Is the sale of a business's customer list subject to New York sales tax?

Plain-English summary

Troiano Fuel Oil Co., a retail heating fuel oil distributor, sold a customer list — the names of the individuals it had sold heating oil to during the prior year. It argued the list was personal or individual in nature and had not been, and could not be, substantially incorporated into reports furnished to anyone outside the buyer's organization, so it should be exempt.

The Department held the sale of the customer list is a taxable information service.

• Furnishing information is taxed. Section § 1105(c)(1) taxes the furnishing of information — including collecting, compiling or analyzing information of any kind and furnishing reports of it — while excluding information that is personal or individual in nature and that is not or may not be substantially incorporated into reports furnished to other persons.
• Courts have already decided customer lists are taxable. The Department pointed to two Appellate Division decisions holding the sale of a customer list taxable under § 1105(c): Long Island Reliable Corp. v. State Tax Commission, 72 A.D.2d 826, and Alan Drey Company v. State Tax Commission, 67 A.D.2d 1055.
• Result: the customer list is not within the personal-or-individual exclusion, and its sale is subject to sales tax as an information service under § 1105(c)(1).

What this means for you

Selling your customer list is a taxable transaction in New York. A customer list is treated as a compiled information product, not a tax-free intangible, so the sale is a taxable information service under § 1105(c)(1). Sellers should expect to charge (and buyers to pay) sales tax on such a sale.

The "personal or individual" exclusion is narrow. It's meant for information created uniquely for one customer that isn't the kind of compiled data that can be furnished to others. A list of names a business assembled in the ordinary course — the sort of list that could be sold or reused — doesn't qualify, as the courts have held.

This reaches sales of the list as an asset, not just list-rental services. Here the fuel-oil distributor sold its own list outright, and the sale was still taxable. If you're buying or selling a customer or mailing list — including as part of selling a book of business — factor sales tax into the deal.

Common questions

Q: We told the buyer the list wouldn't be shared outside their company. Doesn't that make it "personal or individual"?
A: No. The Department relied on court decisions holding customer-list sales taxable regardless. The exclusion is for genuinely personal/individual information, not an ordinary compiled customer list.

Q: Is it the buyer or the seller who owes the tax?
A: Sales tax is due on the sale as an information service. The seller, as vendor, generally must collect it from the buyer; the transaction itself is taxable either way.

Q: Does this apply to mailing lists and similar compiled data?
A: The ruling addresses a customer list specifically, and rests on cases treating such compiled lists as taxable information services under § 1105(c)(1). Similar compiled lists are likely to be treated the same way, but check the specifics of your transaction.

Citations and references

Statute:

• Tax Law § 1105(c)(1) — tax on furnishing information; personal-or-individual exclusion

Cases cited:

• Long Island Reliable Corp. v. State Tax Commission, 72 A.D.2d 826
• Alan Drey Company v. State Tax Commission, 67 A.D.2d 1055

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1981.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a81_47s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-81(47)S
Sales Tax
November 5, 1981

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

PETITION NO. S810817A

On August 17, 1981 a Petition for Advisory Opinion was received from Troiano Fuel Oil Co.
of Suffolk County, Inc., 285 N. Central Avenue, Valley Stream, N.Y. 11580.
The issue raised is whether the sale of a customer list is subject to the New York State sales
and use taxes.
Petitioner is a retail heating fuel oil distributor. It sold a customer list, containing the names
of those individuals to whom Petitioner had sold heating fuel oil during the year preceding the sale.
Petitioner contends that information contained in the list has not been, nor may it be, substantially
incorporated in reports furnished to any party outside of the purchaser's organization.
Section 1105(c)(1) of the Tax Law imposes a tax on:
"The furnishing of information by printed, mimeographed or multigraphed matter or
by duplicating written or printed matter in any other matter, 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 individual in nature and which is not or may not be substantially
incorporated in reports furnished to other persons, . . . "
The customer list at issue is not unlike those customer lists which have been subjected to
review by the Court. The Court has held that the sale of a customer list is taxable under section
1105(c) of the Tax Law. Long Island Reliable Corp. v. State Tax Commission, 72 AD 2d 826 and
Alan Drey Company v. State Tax Commission, 67 AD 2d 1055. Petitioner is, therefore, providing
an information service which is subject to tax pursuant to section 1105(c)(1) of the Tax Law.

DATED: October 20, 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