New York – Taxability of Consulting Services

SALT Report 1736 – The New York Commissioner of Finance issued an advisory opinion regarding a Taxpayer’s online consulting services and custom written research reports. These services are provided online for an annual subscription fee.  Once the fee is paid, the Taxpayer’s customers are allowed a predetermined amount of consultations and access to an online directory of experts in various fields.  Upon request, the Taxpayer will provide a written report based on questions provided by the customer and answered by the experts in the directory.

The Commissioner determined the taxability as follows:

  • The Taxpayer’s oral consultations are not subject to tax because the Taxpayer is simply providing guidance, advice, or a historical perspective based on expert knowledge. Furthermore, the guidance provided is specific to a particular customer and not used, reused, or provided to another party.
  • When providing written reports to its customers, the Taxpayer collects, compiles, and examines the customer’s questions and provides an expert analysis to the customer.  The Commissioner determined that the report provided to the customer constitutes an information service that is exempt from tax only if the information provided is personal or individual in nature, and the reports or survey results are not taken from a common data source or are not incorporated into reports provided to others.
  • The Taxpayer’s customers use pre-written software to access the directory and to interact with an expert.  The use of the software is not taxable because using the software is not a requirement to receive the Taxpayer’s consulting services.  Also, the Taxpayer’s subscription fee does not have a separately stated charge to use the software.

Further, the Commissioner concluded that the primary function of Taxpayer’s service is that of a non-taxable consultation service.

For Further Information:

New York Commissioner of Taxation and Finance – TSB-A-12(22)S