Sales Tax Articles
Sales Tax State Activity Update - July 2006
New York Crunches the Numbers on Web Analytics
Background
The Taxpayer provides two types of Web Site usage information. One of the services allows its clients to obtain real-time information about online visitor and customer behavior. The data is collected by embedding the Taxpayer's HBX code into the client's HTML Web Site code. This code routes data about a consumer's visit to a client's Web Site to the Taxpayer's server. The Taxpayer's server then performs an analysis on the information received.
The analysis includes over 500 statistics tailored to each client based on the path, patterns, and profiles of user behavior. Clients are able to view the data analysis via a Web interface using identifications and passwords to log onto Taxpayer's server and retrieve the data analysis specific to their Web Sites. Clients can tailor reports according to their needs, and these reports can be viewed, printed and/or exported to the client's own spreadsheet program.
The other service provided gathers statistics from millions of Internet users who visit any Web Site that uses the Taxpayer's technology. The data is retrieved through a convenient Web browser interface. The information gathered is not specific to a client's specific Web Site; rather it is a summary of the characteristics and activities of consumers on all clients' Web Sites. The information gathered is used by Web application design professionals to determine the number of consumers using certain Web browsers, screen resolutions, operating systems, screen colors, plug-ins, research referrers, ISPs, etc. This information allows a designer to tailor a Web Site to appeal to the greatest number of consumers. No specific client data is displayed and the information is available to anyone subscribing to this service. Users are given identifications and passwords to log onto the Taxpayer's server and retrieve the data analysis. All of Taxpayer's services are charged to the clients on either a monthly, quarterly, or annual basis.
Opinion
Services are not subject to sales tax unless they are specifically enumerated as being subject to tax under section 1105 of the Tax Law.
The Taxpayer's Web analytics service of collecting and analyzing the client's Web Site data to develop statistics and profiles of user behavior is informational in nature, and thus constitutes the rendering of an information service within the meaning and intent of section 1105(c)(1) of the Tax Law.
The Taxpayer states that the data furnished to a client relates exclusively to the client's Web site. It appears that this information is not substantially incorporated into reports furnished to other clients. The information the Taxpayer provides to the purchaser of the Web analytics service is personal or individual in nature, and provided therefore, that this data is not or may not be substantially incorporated in reports furnished to others, the charges for such service are excluded from tax. See section 1105(c)(1) of the Tax Law and section 527.3 of the Sales and Use Tax Regulations.
The service that gathers statistics from the Internet users who visit any Web Site that uses the Taxpayer's technology is not specific to a particular client's Web Site. Purchasers of this service are able to view the aggregated data analysis via Web interface. The information provided by the Taxpayer is commonly available to all purchasers using this service. The information is not personal or individual in nature and is substantially incorporated in reports furnished to other persons. Therefore, Petitioner's charges for this service is an information services subject to sales tax pursuant to sections 1105(c)(1) and 1105(c)(9) of the Tax Law.
View the full text of this advisory opinion on the New York State Department of Taxation and Finance website.
( New York, Advisory Opinion, TSB-A-06(17), 05/30/2006)
Subscribe to CyberTax News and receive the latest indirect tax news, including rate changes, rule updates, compliance issues, and more, delivered directly to your email.
Call 800.355.3500 to Speak to a Sales Representative.
