Are a business-cycle forecasting firm's monthly research publications exempt from New York sales tax as periodicals, and is its related consulting service taxable?

Plain-English summary

Economic Cycle Research Institute, Inc. researches and forecasts business cycles for brokerages, banks, corporations, and government agencies. It publishes two monthly, $5,000-a-year newsletters at issue in this ruling -- U.S. Cyclical Outlook and International Cyclical Outlook -- each running ongoing, opinionated commentary on economic and inflation cycles, prepared by the firm's nine-person staff. It also sells a related consulting service, giving subscribers phone access to its staff and to its underlying research data, but only to those who buy all three of its publications as part of a $20,000 "All-Inclusive Service" (of which $5,000 is allocated to consulting). The firm asked the Department whether the two newsletters qualify as tax-exempt "periodicals" and whether the consulting service is taxable.

New York exempts periodicals from sales tax, but only if a publication generally meets five tests: it's published in print at least four times a year; it doesn't add up to a book; it's available to the public; it has continuity of title and content from issue to issue; and each issue carries a variety of articles by different authors (a staff of writers counts, even without individually signed bylines) on some field of interest. The Department found both newsletters cleared this bar: they publish monthly by mail, don't constitute a book or books, maintain the same title and subject focus over time, and are available to anyone who wants to subscribe. So receipts from selling the two newsletters aren't subject to sales tax.

The consulting service came out untaxed too, since it isn't one of New York's enumerated taxable services, but with a catch: because it's only sold bundled into the $20,000 all-inclusive package (alongside the exempt newsletters and a third, non-exempt weekly publication not addressed in this ruling), the $5,000 consulting allocation has to be reasonable and separately stated on the invoice to stay untaxed. If it isn't, the whole bundled fee becomes taxable. The same separate-statement rule applies whenever either exempt newsletter is sold bundled with the firm's third (non-exempt) publication or as part of the all-inclusive package.

What this means for you

Newsletter and subscription-research publishers

If your regularly published, editorially driven newsletter goes to any subscriber who wants it, doesn't amount to a "book," and keeps the same title and general content over time, it likely qualifies for New York's periodical exemption -- even without individually bylined articles, as long as a staff of writers originates the content.

Firms bundling exempt publications with taxable or nontaxable add-on services

When you sell an exempt publication together with a taxable item or an unrelated nontaxable service in one bundled price, allocate and separately state a reasonable price for each piece on the invoice. Skipping that step risks making the whole bundled charge taxable.

Research and consulting firms whose services aren't separately enumerated

A consulting service that isn't one of the Tax Law's enumerated taxable services (like this firm's forecasting-explanation service) is untaxed on its own, but only stays untaxed within a bundle if its allocated price is reasonable and separately stated.

Common questions

Q: What does a newsletter need to qualify as an exempt "periodical" in New York?
A: Generally: published at least quarterly, not equivalent to a book, available to the public, continuous title/content, and a variety of articles from different authors or staff writers each issue.

Q: Do all the articles need individual bylines to qualify?
A: No -- a newsletter with unsigned articles can still qualify if a staff of writers originally prepares the content, since that's treated as "articles by different authors."

Q: Is a research consulting service like this one taxable?
A: No, it's not among New York's enumerated taxable services -- but if it's sold bundled with other items, its price must be reasonable and separately stated to keep it out of the tax base.

Q: Does this ruling apply to my publication or consulting 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(a) (sales tax on retail sales of tangible personal property)
• Tax Law § 1115(a)(5) (newspapers and periodicals exemption)
• 20 NYCRR § 528.6(c) (definition of a periodical, five-factor test)
• Promenade Magazine, State Tax Comm, April 15, 1985, TSB-H-85(134)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_42s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-97(42)S
Sales Tax

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S960820A

On August 20, 1996, the Department of Taxation and Finance received a
Petition for Advisory Opinion from Economic Cycle Research Institute, Inc., 666
Fifth Avenue, 24th Floor, New York, New York 10103. Petitioner, Economic Cycle
Research Institute, Inc., provided additional information pertaining to the
Petition on October 11, 1996.
Petitioner raised the following issues:

1. Whether two of its publications are exempt from New York State
   and local sales and compensating use taxes as periodicals under
   Section 1115(a)(5) of the Tax Law.
2. Whether Petitioner’s consulting service is subject to State and
   local sales and use taxes.
   Petitioner submitted the following facts as the basis for this Advisory
   Opinion and provided samples of the publications in question.
   Petitioner was incorporated in April 1996.
   Petitioner specializes in
   researching, analyzing and forecasting business cycles using cyclical indicators
   and gauges. Petitioner issues three regular publications and offers a related
   consulting service.
   The first of these publications, U.S. Cyclical Outlook, is issued monthly
   by fax or by mail to subscribers at $5,000 per year.
   It provides in-depth
   cyclical analysis based on decades of experience with cyclical indicators.
   Articles draw conclusions about the likelihood of future turning points in
   economic, employment and inflation cycles in the United States. Initial issues
   of this publication each contained a single article of about 10 to 12 pages with
   two named authors. Later issues of this publication contain several articles,
   tables and charts.
   Petitioner’s entire staff of nine contributes to the
   publication’s preparation.
   The second publication, International Cyclical Outlook, is in the same
   format as the U.S. Cyclical Outlook, but applies to international free-market
   economies. This publication is issued monthly to subscribers at $5,000 per year.
   The third publication is not at issue in this Advisory Opinion, but is
   available weekly to subscribers at $5,000 per year.
   A combined subscription to any two of Petitioner’s publications is offered
   at $8,000 per year.

