Finserv Computer Corp. v. Tully
| Decision Date | 16 June 1983 |
| Citation | 94 A.D.2d 197,463 N.Y.S.2d 923 |
| Parties | In the Matter of FINSERV COMPUTER CORPORATION, Respondent, v. James H. TULLY et al., Constituting the New York State Tax Commission, Appellants. |
| Court | New York Supreme Court — Appellate Division |
Robert Abrams, Atty. Gen., Albany (Francis V. Dow, Asst. Atty. Gen., Albany, of counsel), for appellants.
Roemer & Featherstonhaugh, Albany (E. Guy Roemer, Albany, of counsel), for respondent.
Before MAHONEY, P.J., and MAIN, MIKOLL, YESAWICH and LEVINE, JJ.
OPINION FOR REVERSAL
Approximately 2% or 3% of petitioner's business consists of reproducing the computerized records of its customers onto microfiche or microfilm. Petitioner described this process as follows. After it receives a computer tape from a customer, it may have to perform several procedures in order to determine the tape's physical characteristics and the format of the information on the tape. Then, if the customer's tape is written in a computer code which is different from the code used by petitioner, the tape must be converted or translated to petitioner's code; this process produces a new tape, compatible with petitioner's equipment. Next, petitioner adds a title row and index information for each piece of microfiche or microfilm. Finally, the tape is processed into words and numbers on microfiche or microfilm, which is then delivered to the customer. On September 29, 1979, respondent State Tax Commission issued a notice of determination assessing a sales and use tax against petitioner for the period June 1, 1975 through February 28, 1979, on the basis that the exchanges of payment for the microfiche and microfilm constituted sales of tangible personal property subject to tax under subdivision (a) of section 1105 of the Tax Law. Following a hearing, respondent upheld the assessment. Petitioner then commenced the instant proceeding, and Special Term annulled the determination, holding that the above-described transactions were excluded from taxation pursuant to section 1105 (subd. par. ) of the Tax Law. This appeal ensued.
Special Term upheld petitioner's contention that the sales at issue are primarily services for the "furnishing of information" (Tax Law, § 1105, subd. par. ) and, therefore, since the information provided concededly is personal or individual in nature and may not be incorporated into reports furnished to other persons, no sales tax is applicable (id.). Section 1105 (subd. par. ) of the Tax Law and its regulations (20 NYCRR 527.3) describe "furnishing of information" as "collecting, compiling or analyzing information of any kind or nature and furnishing reports thereof". Respondent's determination concluded that . Thus, respondent distinguished between (1) integrating or recasting the information received from the customer so that the customer is given back some new information, or some new significant intelligence, concerning the data furnished, and (2) converting the information received from the customer from one form or medium to another, without interpreting or recasting it, so that the form of the information changes but not the intelligence contained therein. Respondent's determination considered only the first of these two alternatives (i.e., providing new information or intelligence) to be "furnishing of information" within section 1105 (subd. par. ) of the Tax Law (see, also, Technical Services Bureau Bulletin No. 1978-1 Technical Services Bureau Memorandum--1981 Respondent's interpretation seems to be consistent with the statutory language "collecting, compiling or analyzing". One cannot collect, compile or analyze the data of a customer without in some way significantly adding to the sum of knowledge of the customer with...
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