medicine, dentistry, or architecture, and the practice of "any other profession" in which capital isn't a material income-producing factor and more than 80% of the gross income comes from personal services actually rendered by the individual.

The Department explained that its own prior decisions and opinions have consistently treated authorship as the practice of a profession within the meaning of section 703(c) - with one carve-out: writing that amounts to advertising copy, commercials, or material that promotes a business or the sale of a product doesn't count, because that's commercial promotional work rather than the practice of the profession of writing. Assuming Summer's writing didn't fall into that carved-out category, and assuming capital wasn't a material income-producing factor in her work and more than 80% of her income came from her personal services, her columnist and freelance-writing income qualified as the practice of a profession and was therefore not subject to the unincorporated business tax.

What this means for you

Freelance writers, columnists, and other authors

Your writing income is generally treated as professional personal-service income exempt from the unincorporated business tax, as long as capital isn't a material factor in producing it and more than 80% of your gross income comes from your own personal services - but this exemption doesn't cover advertising copy, commercial scripts, or other material that promotes a business or product.

Writers who also produce advertising or promotional copy

Separate your writing income by type: general authorship (articles, columns, freelance pieces) can qualify for the professional exemption, but advertising copy, commercials, and business-promotion material do not, and could expose that portion of your income to the unincorporated business tax.

Accountants advising self-employed writers

Confirm that capital isn't a material income-producing factor in the writer's practice and that personal services account for more than 80% of gross income before treating writing income as excluded from the unincorporated business tax - and flag any advertising or promotional writing separately, since it doesn't share the same exempt treatment.

Common questions

Q: Does freelance writing income automatically escape New York's unincorporated business tax?
A: Not automatically - it qualifies as the practice of a profession (and so is excluded from the tax) only if capital isn't a material income-producing factor and more than 80% of the gross income comes from the writer's personal services.

Q: What kind of writing is NOT covered by this exemption?
A: Advertising copy, commercials, and material that promotes a business or the sale of a product - the Department has consistently treated that as outside the practice of the profession of authorship.

Q: Does this rule apply only to newspaper columnists, or to authors generally?
A: It applies to authorship generally; the Department cites prior decisions and opinions going back to the 1960s treating authorship as a profession under section 703(c), not just newspaper columnists.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/income_ao_1981.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/income/a81_11i.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-81 (11) I
Income Tax
December 31, 1981

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. I810617A

On June 17, 1981, a Petition for Advisory Opinion was received from Anita Summer, 619
Oakwood Court, Westbury, New York 11590.
The issue raised is whether Petitioner's income from activities as a newspaper columnist and
free lance writer is subject to the unincorporated business income tax imposed under Article 23 of
the Tax Law.
The tax in question is imposed on "the unincorporated business taxable income of every
unincorporated business wholly or partly carried on within this state." Tax Law, §701(a). The term
"unincorporated business" is defined in section 703 of the Tax Law, wherein it is provided that:
"The practice of law, medicine, dentistry or architecture, and the practice of any other
profession in which capital is not a material income producing factor and in which more than eighty
per centum of the unincorporated business gross income for the taxable year is derived from personal
services actually rendered by the individual on the members of the partnership or other entity, shall
not be deemed an unincorporated business." Tax Law, §703(c).
The occupation of authorship has been consistently held to constitute the practice of a
profession, within the meaning of Section 703(c) of the Tax Law, except to the extent that the
writing in question takes the form of advertising copy or commercials, or material which promotes
business or the sale of a product. Harry Hurwitz and Barbara Hurwitz, Decision of State Tax
Commission, September 28, 1979, TSB-H-79(216)-I; Richard Cornuelle, Decision of State Tax
Commission, September 29, 1977; Opinion of Counsel, January 12, 1967, NYTB 1967-1, p. 43;
Opinion of Counsel, October 27, 1966, NYTB 1966-4, p. 52.
Accordingly, Petitioner's activities described above, assuming that capital is not a material
income producing factor therein and that in excess of 80% of the income derived therefrom is
derived from personal services rendered by Petitioner, constitute the practice of a profession within
the meaning of Section 703(c) of the Tax Law. The income derived therefrom, pursuant to such
statutory. provision, is not subject to the unincorporated business income tax.

DATED: September 30, 1981

JAMES H. TULLY., COMMISSIONER
TP-8 (4/80)

s/LOUIS ETLINGER
Deputy Director
Technical Services Bureau

LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR