Are an investment adviser's phone consultations, hotline, and newsletter subject to New York sales tax?

Plain-English summary

Harmonic Research, Inc. is an SEC-registered investment adviser offering three things: consultations, a telephone hotline, and newsletter subscriptions. It asked whether any of them is a taxable information service under Tax Law § 1105(c)(1).

The Department said none of the three is taxable on these facts.

• Consultations and the hotline — not taxable oral reports. Both are oral reports delivered for a fee, and neither is followed by a written report. Under 20 NYCRR § 527.3(a)(4), a fee for an oral report is taxable only if the oral report is preliminary to a written report. Because these oral services stand alone, neither is a taxable information service.
• The newsletter — an exempt periodical. It is published tri-weekly (18 times a year), is not a book, is available to the public, has continuity of title and content, and each issue carries a variety of articles by seven different authors on investment advice. That satisfies the definition of a periodical (20 NYCRR § 528.6(c)), so it is exempt under Tax Law § 1115(a)(5) — not a taxable information service.

Result: consultations, hotline, and newsletter are all free of New York sales/use tax.

Note on a same-day contrast: in TSB-A-88(44)S the Department held a different investment newsletter (built around specific stock buy/sell recommendations) to be a taxable information service, because a separate rule (20 NYCRR § 527.3(a)(3)) treats stock-market advisory and analysis reports as information services and pulls them out of the periodical exemption. Harmonic Research's newsletter, by contrast, qualified as an ordinary periodical of investment-advice articles.

What this means for you

Purely oral advice usually isn't taxable. A consultation or phone hotline that gives spoken advice for a fee is not a taxable information service unless it's a lead-in to a written report. Standalone oral guidance escapes § 1105(c)(1).

A genuine newsletter can be a tax-exempt periodical. If your publication is regular (at least quarterly), public, continuous, and a variety of articles by different authors (unsigned staff articles count), it can qualify as an exempt periodical — even a frequent, subscription-only investment newsletter.

But stock-tip sheets are different. Watch the line between a periodical and an information service: a publication whose substance is stock buy/sell advisory/analysis is treated as a taxable information service, not an exempt periodical. Content, not format, decides it.

Common questions

Q: I charge for phone consultations and a hotline. Is that a taxable information service?
A: Not if the advice is purely oral and not preliminary to a written report. Under 20 NYCRR § 527.3(a)(4), oral reports are taxable only when they lead into a written report.

Q: Is my subscription investment newsletter taxable?
A: It depends on its content. A newsletter of varied investment-advice articles, published regularly to the public, can be an exempt periodical. But if it's essentially stock buy/sell advisory/analysis, it's treated as a taxable information service (see TSB-A-88(44)S).

Q: Do unsigned articles keep my newsletter from being a periodical?
A: No. Unsigned articles prepared by a staff of writers count as articles by different authors for the periodical definition.

Citations and references

Statute and regulation:

• Tax Law § 1105(c)(1) — imposes tax on furnishing information, including collecting, compiling, or analyzing information and furnishing reports (an "information service"), with exclusions
• 20 NYCRR § 527.3(a)(4) — charges for credit information services other than those transmitted orally are taxable; a fee for an oral report is taxable only if the oral report is preliminary to a written report
• Tax Law § 1115(a)(5) — exempts receipts from retail sales of newspapers and periodicals
• 20 NYCRR § 528.6(c) — defines "periodical" (published at least quarterly at stated intervals; not a book; available to the public; continuity of title and content; a variety of articles by different authors, including unsigned staff articles); Example 8 treats a weekly staff-written trade newsletter as a periodical

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1988.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a88_36s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-88 (36) S
Sales Tax
July 20, 1988

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S880212A

On February 12, 1988, a Petition for Advisory Opinion was received from Harmonic
Research, Inc., 650 Fifth Avenue, New York, New York 10019.
The issue raised is whether Petitioner is providing an information service subject to tax under
Section 1105(c)(1) of the Tax Law.
Petitioner is an investment advisor registered with the Securities and Exchange Commission.
Petitioner offers three types of services: consultations, a telephone hotline, and newsletter
subscriptions.
Section 1105(c)(1) of the Tax Law provides that a sales tax is imposed upon:
The furnishing of information by printed, mimeographed or
multi graphed 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 ....
Section 527.3(a)(4) of the Sales and Use Tax Regulations provides, in part that "charges for
credit information services, other than those that are transmitted orally, are subject to tax .... "Any
fee for an oral report is taxable if the oral report is preliminary to the written report."
Both the consultations and the telephone hotline offered by Petitioner are oral reports that
are provided for a fee. Neither service is succeeded by a written report. Accordingly, neither service
is taxable within the meaning of Section 1105(c)(1) of the Tax Law.
Section 1115(a)(5) of the Tax Law exempts newspapers and periodical from the sales and
use taxes of sections 1105(a) and 1110 of the Tax Law.
Sales and Use Tax Regulation Section 528.6 provides, in part:
(a) Exemption. The sale of newspapers and periodicals is exempt
from sales and compensating use tax.

(c)(1) Definition of a periodical. (1) In order to constitute a
periodical, a publication must conform generally to the following
requirements.

RODERICK G. W. CHU, COMMISSIONER
TP-8 (9/88)

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

-2­
TSB-A-88 (36) S
Sales Tax
July 20, 1988
(i)
(ii)
(iii)
(iv)
(v)

it must be published in printed or written form at stated
intervals, at least as frequently as four times a year;
it must not, either singly or, when successive issues are put
together, constitute a book;
it must be available for circulation to the public;
it must have continuity as to title and general nature of
content from issue to issue; and
each issue must contain a variety of articles by different
authors devoted to literatures, the sciences or the arts, news,
some special industry, profession, sport or other field or
endeavor.

(2) A publication which may be known as or considered to be
a newsletter may qualify as a periodical if it conforms to the above
standards. Where a newsletter has no signed articles, but has a staff
of writers who originally prepare articles, such publication will be
considered to have articles by different authors. If a publication has
been classified by the United States Postal Service as one which is
entitled to second class mailing privileges, that fact will be considered
in determining whether or not the publication is a periodical.
(3) Nothing in this section shall be construed to exempt as a
periodical the following:
(i)
(ii)
(iii)

advertising material, such as catalogs, flyers,
pamphlets, and brochures;
listings and compilations which constitute
informational services;
publications which are issued at stated intervals but
which are books or parts of a book.

Example 8:

A weekly newsletter is comprised of four
pages of various articles devoted to the
automobile industry. Although the articles are
not signed, they are prepared by an editorial
staff. The publication is sold by subscription
and single copies are also available. The
newsletter contains no advertising. This
newsletter constitutes a periodical. 20
NYCRR 528.6.

The third service offered by Petitioner is a newsletter which is published tri-weekly (18 times
per year), does not constitute a book, either singly or when successive issues are put together, is
available for circulation to the public, maintains continuity with respect to title and content from
issue to issue, and each issue of which contains a variety of articles by seven different authors
devoted to investment advice.

-3­
TSB-A-88 (36) S
Sales Tax
July 20, 1988
Accordingly, the newsletter published by Petitioner is not subject to sales or use tax because
it constitutes a periodical.

DATED: July 20, 1988

s/FRANK J. PUCCIA
Director
Technical Services Bureau

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