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Sales Tax

The publications, individually or collectively, do not constitute a book
or reference manual at year-end. The articles throughout the year are an ongoing
commentary on inflation and economic cycles.
They are opinions with high
editorial content.
Petitioner’s consulting service has several components. It includes access
to Petitioner’s staff for private attention to forecasting needs, which is
usually done entirely by telephone. It also includes access to Petitioner’s
working papers relating to its latest research and access to proprietary data
underlying the research. Petitioner has no database as such, but rather computed
indexes that are available on-line or on disk. Petitioner’s consulting service
is, in effect, the right to call Petitioner for an explanation of and the
underlying evidence used in its published articles. The consulting service is
only offered to subscribers who purchase all three of Petitioner’s publications.
This service makes up $5,000 of Petitioner’s $20,000 "All-Inclusive Service."
Anyone may subscribe to these publications and service.
The normal
customer base for business cycle research and forecasting consists of brokerage
firms, banks, financial institutions, major industrial corporations and
governmental agencies.
Applicable Law and Regulations
Section 1105(a) of the Tax Law imposes tax upon:
The receipts from every retail sale of tangible personal
property, except as otherwise provided in this article.
Section 1115 of the Tax Law provides, in part:
(a) Receipts from the following shall be exempt from the tax
on retail sales imposed under subdivision (a) of section eleven
hundred five and the compensating use tax imposed under section
eleven hundred ten:
*

*

*

(5) Newspapers and periodicals.
Section 528.6 of the regulations states, in part:
The sale of newspapers and periodicals is
(a) Exemption.
exempt from sales and compensating use tax.
*

*

*

(c) Definition of a periodical. (1) In order to constitute a
periodical, a publication must conform generally to the following
requirements:

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(i) it must be published in printed or written form at stated
intervals, at least as frequently as four times a year;
(ii) it must not, either singly or, when successive issues are
put together, constitute a book;
(iii) it must be available for circulation to the public;
(iv) it must have continuity as to title and general nature of
content from issue to issue; and
(v) each issue must contain a variety of articles by different
authors devoted to literature, the sciences or the arts, news, some
special industry, profession, sport or other field of endeavor.
(2) A publication which may be known as or considered to be a
newsletter may qualify as a periodical if it conforms to the above
standards. Where a newsletter has no signed articles, but has a
staff of writers who originally prepare articles, such publication
will be considered to have articles by different authors.
If a
publication has been classified by the United States Postal Service
as one which is entitled to second class mailing privileges, that
fact will be considered in determining whether or not the
publication is a periodical.
Opinion
In order to be considered a periodical for purposes of the exemption from
State and local sales and compensating use taxes in Section 1115(a)(5) of the Tax
Law, a publication must conform generally to each of the requirements enumerated
in Section 528.6(c)(l) of the Sales and Use Tax Regulations.
The term
"generally" as used in this section of the regulations means that a publication
may qualify as a periodical even if it does not satisfy one of the five
requirements for a limited period of time. (See, Promenade Magazine, State Tax
Comm, April 15, 1985, TSB-H-85(134)S.)
Petitioner’s U.S. Cyclical Outlook and International Cyclical Outlook
conform generally to all of the regulatory requirements of a periodical for
purposes of the exemption from the sales and compensating use taxes. This is so
provided these publications continue to contain a variety of articles by
different authors or by Petitioner’s staff of writers. These publications are
published monthly in printed form and are available to the public by mail. They
do not in any way constitute a book or books and have continuity as to their
general nature and content. Accordingly, receipts from the sales of these two
publications are not subject to State and local sales and use taxes.
Petitioner’s consulting service is not included among the enumerated
services that are subject to sales and compensating use taxes under the Tax Law.
The consulting service is only offered to subscribers who purchase Petitioner’s
“All-Inclusive Service.” Two of the publications included in this all-inclusive
service are exempt from tax as previously described. It is assumed for purposes

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of this Opinion that the third publication does not qualify for such exemption.
Each of these publications, however, may be purchased separately for $5,000 and
Petitioner has indicated that the consulting service makes up $5,000 of the
$20,000 subscription fee for the all-inclusive service. Accordingly, receipts
from the sale of Petitioner’s consulting service are not subject to State and
local sales and use taxes, provided that such receipts are reasonable and
separately stated on any invoice or other statement of price given to the
subscriber. If the allocable amount is not reasonable and separately stated,
then the entire fee is subject to tax.
This rule concerning receipts also applies to receipts for Petitioner’s
U.S. Cyclical Outlook and International Cyclical Outlook when sold as parts of
Petitioner’s “All-Inclusive Service” or when either publication is sold as part
of a combined subscription with Petitioner’s third publication.

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.