Is a marketing consulting firm's fee -- covering sales-data analysis, purchased-data analysis, written marketing plans, and specific written recommendations for a client -- subject to New York sales tax?

Subject

Issue raised by Petitioner, Crowley Webb & Associates, is whether the sale of its marketing consulting services are subject to sales tax.

What this means for you

A marketing consulting firm charged clients for analyzing internal sales data, analyzing separately purchased outside data, preparing written marketing plans, and giving specific written recommendations for boosting sales/profits and launching new products (positioning, pricing, promotion, advertising, sales strategy).

New York's information-services tax reaches collecting, compiling, or analyzing information and furnishing reports of it -- but excludes information that's personal or individual and can't be substantially reused in reports to other clients. Because the firm's reports related specifically to each individual client and weren't derived from (or reused via) a common database shared across clients, the Department found the written reports qualified as exempt personal/individual information.

The remaining consulting services described -- data analysis itself, marketing-plan preparation, and strategic recommendations -- weren't information-service deliverables at all in the way the opinion analyzed them, and none fell within any of the Tax Law's other enumerated taxable services. So the entire package of marketing consulting services described was untaxed.

Q&A

Q: We provide written strategic recommendations and analysis tailored to each individual client -- is that a taxable information service?
A: Not if the reports are genuinely client-specific and the underlying analysis isn't drawn from (or reused across) a shared database serving multiple clients -- that qualifies for the personal/individual information exclusion, same as this opinion's marketing consultant.

Q: What if we used the same market research or database to write reports for several different clients?
A: That would likely defeat the personal/individual exclusion (compare the contrasting result in TSB-A-95(14)S, where a shared database made otherwise "tailored" reports taxable) -- the exemption depends on the information NOT being reusable across multiple clients' reports.

Q: Does general business/marketing consulting fall under any other taxable service category in New York?
A: Not per this opinion -- pure consulting, strategy, and advisory services (as opposed to installation, maintenance, protective/detective services, or other specifically enumerated categories) generally aren't taxable services in New York.

Citations

• Tax Law § 1105(c)(1) -- taxes information services (collecting/compiling/analyzing and furnishing reports), excluding personal/individual information not substantially reused in reports to other persons.
• Alan/Anthony, Inc., Adv Op Comm T&F, June 18, 1992, TSB-A-92(47)S -- applied in confirming client-specific consulting reports not drawn from a shared database qualify for the personal/individual information exclusion.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1995.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a95_2s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-95 (2)S
Sales Tax
January 11, 1995

Taxpayer Services Division
Technical Services Bureau

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S940627C

On June 27, 1994, a Petition for Advisory Opinion was received from Crowley Webb &
Associates, 268 Main St., Suite 400, Buffalo, New York 14202.
The issue raised by Petitioner, Crowley Webb & Associates, is whether the sale of its
marketing consulting services are subject to sales tax.
Petitioner provides its client with marketing consulting services for a fee which include:
1.)

Analysis of its client's internal sales data,

2.)

Analysis of other data purchased from other sources by its client,

3.)

Preparation of written marketing plans,

4.)

Specific written recommendations for improving sales and profits, and

5.)

Specific written recommendations for new products including position, pricing, promotion,
advertising and sales strategies.

Section 1105 (c)(1) of the Tax Law imposes a tax upon "[T]he furnishing of information by
printed, mimeographed or multigraphed matter or by duplicating written or printed matter in any
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. . ."
Petitioner, is supplying its clients with only written information reports. However, provided
petitioner's reports relate specifically to each individual client and as long as the information
contained in the reports is not and may not be substantially incorporated in reports furnished to other
persons or derived from a common data base, the reports would be considered to be personal or
individual in nature and, therefore, exempt from the tax imposed by Section 1105(c)(1) of the Tax
Law. The other marketing consultation services provided by Petitioner as set forth above are not any

-2­
TSB-A-95 (2)S
Sales Tax
January 11, 1995
of the services enumerated under Section 1105(c) of the Tax Law and, therefore, such services are
not subject to sales tax. Alan/Anthony, Inc., Adv Op Comm T&F, June 18, 1992, TSB-A-92(47)S.

DATED: January 11, 1995

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

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