The New York State Department of Taxation and Finance issued an advisory opinion determining that the fee paid for an information technology support service was not subject to sales and use tax because the taxable component of the service was delivered outside of New York. The taxpayer provided investment advice to its customers and as part of the service, it conveyed significant data through its website. To deliver this service the taxpayer used servers and other information technology assets located outside of New York. The taxpayer hired a New York based company to manage these assets and to provide IT services. The advisory opinion determined that the management of the IT system including security audits, providing anti-virus software, routing emails through anti-spam platform, and managing the taxpayer’s domain name system, constituted a taxable protective service under New York statute. However, because the computer assets and data being protected were located outside of New York, this service was not subject to New York sales tax.
