Is a monthly minimum charge for credit information taxable even when few or no reports are actually issued, and does it matter if the reports are oral or written?

Plain-English summary

CCB Management of Texas, Inc. sells credit-information services to subscribers. To discourage tiny orders, it charges a monthly minimum: if a subscriber orders less than $30 of credit reports in a month, CCB bills the difference between what was ordered and $30. The minimum is not an annual fee and does not entitle the subscriber to free or reduced-price reports. CCB asked whether that minimum charge is taxable in four situations — no reports issued, oral only, written only, or both.

The Department held the minimum charge is taxable:

• Credit information is a taxable information service under § 1105(c)(1) and 20 NYCRR § 527.3(a)(4) (which makes written credit reports taxable, and oral reports taxable when preliminary to a written report). Credit reports are expressly named as a taxable information service.
• The minimum is taxable whether or not reports issue. Because the monthly minimum entitles the customer to receive written reports (or written and oral reports), it is subject to state and local sales tax regardless of whether any report is actually issued.
• Oral-only reports — timing matters. Before September 1, 1990, a charge for purely oral (non-preliminary) reports was not taxable. But effective September 1, 1990, § 1105(c)(9) and Department Notice N-90-44 tax information services delivered by telephony (including credit reports). So a minimum charge entitling customers to oral reports only is also taxable from that date.

What this means for you

A "minimum charge" is taxed like the service it buys

Calling something a minimum, floor, or usage charge doesn't change its character. Because CCB's minimum entitled subscribers to taxable credit reports, the minimum itself is taxable — even in a month when the subscriber orders nothing. If a fee buys access to a taxable information service, expect the fee to be taxable.

Credit reports are an enumerated taxable information service

Credit reports sit squarely in New York's information-service tax (§ 1105(c)(1); § 527.3(a)(4)), and are specifically listed in Notice N-90-44. Providers should assume their report charges — and minimums tied to them — are taxable.

The oral-report rule changed on September 1, 1990

Historically, purely oral credit reports escaped tax (the tax reached written reports and oral reports preliminary to a written one). The 1990 telephony amendment (§ 1105(c)(9)) closed that gap: information services delivered by phone became taxable. Watch this date when reviewing older periods — the answer for oral reports flips at 9/1/1990.

Common questions

Q: Is a monthly minimum credit-report charge taxable if I order no reports that month?
A: Yes. Because the minimum entitles you to taxable written (or written and oral) reports, it is taxable regardless of whether any report is issued.

Q: Are oral credit reports taxable?
A: Before 9/1/1990, purely oral (non-preliminary) reports weren't taxed. From 9/1/1990, § 1105(c)(9) taxes information services delivered by telephony, so oral credit reports are taxable too.

Q: Are written credit reports taxable?
A: Yes. Any fee for a written credit report is taxable under § 527.3(a)(4).

Citations and references

Statutes, regulation, and notice:

• Tax Law § 1105(c)(1) — tax on information services, including credit information
• Tax Law § 1105(c)(9) — information/entertainment services furnished by telephony or telegraphy (effective Sept. 1, 1990)
• 20 NYCRR § 527.3(a)(4) — taxability of credit information services (written vs. oral reports)
• Department of Taxation and Finance Notice N-90-44 — telephony-delivered information services (credit reports named as taxable)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1991.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a91_14s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-91 (14)S
Sales Tax
January 23, 1991

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S901003B

On October 3, 1990, a Petition for Advisory Opinion was received from CCB Management
of Texas, Inc., PO Box 388, Burnt Hills, New York 12077.
The issue raised by Petitioner, CCB Management of Texas, Inc., is whether a minimum
charge for credit information which is not an annual fee and does not entitle the subscriber to free
reports or reduced charges is subject to New York State and local sales and use taxes pursuant to
Section 1105(c)(1) of the Tax Law where there is:
1.

A minimum charge of the full amount when no reports of any kind are issued.

2. A minimum charge in a month when only oral reports are issued.
   3.

A minimum charge in a month when only written reports are issued.

4.

A minimum charge in a month when both written and oral reports are issued.

Petitioner is in the business of providing credit information services to its subscribers
regarding their customers. In an effort to discourage the use of services in very small amounts,
Petitioner has imposed a monthly minimum charge on subscribers. Petitioner has an established fee
schedule for both oral credit reports and for written credit reports and subscribers are charged
according to that schedule. However, if a subscriber orders less than $30.00 per month of credit
reports, a minimum charge in the difference between the amount charged for reports actually ordered
and $30.00 is charged to the customer's account.
Section 1105(c)(1) of the Tax Law imposes tax upon:
The furnishing of information by printed, mimeographed or multigraphed
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, 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, and excluding the
services of advertising or other agents, or other persons acting in a representative
capacity, and information services used by newspapers, radio broadcasters and
television broadcasters in the collection and dissemination of news.

