Are membership fees for a dating referral service, where members browse a library of other members' profiles, taxable as an information service?

Plain-English summary

People Resources runs a singles service. Each member writes their own biography and provides photographs and a video; together these make up the member's profile, which goes into a library that members can browse freely. The profiles are separated by men, women and sexual preference. A member who is interested leaves an invitation card; if the other member accepts, the front desk gives out the inviter's full name and phone number. People Resources argued it was merely a "billboard" — like a personals column — and did not match or refer anyone. It asked whether its membership fees are taxable as an information service under § 1105(c)(1).

The Department held the fees ARE taxable:

• § 1105(c)(1) taxes the furnishing of information — including collecting, compiling or analyzing information and furnishing reports of it. § 527.3(a) confirms that collecting, compiling or analyzing information and furnishing it to others is an information service.
• People Resources collects and compiles information (the biographies, photos and videos), analyzes it to separate it into men, women and sexual preference, and furnishes that information in printed form to its members for viewing through the library.
• Therefore People Resources is providing a taxable information service, and the receipts from members for that service are subject to sales tax.

What this means for you

"We don't match anyone" doesn't avoid the information-service tax

People Resources' whole argument was that it only supplied a forum and let members choose for themselves. That didn't matter. The tax under § 1105(c)(1) attaches to collecting, compiling and furnishing information — even when the customer does the choosing. Framing the business as a passive "billboard" did not change the result.

Compiling member profiles and letting members browse them is a taxable service

Gathering people's information, organizing it (here, by category), and making it available to your members to read is exactly what § 527.3(a) describes as an information service. Businesses built on searchable member or listing databases should assume their membership fees can be taxable in New York.

Note the statute's personal-information exclusion — but it didn't apply here

Section 1105(c)(1) excludes information that is "personal or individual in nature" and is not substantially incorporated into reports furnished to others. People Resources' service didn't fit that exclusion, because it compiled members' information into a shared library furnished to all its members rather than delivering purely private, one-off information.

Common questions

Q: Are dating or matchmaking service fees taxable in New York?
A: On these facts, yes — compiling member profiles and furnishing them to members is a taxable information service under § 1105(c)(1).

Q: Does it matter that the service says it doesn't do the matching?
A: No. The tax is on collecting, compiling and furnishing the information; letting members choose for themselves does not exempt it.

Q: What about the "personal or individual" information exclusion?
A: It didn't apply, because the information was compiled into a shared library furnished to the membership, not delivered as purely private, non-shared information.

Citations and references

Statutes and regulations:

• Tax Law § 1105(c)(1) — tax on information services, with an exclusion for personal/individual information not substantially incorporated in reports to others
• 20 NYCRR § 527.3(a) — collecting, compiling or analyzing information and furnishing reports of it is a taxable information service

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_28s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-91 (28)S
Sales Tax
March 18, 1991

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S910103A

On January 3, 1991, a Petition for Advisory Opinion was received from People Resources,
119 West 57th Street, New York, New York 10019.
The issue raised by Petitioner, People Resources, is whether the receipts received from its
members for the dating referral services it performs are subject to State and local sales and use tax
as an information service pursuant to Section 1105(c)(1) of the Tax Law.
Petitioner is an organization for singles, but unlike typical matching services and or
computerized dating services, the Petitioner provides a forum within which its members may choose
other members whom they wish to meet. Petitioner does not, in any respect whatsoever, assist its
members in making a decision as to the matching or referral process. Petitioner likens itself to that
of a billboard upon which people place messages; similar to a personal column in a magazine section
where people place advertising concerning themselves in the hope that some other individual will
be interested so as to meet them. When an individual becomes a member he or she prepares, by
themselves, a written biography indicating certain basic information about themselves. This
information, as well as photographs and a video, comprises the member's profile and is placed in a
library in which the members have free access to view the various profiles. The profiles are not
categorized per se, but are separated by men, women and sexual preference. Members read the
written biographics first, and, if interested, view the videos.
When a member is interested in meeting another member, he or she must issue an invitation
card indicating that he or she would be interested in the other member's viewing their profile to see
if mutual selection may be had. The invitor then leaves the invitation card at the front desk, where
it is maintained. The other member peruses the invitor's profile and either declines the invitation or
accepts it by completing it and setting forth their full name and phone number. The completed
invitation is brought up to the front desk by the member. Upon receiving completed accepted
invitations, the front desk personnel orally give out invitors' full names and phone numbers.
Members typically call into the office and are advised on the telephone that invitations have been
received or completed. In some instances, notices are forwarded through the mail to members
advising them that they have invitations and that they should come in accordingly. Members may
also telephone and obtain the full names and phone numbers of other members who have accepted
their invitations.
Section 1105(c)(l) of the Tax Law imposes, sales tax upon the receipts from every sale,
except for resale of the following:

-2­
TSB-A-91 (28)S
Sales Tax
March 18, 1991

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. . . (Emphasis added)
Section 527.3 of the Sales and Use Tax Regulations provides, in part, as follows:
(a) Imposition
(1) Section 1105(c)(l) of the Tax Law imposes a tax on the receipts from the
service of furnishing information by printed, mimeographed or multigraphed
matter or by duplicating written or printed matter in any manner such as by
tapes, discs, electronic readouts or displays.
(2) The collection, compiling or analyzing information of any kind of nature
and the furnishing reports thereof to other persons is an information service.
(emphasis added)
Petitioner collects and compiles information through written biographies, photographs and
videos, analyzes such matter to separate it as to men, women and sexual preference, and furnishes
the information in printed form for perusal and viewing to its members through use of its library.
Accordingly, Petitioner is providing an information service subject to sales tax pursuant to Section
1105(c)(1) of the Tax Law and Section 527.3(a) of the Sales and Use Tax Regulations. Therefore,
receipts paid to Petitioner by its members for the services it performs are subject to sales tax.

DATED: March 18, 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.