Are on-line financial news services delivered to subscribers on computer screens exempt newspapers or periodicals, or a taxable information service?

Plain-English summary

Mark S. Klein, on behalf of a client, asked whether the client's on-line news services are newspapers or periodicals exempt from sales tax under Tax Law § 1115(a)(5). The client — a registered investment advisor — published four on-line financial newsletters (labeled A through D) aimed at sophisticated financial decision-makers: near-instantaneous news and analysis on corporate securities, money and capital markets, currency markets, and fixed-income cash and futures markets. Reporters typed stories into a computer system and published them "at the push of a button" over electronic networks (Telerate, Quotron, ADP); subscribers read the newsletters as text on computer screens and could print them. New editions appeared each business day and were often updated during the day; a hard copy was also mailed to subscribers without terminal access.

The Department held that the on-line service is not an exempt newspaper or periodical:

• The exemption requires printed or written form. Under § 528.6, to be a newspaper or a periodical a publication must be "published in printed or written form" (daily/weekly for a newspaper; at least four times a year for a periodical). Because these newsletters are delivered as an electronic readout or display on a computer screen, they are not published in printed or written form and so do not meet the § 528.6 definitions.
• Exemptions cover only tangible personal property. The § 1115 exemptions apply only to receipts from sales of tangible personal property that would otherwise be taxable under § 1105(a). Because the client delivers the news electronically, it is not selling tangible personal property, so the § 1115(a)(5) newspaper/periodical exemption cannot apply to it.
• It is a taxable information service. Instead, receipts from the on-line news services are receipts from the sale of an information service, taxable under § 1105(c)(1) and § 527.3(a)(1) (which reaches information furnished "by tapes, discs, electronic readouts or displays"). The Department cited Murphy Heating Service, Inc. v. Chu, 124 AD2d 907.
• No constitutional ruling. The Department presumes the law and regulations constitutional and has no jurisdiction at the advisory-opinion level to declare otherwise.

What this means for you

Electronic delivery falls outside the newspaper/periodical exemption

New York's § 1115(a)(5) exemption is tied to a printed or written publication. Genuine, frequently updated journalism — even prize-quality financial reporting written by a professional staff — does not qualify for the exemption when it reaches the customer as an on-screen electronic readout rather than in printed/written form.

On-screen news and data feeds are taxed as information services

The Department treats electronically delivered news as a taxable information service under § 1105(c)(1). The subscriber's ability to print the screen does not convert the service into an exempt publication or a sale of tangible property. Providers of on-line newsletters, market data, and similar feeds should expect their New York receipts to be taxable on this rationale.

This opinion anchors a line of NY rulings

TSB-A-91(53)S is the opinion the Department relied on a few weeks later in Market News Service, TSB-A-91(60)S, which reached the same result for a competing on-line financial news service. Both rest on the printed/written-form requirement and the Murphy Heating holding that electronically delivered information is a taxable information service.

Common questions

Q: Is an on-line or electronic newsletter an exempt newspaper or periodical in New York?
A: No. The exemption requires publication in printed or written form; an electronic on-screen readout does not qualify (§ 528.6; § 1115(a)(5)).

Q: How is the on-line news taxed instead?
A: As a taxable information service under § 1105(c)(1) and 20 NYCRR § 527.3(a)(1).

Q: Subscribers can print the newsletters — doesn't that make them printed publications?
A: No. The Department focused on how the service is delivered (an electronic readout/display). The subscriber's ability to print does not turn it into an exempt printed publication or a sale of tangible property.

Q: Can the Department address the argument that this treatment is unconstitutional?
A: No. It presumes the law and regulations constitutional and lacks jurisdiction at the advisory-opinion level to rule on constitutionality.

Citations and references

Statutes, regulations, and cases:

• Tax Law § 1105(c)(1) — tax on furnishing information services
• Tax Law § 1115(a)(5) — exemption for newspapers and periodicals
• Tax Law § 1105(a) — tax on retail sales of tangible personal property; the § 1115 exemptions apply only to otherwise-taxable TPP
• 20 NYCRR § 527.3 — sale of information services, including information furnished by tapes, discs, electronic readouts, or displays
• 20 NYCRR § 528.6 — definitions of newspaper and periodical, both requiring publication in printed or written form
• Murphy Heating Service, Inc. v. Chu, 124 AD2d 907

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_53s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-91 (53)S
Sales Tax
July 29, 1991

