SALT Report 1394 – The New York Department of Taxation and Finance has issued a memorandum that explains recently legislation that provides a sales and use tax exemption for electronic news services and electronic periodicals. The Department defines news content as articles, photographs, videos, and audio materials relating to news. The exemption does not apply to listings, advertisements, catalogs, compilations, or databases.
Electronic news service is defined as a service that is delivered, furnished, or provided to or accessed by the purchaser electronically or digitally and that meets all of the following conditions:
- The service’s predominant purpose is the presentation of news content that is prominently featured
- News content must include general news that is accessible without the use of a search function;
- Must be newly published or updated at least daily unless the service specifies some other interval,
- Must be predominantly purchased from contracted wire services, or written and produced by employees, or by independent contractors
- Is available to the public
- Describes itself as a news service, newspaper, magazine, periodical, journal, or post, or using similar words;
- The title of the service and nature of its content are continuous over time;
- The service is not a listing, catalog, database, or compilation; and
- The only search function the service offers without a separately stated, reasonable is a search of the service’s present or past news content.
However, if the service does feature a search function without a separately stated, reasonable charge that allows access to content other than the past or present news content, the service will still qualify as an electronic news service if all of the other conditions described above are met, and the provider of the service can prove that the “enhanced” search function is only an incidental part of the service.
Electronic News Bundled and Sold for a Single Price
If an electronic news service is sold together with other components for a single or bundled price, the following rules apply regarding the exemption:
If the provider of the electronic news service does not separately sell the electronic news service in the regular course of business and the other components are subject to sales tax, the exemption granted to the electronic news service does not apply, and the entire bundled price is subject to sales tax.
If the provider of the electronic news service does not separately sell the electronic news service in the regular course of business, and the other components are not subject to sales tax, and the bundled price is less than the cap amount, then the entire sales price is exempt from sales tax.
If the provider of the electronic news service sells the electronic news service separately and also sells each of the other components separately, and the separate price of the electronic news service does not exceed the cap amount, only a portion of the bundled price is exempt from sales tax as the sale of an electronic news service.
The sale or use of an electronic periodical is also exempt from sales tax. An electronic periodical is defined as a publication that is delivered, furnished or provided to or accessed by the purchaser electronically or digitally and meets all of the following conditions:
- The publication’s predominant purpose is the presentation of news content, which it prominently features;
- The publication is published at stated intervals, at least four times a year, but no more than weekly, and is not updated between issues;
- The publication’s news content is purchased from contracted wire services or written or produced by multiple employees or by independent contractors engaged by the person providing the publication;
- The publication is available to the public;
- The publication describes itself as a magazine, or periodical or describes itself using similar words;
- The title of the publication and the general nature of its content are continuous over time;
- The publication is not a listing, catalog, database, or compilation; and
- The only search function the publication offers without a separately-stated, reasonable charge is a search of the publication’s present or past news content or that of an affiliate of the publication’s seller. However, this condition will be considered to have been met if the publication provides access to a search function, at no additional charge, if this same search function is offered to the public for free.
In addition, the new law provides that information services and telephone and telegraph services used by an electronic news service are exempt from sales tax.
For Further Information:
New York Department of Taxation and Finance – TSB-M-12(1)S