When a data processor maintains and prints a client's membership list, is it selling a taxable printed product or an exempt information service?

Plain-English summary

Concept IV Computer Systems operates a data processing center. It maintains the master membership list for the New York State Association of Realtors (NYSAR): NYSAR sends additions, changes, and deletions; Concept IV updates the list and, each quarter, delivers an updated printed membership list plus an add/drop list of the quarter's changes, billing monthly per change. It asked whether this is taxable.

The Department held it is a taxable sale of tangible personal property.

• Look at the complete package purchased. Taxability is judged by focusing on "the complete package or item purchased" (Cable TV v. Tax Comm. of N.Y.). Although Concept IV performs data-processing steps, the essence is that NYSAR receives, for consideration, printed materials — a retail sale of tangible personal property taxable under § 1105(a).
• Format conversion of the client's own data isn't an exempt information service. Under Finserv Computer Corp. v. Tully, a service that primarily rearranges or converts information from one format to another — without supplying information the customer didn't already have, and without analyzing it to change its informational content — is not an exempt information service under § 1105(c)(1).
• This is that situation. NYSAR supplies the names; Concept IV renders back not new information but the client's own information in a convenient printed form. The transfer of that printed embodiment is a taxable sale.

What this means for you

Delivering a printed list built from the client's own data is selling a product, not a service. If the deal really produces printed (or other tangible) output embodying information the customer already supplied, New York taxes it as tangible personal property — the data-processing labor behind it doesn't change that.

The information-service exemption needs genuinely new or analyzed information. To be an exempt § 1105(c)(1) information service, you generally must give the customer information they didn't have, or analyze their data to change its content — not just reformat, sort, or reprint what they gave you.

Membership-list, mailing-list, and similar "maintain-and-print" jobs are exposed. Ongoing list maintenance that culminates in delivered printed lists tends to be taxable. Compare TSB-A-84(20)S (Sherman Data Finances), decided the same era, which taxed computer-generated financial printouts on a related information-services rationale.

Common questions

Q: I maintain and print my client's membership or mailing list. Is that taxable?
A: Generally yes. If the essence is delivering printed lists embodying the client's own data, it's a taxable sale of tangible personal property under § 1105(a).

Q: Isn't the data processing an exempt service?
A: Not by itself. Reformatting or reprinting a client's own information isn't an exempt information service. The exemption requires supplying new information or analysis that changes the information's content.

Q: What if I delivered results only electronically, not on paper?
A: This opinion addresses delivered printed lists (tangible personal property). Different delivery facts can change the analysis, so evaluate the actual package the customer buys.

Citations and references

Statutes:

• Tax Law § 1105(a) — tax on retail sales of tangible personal property
• Tax Law § 1105(c)(1) — tax on furnishing information, with the information-service exclusion

Cases:

• Cable TV v. Tax Commission of N.Y., 88 Misc. 2d 601, aff'd 59 A.D.2d 81
• Finserv Computer Corp. v. Tully, 94 A.D.2d 197

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1984.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a84_18s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-84(18)S
Sales Tax
May 21, 1984

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S810320D

On March 20, 1981, a Petition for Advisory Opinion was received from Concept IV
Computer Systems, P.O. Box 1290, Albany, New York 12201.
The issue raised is whether the services furnished by Concept IV Computer Systems
(hereinafter "Petitioner") to the New York State Association of Realtors (hereinafter "NYSAR"), as
described below, are subject to State and local sales taxes.
Petitioner operates a data processing center. NYSAR is a professional association whose
membership is comprised of realtors, realtor-associates, realtor-affiliates and boards of realtors.
Petitioner maintains a master list of NYSAR's membership. NYSAR provides Petitioner with
information on additions, changes and deletions to the membership master list. Petitioner updates
the membership master list accordingly. On a quarterly basis Petitioner supplies its customer with
an up-dated membership list in printed form, along with an ancillary add/drop list indicating changes
made during the quarter. Petitioner bills its customer on a monthly basis, its charge computed on the
basis of specified charges for each addition, deletion or other change.
In determining the applicability of the sales tax to a given transaction or set of transactions,
it is appropriate to "focus upon the complete package or item purchased." Cable TV v. Tax Comm.
of NY, 88 M 2d 601, aff'd 59 AD 2d 81. Here the customer, NYSAR, subscribes to a series of
updated membership lists which it uses as part of its dues assessment processes. While Petitioner
must by the nature of the operation engage in certain data processing activities, the essence of the
transaction is that NYSAR receives, for a consideration, certain printed materials. This constitutes
a sale of tangible personal property at retail, the receipts from which are subject to the State sales tax
imposed under section 1105(a) of the Tax Law, as well as all other State and locally imposed sales
taxes. See Finserv Computer Corp v. Tully, 94 AD 2d 197, aff’d
NY 2d
. I n t hat case
Finserv reproduced the computerized records of its customers, provided on tape, onto microfiche or
microfilm. Finserv asserted that its sales were of an information service exempt from tax under Tax
Law, §1105(c)(1). The court found, however, that Finserv's service consisted primarily of "the rear­
ranging or conversion of information from one format to another." That is, it did not sell to its
customer information which that customer did not already have, nor did it analyze the information
supplied by the customer so as to change the informational content of the computer tape supplied.

RODERICK G. W. CHU, COMMISSIONER
TP-8 (3/83)

GABRIEL B. DiCERBO, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

-2­
TSB-A-84(18)S
Sales Tax
May 21, 1984

In the present matter, similarly, Petitioner is supplied with information by its customer, in the form
of lists of names to be added or deleted from the master membership list, and it renders to its
customer not new information but, rather, merely the information supplied by the customer itself,
embodied in a physically convenient format. The transfer of that embodiment, constituting tangible
personal property, is a sale the proceeds of which are subject to tax.

DATED: April 26, 1984

s/FRANK J. PUCCIA
Director
Technical Services Bureau

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