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S910325C

On March 25, 1991 a Petition for an Advisory Opinion was received from Mark S. Klein,
Hodgson, Russ, Andrews, Woods and Goodyear, 1800 One M & T Plaza, Buffalo, N.Y. 14203.
The issue raised by Petitioner, Mark S. Klein, is whether Petitioner's client's on-line news
services are periodicals or newspapers which qualify for exemption from sales taxes under Section
1115(a)(5) of the Tax Law.
Petitioner's client is registered as an investment advisor with the Securities and Exchange
Commission. It engages in consulting and investment advisory services, investment research and the
publication of financial newsletters targeted to an audience of high-level, technically sophisticated
financial management decision makers. Its publications consist of Newsletter A, Newsletter B,
Newsletter C and Newsletter D.
Each of the four newsletters is designed to provide subscribers with almost instantaneous
access to news and analysis regarding particular financial markets. These subscribers, many
responsible for managing literally billions of dollars of investments, look to these newsletters to
provide them with news of fast-breaking events and other information necessary to make informed
investment decisions. In the world of financial markets such news must be available almost
instantaneously and be offered in a format that maximizes the amount of useful information provided
while minimizing the amount of time it takes to absorb that information. Speed and accessibility take
clear precedence over the quality of the prose. Written for a knowledgeable audience, the news can
sometimes be reported most succinctly with acronyms, abbreviations and numbers. A typical
newsletter article might give an almost instantaneous summary of the testimony of the Chairman of
the Federal Reserve Board before Congress combined with analysis of the impact of that testimony
on various financial markets. Articles for each publication are prepared by a staff of correspondents.
All four newsletters are "on-line" publications available to subscribers in text form on
computer screens located on the premises of subscribers. Subscribers can and many do convert the
newsletter as a whole or particular articles to hard copy using printers wired to their computer
terminal. The newsletters are delivered to subscribers via one of the three electronic networks:
Telerate, Quotron and ADP. The newsletters are published each business day and appear on
particular pages of these electronic news services.
The newsletters' offices are equipped with a noteworthy array and amount of communication
equipment -- telephones, televisions, wire services, etc. Reporters are on the telephones constantly,
securing new information, "checking out" leads, confirming rumors, and seeking comment on recent
events. Television broadcasts and wire services are monitored for news as well. As news is gathered,
reporters type their stories directly into a sophisticated computer system. When the initial daily

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Sales Tax
July 29, 1991

edition or new articles or updates throughout the day are ready for dissemination, the information
is published at the "push of a button" via electronic network to the publications' subscribers. At the
end of each business day, a hard copy of the newsletter is also produced for mailing to clients who
do not have video display terminal access or capabilities.
The stories in all four publications change daily, and are in fact often updated throughout the
day, much like the "early" and "final" editions of newspapers. Each new day starts with a new
publication. Past publications are not available via electronic network, nor stored electronically for
"retrieval", nor compiled in hard copy form for sale. While on-line, the newsletters are not subject
to inquiries or work searches as a data base would be. The newsletters are publications containing
financial news readable by subscribers in their entirety or article by article as any other multi-story
news publication would be.
Newsletter A
Newsletter A is an on-line publication focusing on fast-breaking news developments in and
analysis of the corporate securities market, including market facts, market "color" and market
rumors. Its articles are written by a staff of five reporters who investigate, analyze and report the
news. Organized into various sections, Newsletter A each day includes:
--

up-to-the-minute reporting on news developments affecting corporate securities;

-analysis of economic trends and developments and their likely impact on future
performance and opportunities in the corporate securities market;
-information on new filings, new issues, corporate rating changes, potential rating
changes, current yields, etc.
--

special topical reports on issues such as private placement activity, etc.

Newsletter B
Newsletter B focuses on United States money and capital markets. The newsletter is
designed to provide continuously updated analysis of Federal Reserve Board policy and operation,
economic indicators, fiscal policy and other factors that drive United States interest rates. The
publication includes articles that provide:
-forecasts, analysis and comment on events critical to the bond market; for
example, analysis of how markets should react to U.S. economic statistics appear within 15
minutes of the release of these statistics.
-in-depth examinations of particular factors affecting the capital market, e.g.
Federal Reserve Board policy;

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Sales Tax
July 29, 1991

-money supply estimates, projected financing schedules, cash balances, actual
and projected yield curves, spread data, etc.
-and Tokyo.

updates and forecasts of European and Asian market activity from London

The contents of Newsletter B includes news of all kinds, the common link being a
connection to the performance of the bond market. The news is coupled with analysis of what
that performance is likely to be. The reporting is accomplished by taxpayer's staff of eight
located in New York, London and Tokyo.
Newsletter C
Newsletter C is devoted to currency markets. Articles touch upon, among other topics:
--

analysis of the factors affecting the foreign exchange market;

--

briefings on the outlook for the dollar;

--

key upcoming economic and political events;

--

comments on data releases of foreign governments and banks;

--

histories of key economic indicators;

--

review of technical trends in the currency market;

--

in-depth reports on issues affecting the foreign exchange market.

Newsletter C is the product of a staff of ten individuals, each contributing unsigned articles
that together comprise the publication's text.
Newsletter D
Newsletter D is devoted to articles on fixed income cash and futures markets. Articles touch
upon, among other topics:
--

updates, observations, comments and trading recommendations;

--

forecasts of market price changes;

--

market yields and values;

--

analysis of related markets; and

--

technical studies.

