Are a fleet-management company's personal-mileage and vehicle-expense reports, prepared for individual corporate clients from their own data, subject to New York sales tax as an information service?

Subject

Capital Fleet Services, is whether certain reports furnished by it to its customers are subject to sales tax.

What this means for you

A fleet-management company offers two report services to large corporate clients that lease vehicles for employees: (1) the Personal Mileage Program, which tracks IRS rules on taxable personal use of company vehicles, compiles each employee's personal vs. total mileage from expense reports, and produces quarterly and annual benefit-value summaries; and (2) the Vehicle Related Expense Reporting Program, which monitors each vehicle's operating costs against the client's own benchmarks and produces reports flagging underperforming vehicles, cost breakdowns by model/year, and replacement recommendations. Both services are billed separately from any vehicle lease itself, and can even be sold to clients who don't lease their vehicles from this company.

New York taxes "information services" that collect/compile/analyze data and furnish reports -- but specifically excludes information that's personal or individual and not shared with other customers. Courts have described a taxable information service as one that "integrates or recasts" a customer's data into genuinely new intelligence. Here, the company does process client-submitted data into new summaries and analyses -- but every report pertains ONLY to that one client's own leased/owned vehicles and employees, and is never folded into reports for other clients. That personal, client-specific nature is exactly what the tax law's exclusion protects, so both report programs escape sales tax, PROVIDED the underlying information genuinely isn't shared across customers' reports (the same condition applied to routine payroll and accounting-report preparation by computer service companies).

Q&A

Q: We process our clients' own submitted data (mileage, expenses, etc.) into customized reports just for that client -- is our fee taxable as an information service?
A: Not if the reports stay client-specific, per this opinion -- since each report covers only that client's own data and isn't shared with other clients, it qualifies for the personal-information exclusion from the Tax Law § 1105(c)(1) information-services tax.

Q: Does it matter that we recast raw employee mileage/expense submissions into new summaries, benchmarks, and recommendations rather than just returning the raw data?
A: No, per this opinion (citing Finserv Computer Corp. v. Tully) -- "furnishing information" specifically includes integrating/recasting a customer's own data into new intelligence; that reprocessing doesn't disqualify the report from the personal-information exclusion as long as it stays specific to that one customer.

Q: We sell this reporting service separately from any equipment lease, even to customers who don't lease from us -- does that change the tax treatment?
A: This opinion doesn't treat that as disqualifying -- it notes the reporting services are separate agreements apart from any vehicle lease, and analyzes the reports' taxability purely on the personal/individual-information exclusion, independent of the lease relationship.

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 furnished to other persons.
• 20 NYCRR § 527.3(b)(2), Example 3 -- confirms computer-prepared payroll reports are excluded from the information-services tax as personal/individual information; the same exclusion extends to accounting-report preparation.
• Finserv Computer Corporation v. Tully, 94 A.D.2d 197 -- defines "furnishing information" as integrating/recasting a customer's own data into new significant intelligence; applied here.

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_3s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-94 (3)S
Sales Tax
February 18, 1994

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S930809A

On August 9, 1993, a Petition for Advisory Opinion was received from G.E. Capital Fleet
Services/GELCO Corp., Three Capital Drive, Eden Prairie, MN 55344.
The issue raised by Petitioner, G.E. Capital Fleet Services, is whether certain reports
furnished by it to its customers are subject to sales tax.
The first of the reports furnished by Petitioner to its customers is known as the Personal
Mileage Program.
Petitioner's customers are generally large corporations who lease vehicles for their employees
and/or salespersons. Personal use of a business vehicle is deemed to be a taxable benefit as non-cash
compensation. The objective of the Personal Mileage Program service is to provide the customer
with a comprehensive reporting, valuation, and data capture system that will help them comply with
the Internal Revenue Service requirements easily, yet effectively.
As part of this service, Petitioner:
1)

Closely tracts changes in Internal Revenue Service regulations pertaining to personal
use.

2)

Compiles personal and total use miles captured from the customer's employee's
expense reports and furnishes the customer with the calculated benefits for each
employee.

3)

Provides the customer with the flexibility to choose the appropriate personal
compensation method suggested by the Internal Revenue Service.

4)

Provides the customer with a quarterly detailed summary which they may distribute
to employees.

5)

Creates an annual report in December of each year which will be based on the total
personal use mileage value in accordance with our customer's designated valuation
method.

The second of the reports furnished by Petitioner to its customers is known as the Vehicle
Related Expense Reporting Program.
Once again, Petitioner's clients are generally large corporations who lease vehicles for their
employees and/or salespersons. Petitioner's clients, as expected, are concerned about the costs of
operating their vehicles. The Vehicle Related Expense Reporting Program monitors operating
expenses and isolates vehicles in the client's fleet that are not operating up to pre-determined
standards set by its client. Petitioner processes the data provided and forwards the following detailed
reports to the client:

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Sales Tax
February 18, 1994
Operations Summary: details variable costs, fixed costs and miles traveled.
Unit Expense Report: summary for all individual units in the customer's fleet.
Unit Maintenance Ledger: details specific vehicles whose operating costs are significantly
above or below predetermined cost parameters set by the customer.
Fleet Model Recap: breaks down variable operating costs by year, make and model.
Replacement Projection Analysis: Isolates vehicles that will be due for replacement
according to our customer's criteria.
The services provided by Petitioner are separate agreements apart from the motor vehicle
lease, and in some instances the services may be performed for customers who do not lease their
vehicles from Petitioner. Reports and service benefits are received in New York but the service is
performed in Minneapolis. The reports are based solely on information provided by Petitioner's
customer.
Section 1105(c)(1) of the Tax Law imposes sales 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 adverting 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.
Section 527.3(b)(2), Example 3 of the New York State Sales and Use Tax Regulations
explains that the preparation of payrolls for customers by computer service companies is not a
taxable information service as payrolls are considered to be personal and individual in nature and
the information contained in a payroll may not be furnished to other parties. The exclusion from tax
provided under Section 1105(c)(1) of the Tax Law also apples to the preparation of accounting
reports, etc.
It has been held that furnishing information is integrating or recasting information received
from a customer so that customer is given back some new information or some new significant
intelligence concerning data furnished. (Finserv Computer Corporation v. Tully, 94 AD2d 197)
In the Personal Mileage Program and the Vehicle Related Expense Reporting Program the
Petitioner has received information from its customers which it has in turn processed and has given
back new information to its customers. This new information pertains only to properties owned or
leased by Petitioner's customers. Thus, Petitioner's information service will be considered personal

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Sales Tax
February 18, 1994
and individual in nature and will qualify for exclusion from tax provided under Section 1105(c)(1)
of the Tax Law, provided the information contained therein is not incorporated into reports furnished
to other persons.

DATED: February 18, 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.