Does a company that laser-prints tax returns from clients' data files sell taxable tangible personal property, or a service?

Plain-English summary

Lasar Image Corp. is in the business of producing laser-printed income tax returns. Its clients are accountants and other tax preparers who send it computer tapes; Lasar uses the tapes to print copies of the income tax returns and returns both the tapes and the printed returns to the client. Lasar does not prepare the returns itself — it simply converts the information on the tapes into paper form. It asked whether it should collect sales tax on what it does, or instead pay sales tax on the paper and supplies it uses.

The Department held that Lasar is selling tangible personal property and must collect tax.

• This is not an information service. Section 1105(c)(1) taxes information services but excludes information that is personal or individual and not substantially incorporated in reports to others. That exclusion is beside the point here, because Lasar gave its clients no information they did not already have — it merely rearranged the client's own data onto a different medium.
• It is a sale of tangible personal property. Because Lasar provides its clients with copies of income tax returns (physical paper), it is making a sale of tangible personal property taxable under § 1105(a) — following Matter of Finserv Computer Corporation and Finserv Corp. v. Tully.
• Lasar may buy its inputs tax-free. The paper and ink that become part of the returns Lasar sells can be purchased without tax by giving suppliers a properly completed Resale Certificate (Form ST-120), because those materials are resold as part of the finished product.

What this means for you

Moving a client's own data onto paper is a sale of goods, not a service. If you don't add information the client lacked — you just print, format, or reproduce the client's data — New York treats the printed output as taxable tangible personal property under § 1105(a), and you must collect tax on the full charge.

The information-service exclusion needs new information. The personal-or-individual exclusion in § 1105(c)(1) only matters if you are selling an information service in the first place. Reproducing what the customer already supplied isn't furnishing information at all.

Buy your consumables for resale. When the paper, ink, or other materials physically become part of what you sell, give suppliers a Resale Certificate (Form ST-120) and buy them tax-free — you collect the tax once, on the finished product.

Common questions

Q: We just print documents from files our clients give us. Do we charge sales tax?
A: Yes. If you provide the physical printed output and add no information the client didn't already have, you're selling tangible personal property taxable under § 1105(a).

Q: Isn't printing a service?
A: New York looked at what the client receives — physical copies of their returns — and treated the whole transaction as a sale of goods, citing the Finserv decisions. The service label didn't control.

Q: Can we avoid tax on the paper and ink we use?
A: Yes — because those materials become part of what you sell, buy them tax-free with a Resale Certificate (Form ST-120) and collect tax on the finished product instead.

Citations and references

Statutes and forms:

• Tax Law § 1105(a) — imposes tax on receipts from every retail sale of tangible personal property
• Tax Law § 1105(c)(1) — taxes information services but excludes information that is personal or individual and not substantially incorporated in reports to others
• Form ST-120 (Resale Certificate) — lets a seller buy tax-free the property that becomes part of what it resells

Decisions cited:

• Matter of Finserv Computer Corporation, Decision of the State Tax Commission, Oct. 30, 1981, TSB-H-81(195)S
• Finserv Corp. v. Tully, 94 AD2d 197 (1983), aff'd 61 NY2d 947 (1984)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1986.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a86_42s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-86(42)S
Sales Tax
October 24, 1986

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

PETITION NO. S860722B

On July 22, 1986, a Petition for Advisory Opinion was received from Lasar Image Corp., 265
Glen Cove Road, Carle Place, New York 11554.
The issue raised is whether Petitioner, who is in the business of producing laser printed
income tax returns, is required to collect sales tax on its services or to pay sales tax on its purchases
of paper and supplies used in preparation of the returns.
Petitioner's clients are accountants and other tax preparers. Petitioner's clients supply it with
computer tapes which are then used to produce copies of income tax returns. The computer tapes
and the tax returns are then returned to Petitioner's clients. Petitioner itself does not perform the
professional service of preparing the tax returns but converts the information contained on the tapes
to a paper form.
Section 1105(c)(1) of the Tax Law imposes a tax upon the sale of information services but
excludes from tax the services of furnishing information which is personal or individual in nature
and which may not be substantially incorporated in reports furnished to other persons. Petitioner did
not furnish its clients with any information its clients did not previously have. Therefore, Petitioner's
sales were not of information services but rather the rearranging of its client's information onto a
different medium. Since Petitioner provides its clients with copies of income tax returns, Petitioner's
sales constitute the sale of tangible personal property subject to tax under section 1105(a) of the Tax
Law. See Matter of Finserv Computer Corporation, Decision of the State Tax Commission, October
30, 1981, TSB-H-81(195)S; Finserv Corp. v. Tully, 94 AD2d 197(1983); aff'd 61 NY2d 947(1984).
Petitioner may purchase tax free the paper and ink incorporated into the income tax returns
sold to its clients by furnishing to its suppliers properly complete Resale Certificates (Form ST-120).

DATED: October 24, 1986

s/FRANK J. PUCCIA
Director
Technical Services Bureau

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

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

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