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Sales Tax
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The Newsletter provides 24 hour a day analysis and forecasts of the bond markets in over 10
countries and utilizes several levels of technical analysis to provide forecasts of market behavior.
Newsletter D is the most technical of the four newsletters and the most difficult for a "lay reader"
to understand. Nonetheless, for subscribers well-versed in the language of the industry Newsletter
D is an invaluable source of news, offering insight into the importance of fast-breaking events,
guidance on the meaning behind market pries and trends, and new ways to predict market behavior.
Newsletter D represents the combined effort of a reporting staff of eight.
Section 1105 of the Tax Law provides, in part:
Imposition of sales tax. -- . . .there is hereby imposed and there shall be paid a tax.
. .upon:
(a) The receipts from every retail sale of tangible personal property, except as
otherwise provided in this article. (Emphasis added)
(c) The receipts from every sale, except for resale, of the following services:

(1) The furnishing of information by printed, mimeographed or multigraphed matter
or by duplicating written or printed matter in any other manner. . . .
Section 1115 of the Tax Law provides,, in part:
Exemptions from sales and use taxes.. -- (a) Receipts from the following shall be
exempt from the tax on retail sales imposed under subdivision (a) of section eleven
hundred five and the compensating use tax imposed under section eleven hundred
ten:
(5) Newspapers and periodicals.
Section 527.3 of the Sales and Use Tax Regulations states, in part:
Sale of information services. (Tax Law, 1105[c][l])
(a) Imposition. (1) Section 1105(c) 1) 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.
Section 528.6 of the Sales and Use Tax Regulations states, in part:
Newspapers and periodicals (Tax Law, 1115[a][5]. (a) Exemption. The sale of
newspapers and periodicals is exempt from sales and compensating use tax.
(b) Definition of newspaper. (1) In order to constitute a newspaper, a publication
must conform generally to the following requirements:

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July 29, 1991

(i) it must be published in printed or written form at stated
short intervals, usually daily or weekly;
(ii) it must not, either singly or, when successive issues are put
together, constitute a book;
(iii) it must be available for circulation to the public; and
(iv) it must contain matters of general interest and reports of
current events.
(2) Notwithstanding the fact that a publication may be devoted primarily to
matters of specialized interest, such as legal, mercantile, financial, theatrical,
political, religious or sporting matters, nevertheless, if, in addition to the special
interest it serves, the publication contains general news, it is entitled to the
classification of a newspaper. . . .
(c) Definition of a periodical. (1) In order to constitute a periodical, a publication
must conform generally to the following requirements:
(i) it must be published in printed or written
form at stated intervals, at least as frequently as four
times a year;
(ii) it must not, either singly or, when
successive issues are put together, constitute a book;
(iii) it must be available for circulation to the
public;
(iv) it must have continuity as to title and
general nature of content from issue to issue; and
(v) each issue must contain a variety of articles
by different authors devoted to literature, the sciences
or the arts, news, some special industry, profession,
sport or other field of 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. . . .

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July 29, 1991

In order to be considered a newspaper or periodical for sales tax purposes, a publication must
meet the requirements enumerated in Section 528.6(b)(l) and (c)(1), respectively, of the Sales and
Use Tax Regulations. One requirement for either classification is that the publication must be
published at certain stated intervals in printed or written form.
To the extent that Petitioner's publications are made available to their subscribers as an
electronic readout or display on a computer screen, they are not newspapers or periodicals for the
purposes of the exemption contained in Section 1115(a) of the Tax Law since they do not meet the
definition of a newspaper or a periodical contained in Section 528.6 of the Sales and Use Tax
Regulations in that they are not published in printed or written form.
It is also noted that the exemptions afforded under Section 1115 of the Tax law are only
applicable to receipts from sales of tangible personal property which would be subject to the tax
imposed under Section 1105(a) of the Tax Law except for the provisions of Section 1115.
Because Petitioner's client's on-line news service is delivered to customers by means of an
electronic readout or display rather than in printed, or written form, Petitioner's client is not
considered to be selling tangible personal property. Therefore, the receipts from sales of the on-line
news service do not fall within the exemption provided under Section 1115(a)(5) of the Tax Law for
newspapers and periodicals.
However, receipts from Petitioner's client's sales of the on-line news services are considered
to be receipts from the sales of an information service and are subject to the tax imposed under
Section 1105(c)(1) of the Tax Law and Section 527.3(a)(1) of the Sales and Use Tax Regulations.
Murphy Heating Service, Inc. v Chu, 124 AD2d 907.
The laws of New York State and the Regulations of the Commissioner of Taxation and
Finance are presumed to be constitutional by the Commissioner. There is no jurisdiction at the
advisory opinion level to declare such laws or regulations unconstitutional. Therefore, it must be
presumed that the relevant sections of the law are constitutional to the extent that they relate to the
imposition of the tax liability on Petitioner's client.

DATED: July 29, 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.