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TSB-A-91 (14)S
Sales Tax
January 23, 1991
Section 1105(c)(9) of the Tax Law, effective September 1, 1990, imposes tax upon:
The furnishing or provision of an entertainment service or of an information
service, which is furnished, provided, or delivered by means of telephony or
telegraphy or telephone or telegraph service (whether intrastate or interstate) of
whatever nature, such as entertainment or information services provided through 800
or 900 numbers or mass announcement services or interactive information network
services. Provided, however, that in no event (i) shall the furnishing or provision of
an information service be taxed under this paragraph unless it would otherwise be
subject to taxation under paragraph one of this subdivision if it were furnished by
printed, mimeographed or multigraphed matter or by duplicating written or printed
matter in any other manner nor (ii) shall the provision of cable television service to
customers be taxed under this paragraph.
Section 527.3(a) of the Sales and Use Tax Regulations provides:
*
*
*
(4) Charges for credit information services, other than those that are transmitted
orally are subject to tax. The following rules shall apply in determining taxability of
services that include both oral and written reports:
(i) Any fee for a written report is taxable.
(ii) Any fee for an oral report is taxable if the oral report is
preliminary to the written report.
(iii) An annual fee for subscribing to a service is taxable if it entitles
the subscriber to a certain number of free reports, or to reduced
charges on reports, unless the subscriber is entitled only to oral
reports.
This regulation as it pertains to oral reports, only applies to such reports issued prior to
September 1, 1990.
Department of Taxation and Finance Notice, N-90-44, pertaining to the taxability of
entertainment and information services provided by means of telephony or telegraphy, states, in part,
as follows:
Effective September 1, 1990, any charge for entertainment services or certain
information services which are furnished, provided or delivered by means or
telephony or telegraphy or telephone or telegraph service will be subject to the
combined state and local sales tax. The combined state and local sales and use tax
rate to be used will be the rate in effect in the jurisdiction where the service is
received.

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TSB-A-91 (14)S
Sales Tax
January 23, 1991

The term telephony or telegraphy or telephone or telegraph service is used in the
broadest sense and includes, without limitation, the transmission, conveyance,
routing or reception of messages, information or data by electric or similar means by
wire, cable, fiber optics, microwave, radio, satellite or similar facilities.
Entertainment and information services provided or delivered by means of telephony
or telegraphy or telephone or telegraph service include all such services delivered by
such means. These services are taxable whether provided through 500, 700, 800 or
900 telephone numbers as well as those delivered by private telephone line, cable or
channel.
Among the services that are subject to tax as entertainment services are those of an
interactive nature such as theme conversation opportunities: e.g., dating
opportunities, adult conversation opportunities and celebrity call-in lines. In
addition, conversation or gab lines/party lines are also included. Prerecorded
entertainment (celebrity messages, jokes, music, readings, horoscopes, etc.) and
contests, call-in polls and games are also examples of the taxable service.
Collecting, compiling or analyzing information of any kind and reporting such
information to other persons by means of telephony or telegraphy or telephone or
telegraph service constitutes the rendering of an information service subject to tax.
Information services that are currently subject to tax when furnished in written form
by printed, mimeographed or multigraphed matter or by duplicating written or printed
matter continue to be subject to tax.
Among the services that are subject to tax as information services are credit reports,
tax or stock market advisory and analysis reports, stock quotes, product and
marketing surveys and sports highlight lines.
Sales tax applies to all charges for the service by the vendor to the customer.
A fee for subscribing to a taxable entertainment or information service that is billed
on a monthly, annual or other basis is taxable. Membership or other fees entitling the
subscriber to receive, by means of telephony or telegraphy, a certain number of free
reports or services, or reduced charges on reports or services are also taxable. No tax
is due where the vendor makes no charge for the services. (emphasis added)
Accordingly, since Petitioner is providing a service taxable under Section 1105(c)(1) of the
Tax Law, therefore pursuant to said Section and to Section 527.3(a)(4) of the Sales and Use Tax
Regulations a monthly minimum charge assessed by Petitioner which entitles its customers to
receive either written credit reports or written and oral credit reports, regardless of whether any
reports are actually issued, is subject to State and local sales and use tax. In addition, since

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TSB-A-91 (14)S
Sales Tax
January 23, 1991

the Petitioner is providing a service taxable under Section 1105(c)(9) of the Tax Law and Notice N­
90-44, effective September 1, 1990, a monthly minimum charge assessed by Petitioner which entitles
its customers to receive oral reports only is also subject to State and local sales and use taxes.

DATED: January 23, 1991

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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