Is a customer-satisfaction survey consulting business's fee for developing surveys, analyzing data, and delivering findings reports subject to New York sales tax as an information service?

Subject

Whether the sale by Quality Surveys of its customer satisfaction survey consulting service is subject to sales tax under Section 1105(c)(1) of the Tax Law.

What this means for you

A consultant provides customer-satisfaction survey services to non-profit hospitals (with plans to expand to physician offices and universities): developing survey instruments, analyzing the resulting data, reporting outcomes, and recommending programs to implement change based on the findings -- delivered as verbal discussion or written reports tailored to each client's needs.

New York taxes "information services" -- collecting, compiling, or analyzing information and furnishing reports on it -- but carves out information that's personal or individual in nature and isn't substantially folded into reports given to OTHER clients. Since the written report here is built from data the consultant collects and analyzes, it does count as an information service in the first place. But because each report pertains only to a particular hospital's or facility's own customer-satisfaction survey, it satisfies the "personal or individual" half of the exclusion test. The remaining condition -- that the information not be substantially incorporated into reports furnished to other clients -- is a factual question the opinion leaves to the taxpayer to confirm in its own practice; PROVIDED that condition holds, the survey consulting fee is excluded from sales tax.

Q&A

Q: We provide survey/data-analysis consulting and deliver a written report unique to each client -- is our fee taxable as an information service?
A: It technically IS an information service under Tax Law § 1105(c)(1), per this opinion -- but it can qualify for the personal-information exclusion if the report is unique to that one client's own facility and isn't substantially reused in reports for other clients.

Q: What if we reuse chunks of one client's survey findings or benchmarks in another client's report?
A: This opinion conditions the exclusion on the information NOT being substantially incorporated into other clients' reports -- doing so could jeopardize the exemption for that portion of your services, though the opinion doesn't quantify how much reuse would tip the balance.

Q: Does it matter that we're currently serving hospitals but plan to expand to physician offices and universities?
A: No, per this opinion -- the analysis turns on whether each report is personal/individual to its own client and not shared, not on which industries the client happens to be in.

Citations

• Tax Law § 1105(c)(1) -- imposes tax on information services (collecting, compiling, or analyzing information and furnishing reports), excluding personal/individual information not substantially incorporated into reports for other persons.
• 20 NYCRR § 527.3(b)(2) -- clarifies that sales tax doesn't apply to information that is personal or individual in nature and not substantially incorporated into reports furnished to other persons by the same collector/analyzer.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1994.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a94_16s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-94 (16)S
Sales Tax
April 6, 1994

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S940118A

On January 18, 1994 a Petition for Advisory Opinion was received from Anne E. Steger, 3
Birchstone Hill Rd., Rush, N.Y. 14543.
The issue raised by Petitioner, Anne E. Steger, is whether the sale by Quality Surveys of its
customer satisfaction survey consulting service is subject to sales tax under Section 1105(c)(1) of
the Tax Law.
Petitioner currently provides customer satisfaction survey consulting services to non-profit
hospitals. It is anticipated that in the near future these services will be expanded to include physician
offices and universities.
The services provided range from assisting institutions in developing survey instruments and
reporting outcomes to recommending and developing programs for implementing change based on
survey findings. The services are in the form of verbal discussion or written reports based on the
needs of the client. A typical client will need to have a survey developed, data analyzed, and a report
generated on the findings.
Section 1105(c) of the Tax Law imposes a tax upon 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, 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
supplied).
Regulation Section 527.3(b)(2) further explains §1105(c)(1) of the Tax Law as follows:
The sales tax does not apply to the receipts from the sale of information
which is personal or individual in nature and which is not or may not be substantially
incorporated into reports furnished to other persons by the person who has collected,
compiled or analyzed such information. . . .
Since the report is developed from data which is collected and analyzed by Quality Surveys,
the sale of such report in written form constitutes the rendering of an information service within the
meaning and intent of Section 1105(c)(1) of the Tax Law.

-2­
TSB-A-94 (16)S
Sales Tax
April 6, 1994
However since the reports pertain only to customer satisfaction surveys in particular offices
or facilities, the reports are considered to be uniquely personal or individual in nature, thus satisfying
the first condition required for exclusion from sales tax pursuant to Section 1105(c)(1) of the Tax
Law.
The second condition for exclusion mandates that the information may not be substantially
incorporated in reports furnished to other persons. Provided the reports furnished to the client meet
this condition, Quality Surveys' consulting services will be considered to meet the requirements for
exclusion from sales tax under Section 1105(c)(1) of the Tax Law.

DATED: April 6, 1994

/s/
PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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