New York – Customized Reports and Use of Software Not Taxable

SALT Report 1808 – The New York Division of Taxation issued an advisory opinion regarding a Taxpayer’s sale of business analytics services. The Taxpayer is hired by its customers to gather business data such as payroll and human resources information.  The Taxpayer aggregates the information so that the customer can review the combined data in a customizable report.  The reports are formatted to the customer’s specifications and are designed to allow the customer to review the results of a certain business decision or to identify areas of weakness.  The reports can only be viewed by the customer on software that the Taxpayer developed and maintains.

The Department determined that the Taxpayer’s charges to its customers for data gathering, mapping, and storing services qualify as an information service under section 1105(c)(1) of the Tax Law and are excluded from tax.

Further, although the Taxpayer uses its own software to provide its service, the Department ruled that the customer’s use of the software is limited and part of a more comprehensive service; therefore these transactions do not constitute the sale of prewritten computer software and are excluded from tax.

For Further Information:

New York Commissioner of Taxation and Finance – TSB-A-12(24)S