Is a service that collects driving-complaint calls and reports them to the vehicle owner subject to New York sales tax?

Plain-English summary

Alfred Farella's business gave subscribers a uniquely numbered bumper sticker asking other drivers to call a toll-free number and report unsafe driving. An out-of-state marketing service took the calls live, asked callers scripted questions (what happened, where, and when), and e-mailed the reports to Farella's business each day. Farella's business then reviewed each report, and -- if it was a genuine unsafe-driving complaint -- prepared a report for the specific subscriber, sometimes including driving tips or referrals to driver-safety schools, and sent it by fax or e-mail. The reports went only to the individual subscriber; the call-center operators never spoke with subscribers, and subscribers couldn't call the operators directly. Farella asked whether this service was subject to sales tax.

The Department said no. New York taxes "the furnishing of information ... including the services of collecting, compiling or analyzing information ... and furnishing reports thereof to other persons" under § 1105(c)(1) -- but that same provision specifically excludes information that is "personal or individual in nature" and isn't (and won't be) substantially folded into reports given to other people. Because each subscriber's report reflected only complaints about that subscriber's own vehicle and was sent only to that one subscriber (never bundled into a broader report sold to others), the service qualified for the personal/individual information exclusion. The Department also confirmed the service wasn't a taxable telephone answering service under § 1105(b): even though live operators answered incoming calls, that was only incidental to the real service Farella provided (reviewing, interpreting, and reporting complaints to the vehicle owner).

What this means for you

Driver-monitoring, fleet-safety, and similar complaint-reporting businesses

If your service gathers information about one specific customer's situation (their vehicle, their employee, their property) and reports it only back to that customer -- never packaging it into a broader report sold to third parties -- it likely qualifies for the personal/individual information exclusion from New York's information-services tax, even if you use call centers or telephone answering as part of your process.

Businesses using outsourced call-answering as part of a larger service

Simply because your process includes elements of a telephone answering service doesn't automatically make your charges taxable as such. The Department looks at what the customer is really paying for -- here, individualized reports -- and treats incidental call-handling as part of that larger, non-enumerated (and, separately, personal-information-excluded) service.

Accountants and tax professionals

This is a useful application of the personal/individual information exclusion within § 1105(c)(1) to a service built around live call intake plus individualized reporting -- a fact pattern distinguishable from typical taxable "information services" (like credit reports or research services) that compile data into reports distributed to multiple customers or the public.

Common questions

Q: Is a service that reports driving complaints back to a vehicle owner taxable as an information service?
A: No, when the reports are personal to that one subscriber and aren't incorporated into reports given to other people -- that's the personal/individual information exclusion in § 1105(c)(1).

Q: Does using a call center to answer incoming complaint calls make the service a taxable telephone answering service?
A: Not on its own. If call answering is only incidental to a larger reporting service, the answering-service tax under § 1105(b) doesn't apply.

Q: Can another business with a similar reporting service rely on this ruling directly?
A: Not automatically. This advisory opinion binds the Department only as to the petitioner and the specific facts (individualized, non-shared reports) described.

Citations and references

Statutes and rules:

• Tax Law § 1105(a) (tax on retail sales of tangible personal property)
• Tax Law § 1105(c)(1) (tax on furnishing information services, with exclusion for personal/individual information not incorporated into reports to others)
• Tax Law § 1105(b) (tax on telephone answering services)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1998.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a98_70s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-98(70)S
Sales Tax
October 7, 1998

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S980511A

On May 11, 1998, the Department of Taxation and Finance received a Petition
for Advisory Opinion from Alfred A. Farella, 201 Sherman Avenue, Hawthorne, N.Y.,
10532.
Petitioner, Alfred A. Farella, submitted additional information
pertaining to the Petition on July 8, 1998 and September 20, 1998.
The issue raised by Petitioner, Alfred A. Farella, is whether services
rendered by a business engaged in the collection and compilation of comments and
complaints about unsafe driving practices is subject to sales tax.
Petitioner submitted the following facts as the basis for this Advisory
Opinion.
Petitioner’s business is engaged in the collection of comments and
complaints about unsafe driving practices where the information is gathered for
and only released to subscribers.
A subscriber to the service is issued a
uniquely numbered bumper sticker to place on his or her vehicle or vehicles. The
bumper sticker asks other drivers to report unsafe driving practices to a toll­
free telephone number. Petitioner has contracted with an out-of-state in-bound
marketing service to have live operators take calls from persons who call the
toll-free number. The operators ask callers questions from a prepared script.
The questions include what the caller wishes to report and where and when the
incident took place. At 5:00 p.m. each day, the marketing service sends reports
directly to Petitioner via e-mail. Operators do not speak to or correspond with
the subscribers, and the subscribers cannot call the operator for a report. Upon
receipt of the report from the marketing service, Petitioner reviews and
interprets the reported incident. If the incident falls within the bounds of the
program (unsafe driving reports), Petitioner will prepare a report for
distribution to the subscriber, including driving tips or referrals to local
driver safety schools when appropriate.
Petitioner distributes the report by
fax or e-mail to the subscriber for whatever corrective action he or she might
deem appropriate.
Applicable Law and Regulations
Section 1105(a) of the Tax Law imposes a tax on the receipts from every
retail sale of tangible personal property, except as otherwise provided.
Section 1105(c)(1) of the Tax Law imposes a tax on the receipts from every
sale of the following services:
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

-2­
TSB-A-98(70)S
Sales Tax
October 7, 1998

not or may not be substantially incorporated in reports furnished to
other persons, and excluding the services of advertising 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.
Opinion
Petitioner’s
business is engaged in the collection of comments and
complaints pertaining to unsafe driving practices for its subscribers. Petitioner
prepares individualized reports of the driving practices of the persons operating
its subscribers’ vehicles. These reports are transmitted by fax or e-mail to the
respective subscriber.
The service Petitioner provides to its subscribers, as described above, is
not subject to sales tax. The tax imposed by Section 1105(b) of the Tax Law on
telephone answering services does not apply to Petitioner’s service.
Although
Petitioner’s service may include elements of a telephone answering service,
telephone answering service is only incidental to the service provided by
Petitioner to its subscribers.
Petitioner is making sales of personal and
individual information to its subscribers. This information is transmitted by
fax or e-mail only to the subscriber, and is not incorporated into reports
furnished to other persons. Accordingly, the service described in the facts
above qualifies for the exclusion from tax under Section 1105(c)(1) of the Tax
Law.
Petitioner is not required to collect sales tax on its sales of this
service.

DATED: October 7, 1998

NOTE:

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

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