Skip to content

Menu

LexBlog, Inc. logo
NetworkSub-MenuBrowse by SubjectBrowse by PublisherBrowse by ChannelAbout the NetworkJoin the NetworkProductsSub-MenuProducts OverviewBlog ProBlog PlusBlog PremierMicrositeSyndication PortalsAbout UsContactSubscribeSupport
Book a Demo
Search
Close

New York Broadly Applies Information Service Tax to Marketing Analytic Services

By Stefi George & David Blum on January 19, 2021
Email this postTweet this postLike this postShare this post on LinkedIn

A year and a half following the New York Court of Appeals’ significant 2019 decision in Matter of Wegmans Food Markets, Inc. v. Tax Appeals Tribunal of State of New York, 33 NY3d 587 (2019), New York continues to grapple with the sales tax treatment of information services.

In a recent determination by the Division of Tax Appeals (DTA), Matter of Marketshare Partners LLC, DTA 828526, the Administrative Law Judge (ALJ) issued a 55-page opinion analyzing the interplay between taxable information services, nontaxable consulting services and the personal and individual exclusion for information services under Section 1105(c)(1) that was the subject of the Wegmans case. This opinion is an important development in an area that has been the source of much confusion and ambiguity in recent years.

As the Marketshare Partners case illustrates, the challenge in determining the taxability of information technology services is that they do not fall neatly into one category. The taxpayer in this case was a marketing analytics firm selling advertising services, media company services, white paper services and an advertising agency product. The ALJ determined that the advertising and media company services were nontaxable consulting services, the white paper product was a taxable information service (based on lack of sufficient evidence to qualify for exemption or exclusion), and the advertising agency product was treated as a taxable software license.

With respect to the advertising and media company services, the NYS Tax Department contended that these services constituted a taxable information service because the taxpayer collected data and used that data to build models and then disseminate information and recommendations to the customer. The ALJ, however, sided with the taxpayer, who claimed that the service was a nontaxable consulting service, notwithstanding the inclusion of data in the product provided to the customer. The ALJ emphasized that the taxpayer provided critical guidance to customers to develop and implement their marketing strategies, including meeting with the customers, rather than merely disseminating electronic data. Thus, the services were more akin to nontaxable professional consulting services than information services. The ALJ confirmed that under the regulations and existing precedent, services that principally include advice and guidance do not fall within the scope of information services.

Although the issue was moot (since the ALJ concluded that the services did not constitute information services), the ALJ nonetheless briefly addressed the taxpayer’s argument that the services were eligible for the exclusion from taxable information services because the data was personal or individual in nature and cannot be substantially incorporated into reports furnished to other persons. Following Wegmans, the ALJ held that, if the services did constitute information services, the taxpayer would not be eligible for the exclusion under Section 1105(c)(1) because the taxpayer had not produced sufficient evidence that the information was not from publicly available data nor that it could not be incorporated into a product for another customer.

Overall, this case is helpful for its deep analysis of the distinction between consulting services and information services and the significant overlap between the two services. However, there remains the unanswered question in a post-Wegmans landscape – as to what qualifies as personal and individual information services sufficient to qualify for the sales tax exclusion. It is likely only a matter of time before another case will find its way before DTA on this issue.

Photo of Stefi George Stefi George

A versatile tax lawyer, Stefi George advises clients in tax planning, compliance, controversy, tax insurance underwriting and litigation. Stefi’s practice encompasses all areas of state and local tax controversy and planning, including income tax, gross receipts, payroll, and sales and use tax. Stefi…

A versatile tax lawyer, Stefi George advises clients in tax planning, compliance, controversy, tax insurance underwriting and litigation. Stefi’s practice encompasses all areas of state and local tax controversy and planning, including income tax, gross receipts, payroll, and sales and use tax. Stefi focuses on complex, emerging state and local tax issues and cases of first impression, particularly for digital services and SaaS companies, remote sellers, and marketplace facilitators.

Read more about Stefi GeorgeEmail
Show more Show less
Photo of David Blum David Blum

Ranked by Chambers USA for both taxation and tax controversy, David Blum provides transactional, tax planning, and tax litigation counsel to local and multinational businesses throughout the United States. His practice serves a variety of sectors, including telecommunications, automotive retail, equipment leasing, financial…

Ranked by Chambers USA for both taxation and tax controversy, David Blum provides transactional, tax planning, and tax litigation counsel to local and multinational businesses throughout the United States. His practice serves a variety of sectors, including telecommunications, automotive retail, equipment leasing, financial services, senior care, logistics, and retail, among others. David’s comprehensive multistate taxation practice includes nexus issues, income apportionment, sales and use tax, franchise tax, False Claims Act (qui tam), transfer taxes, and state registration and reporting requirements. In addition, he has significant experience in creating and implementing tax-efficient corporate and partnership structures for all types of U.S. and cross border transactions, including business start-ups, private equity, venture capital, mergers and acquisitions, joint ventures, dispositions, restructurings, intellectual property, and corporate finance matters

Read more about David BlumEmail
Show more Show less
  • Posted in:
    Tax
  • Blog:
    SALT Insights
  • Organization:
    Akerman LLP
  • Article: View Original Source

LexBlog, Inc. logo
Facebook LinkedIn Twitter RSS
Real Lawyers
99 Park Row
  • About LexBlog
  • Careers
  • Press
  • Contact LexBlog
  • Privacy Policy
  • Editorial Policy
  • Disclaimer
  • Terms of Service
  • RSS Terms of Service
  • Products
  • Blog Pro
  • Blog Plus
  • Blog Premier
  • Microsite
  • Syndication Portals
  • LexBlog Community
  • Resource Center
  • 1-800-913-0988
  • Submit a Request
  • Support Center
  • System Status
  • Resource Center
  • Blogging 101

New to the Network

  • Tennessee Insurance Litigation Blog
  • Claims & Sustains
  • New Jersey Restraining Order Lawyers
  • New Jersey Gun Lawyers
  • Blog of Reason
Copyright © 2025, LexBlog, Inc. All Rights Reserved.
Law blog design & platform by LexBlog LexBlog Logo