NY TSB-A-97(41)S Sales Tax 1997-07-23

Is designing customized web pages and placing them on the Internet subject to New York sales tax?

Short answer: No -- designing customized web pages and placing them on the Internet isn't one of New York's enumerated taxable services, so the charge is untaxed as long as no tangible personal property is sold along with it.

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This page answers the general question as of 1997. Ezel answers yours, under current New York tax law, with citations.

Disclaimer: This is an official New York State Department of Taxation and Finance Advisory Opinion (TSB-A), issued by the Office of Counsel at a taxpayer's request. It is limited to the facts set forth in it and binds the Department only with respect to the petitioner to whom it was issued, and only if that petitioner fully and accurately described all relevant facts; another taxpayer cannot rely on it. It reflects the law, regulations, and Department policy in effect when issued and may since have changed. Taxpayer-identifying details are redacted. New York State and local sales taxes are administered centrally by the Department. This summary is informational only and is not legal or tax advice. Consult a licensed New York tax professional about your specific situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

Pat Rolland's client designs customized web pages -- consisting of advertisements -- and places them on the Internet for its own customers, without selling any tangible personal property along the way. Rolland asked the Department whether this web-page design and placement service is subject to New York sales tax.

The answer was straightforward: designing and posting customized web pages isn't among the services New York specifically lists as taxable under Tax Law § 1105(c). The Department pointed to its own recent opinion in a similar case (Ski Soft, Inc., issued about a month earlier) reaching the same conclusion. Because the client doesn't sell any tangible personal property to its customers as part of the arrangement, its charge for designing and placing the web pages is entirely untaxed.

What this means for you

Web designers and small digital agencies

If your service is limited to designing a web page or site and getting it online -- without selling any tangible personal property to the client -- your charge isn't subject to New York sales tax. Watch for the moment your engagement adds a taxable component, like selling software, hardware, or other tangible property alongside the design work.

Advertising-focused web developers

Even where the web pages themselves consist of advertisements, that doesn't change the analysis -- the taxability turns on whether the service is an enumerated one and whether tangible personal property changes hands, not on the content of the pages.

Common questions

Q: Does it matter that the web pages are advertisements?
A: No -- the taxability analysis turns on whether the service is an enumerated taxable service and whether any tangible personal property is sold, not on what the pages contain.

Q: What would make a web design charge taxable?
A: Selling tangible personal property (such as software or hardware) to the customer as part of the engagement could bring some or all of the charge into the tax base; pure design and hosting/placement services on their own are not enumerated taxable services.

Q: Does this ruling apply to my web design business?
A: Not automatically. An Advisory Opinion binds the Department only for the taxpayer and facts it was issued to, and it can't be relied on by anyone else.

Citations and references

Tax Law § 1105(c) (enumerated taxable services)
Ski Soft, Inc., Adv Op Comm T&F, June 25, 1997, TSB-A-97(35)S

Source

Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1997.htm
Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a97_41s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-97(41)S
Sales Tax

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO.S960806A

On August 8, 1996, the Department of Taxation and Finance received a
Petition for Advisory Opinion from Pat Rolland, c/o Richard Koskey, 502 Union
Street, Hudson, New York 12534.
The issue raised by Petitioner, Pat Rolland, is whether the design of
customized web pages for the Internet is subject to sales tax.
Petitioner's client designs customized Web pages, consisting of
advertisements, and places them on the Internet for its customers.
Petitioner's
client does not sell tangible personal property to its customers.
Opinion
Petitioner's services of designing customized Web pages and placing these
pages on the Internet are not included among the enumerated services the receipts
from the sale of which are subject to State and local sales taxes under Section
1105(c) of the Tax Law (see, Ski Soft, Inc., Adv Op Comm. T&F, June 25, 1997,
TSB-A-97(35)S). Provided Petitioner’s client does not sell any tangible personal
property, its charge to its customers is not subject to sales tax.

DATED: July 23, 1997

NOTE:

/s/
John W. Bartlett
Deputy Director
Technical Services Bureau

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

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