Is a telephone sales-lead generation service a taxable information service in New York, and does handing over written lead reports change that?

Plain-English summary

Alan/Anthony, Inc., a New York City marketing consulting firm, planned to offer a telephone sales-solicitation service to generate high-quality sales leads for its clients. The steps: consult with the client about its products and markets; develop a script/questionnaire; identify potential buyers from the client's lists and industry sources; call those buyers with the approved script (telling them the call is on the client's behalf and is a sales call) to gauge how likely they are to buy; and report the resulting leads to the client in writing. All of the information — scripts, leads, and data on companies contacted — becomes the client's exclusive, confidential property. On request, Alan/Anthony would also give its opinion on the client's marketing effort. The firm asked whether this service is subject to New York sales and use tax.

The Department said no:

• The written reports are incidental. Transferring the written lead reports to the client is "merely incidental to the service performed" and is not a retail sale of tangible personal property under § 1105(a).
• Not a taxable information service. The service doesn't come within § 1105(a) or the information-services tax of § 1105(c)(1), and no other Tax Law provision applies — so the telephone sales-solicitation service is not taxable.
• Personal/individual backstop. The Department noted that even if the service were deemed an information service under § 1105(c)(1), it would still be exempt, because the information provided is personal or individual in nature (the client's own confidential leads, for the client's exclusive use).

What this means for you

A service isn't taxable just because it ends in a written report

Many service providers deliver their work product on paper or by file. New York doesn't tax that transfer when the document is incidental to the underlying service — it isn't a "retail sale" of tangible personal property. The lead reports here were the by-product of a telemarketing service, not goods being sold.

Lead generation / telemarketing generally isn't an enumerated taxable service

The telephone sales-solicitation service didn't fit § 1105(a) (no TPP sold), didn't fit the § 1105(c)(1) information-services tax, and matched no other enumerated service — so it fell outside the sales tax entirely. New York taxes only listed services; a marketing/telemarketing service that isn't one of them isn't taxable.

The personal-or-individual exclusion is a second line of defense

Even treating the leads as "information," they were the client's own confidential data for its exclusive use — personal or individual in nature and not incorporated into reports for others — so the § 1105(c)(1) exclusion applied. This is the same principle that keeps individualized consulting reports untaxed (compare TSB-A-92(5)S, investment-evaluation reports).

Common questions

Q: Is a telephone sales-lead (telemarketing) service taxable in New York?
A: No. On these facts it isn't a taxable sale of TPP under § 1105(a) or a taxable information service under § 1105(c)(1), and no other provision applies.

Q: Does giving the client written lead reports make it a taxable sale?
A: No. The reports are incidental to the service, so transferring them isn't a retail sale of tangible personal property.

Q: What if it were considered an information service?
A: It would still be exempt, because the leads are the client's own confidential, personal-or-individual information, not incorporated into reports furnished to others.

Q: Would selling a generic list of leads to many buyers be different?
A: Likely yes. Compiling and selling reusable information to multiple customers is the kind of information service that can be taxable; the exclusion here rests on the data being unique and exclusive to the one client.

Citations and references

Statutes, regulations, and authorities:

• Tax Law § 1105(a) (tax on receipts from every retail sale of tangible personal property)
• Tax Law § 1105(c)(1) (tax on furnishing information; exclusion for information personal or individual in nature not substantially incorporated in reports furnished to others)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1992.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a92_6s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-92 (6)S
Sales Tax
January 31, 1992

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S911030A

On October 30, 1991, a Petition for Advisory Opinion was received from Alan/Anthony, Inc.,
145 Avenue of the Americas, 2nd Floor, New York, New York 10013.
The issue raised by Petitioner, Alan/Anthony, Inc., is whether a telephone sales solicitation
service to be provided to its clients in New York State will be subject to New York State and local
sales and use taxes.
Petitioner, a marketing consulting firm, plans to offer a consulting service whose purpose is
to provide the client with high-quality sales leads. These leads will be obtained by the following
steps:
1.

Consultation with the client regarding its customers, markets, products and services.

2.

Development of a script/questionnaire asking for information needed to evaluate how likely
a potential buyer is to purchase from the client.

3.

Identification of potential buyers from lists provided by the client, published industry
directories, articles in trade journals, and referrals from potential buyers.

4.

Telephone solicitation, using the approved script, to determine how likely the potential buyer
is to purchase from the client. All potential buyers will be told that Petitioner is calling on
behalf of the client and that the purpose of the call is sales.

5.

Reporting of sales leads (i.e., companies likely to make a purchase) to the client in writing,
including all information gained from the telephone call.

All information (i.e., script, sales leads and data on companies contacted that are not likely
buyers) will be the property of the client, for the exclusive use of the client, and held in the strictest
confidence. This information will be provided on written lead reports. Upon client request, Petitioner
will provide its opinion on the client's marketing effort based on the results of the telephone
solicitation: for example, identifying the market segments with the greatest demonstrated interest
in the client's products or services.
Section 1105(a) of the Tax Law imposes a tax upon "the receipts from every retail sale of
tangible personal property".
Section 1105(c)(1) of the Tax Law imposes tax upon:

-2­
TSB-A-92 (6)S
Sales Tax
January 31, 1992

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.
The transfer of the written lead reports by Petitioner to its clients will be merely incidental
to the service performed by it and will not be a retail sale within the meaning of section 1105(a) of
the Tax Law. Accordingly, since the services performed by Petitioner will not come within the
provisions of section 1105(a) or 1105(c)(1) of the Tax Law and since no other provision of the Tax
Law applies to the telephone sales solicitation service to be provided by Petitioner, the services to
be provided by Petitioner, as described above, will not be subject to New York State sales or use tax.
It is noted that even in the instant case if it is deemed that Petitioner will be conducting an
information service described in Section 1105(c)(1) of the Tax Law, such service will be exempt
from sales and use taxes since the information provided to its customers will be personal or
individual in nature.

DATED: January 31, 1992

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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