Towne-Oller and Associates, Inc. v. State Tax Com'n, TOWNE-OLLER
| Decision Date | 22 May 1986 |
| Docket Number | TOWNE-OLLER |
| Citation | 120 A.D.2d 873,502 N.Y.S.2d 544 |
| Parties | In the Matter ofAND ASSOCIATES, INC., Petitioner, v. STATE TAX COMMISSION of the State of New York, Respondent. |
| Court | New York Supreme Court — Appellate Division |
Carter, Ledyard & Milburn (Jerome J. Caulfield, of counsel), New York City, for petitioner.
Robert Abrams, Atty. Gen. (Wayne L. Benjamin, of counsel), Albany, for respondent.
Before MAIN, J.P., and WEISS, MIKOLL and YESAWICH, JJ.
Proceeding pursuant to CPLR article 78 () to review a determination of respondent which partially sustained a sales and use tax assessment imposed under Tax Law articles 28 and 29.
Petitioner is a New York corporation in the business of preparing reports for its customers who are manufacturers of health and beauty aid products. Its customers number 75 to 80 establishments. The service sold to the customers identifies distribution problems for their products. Petitioner also prepares reports for customers to assist them in convincing distributors to stock their products. Petitioner prepares about 20 different reports. To obtain information for its reports, petitioner purchases tapes from wholesalers and distributors identifying products they distribute and to what food stores. All of petitioner's reports are created from this data base. Some of the reports are directed to meet the individual needs of a given customer. These are prepared at the request of a customer and include a product positioning study, a distribution opportunity study and a manufacturer's special report. A second group of reports are more general in nature and are distributed as a matter of course to all of petitioner's customers. A third group of reports is distributed to all customers who define categories in the same manner.
The hearing disclosed that it is possible but unlikely that any two of petitioner's customers receive the same packet of reports, although at least two customers receive a like format.
Petitioner contends that the service it provides to its customers is primarily a marketing service and that the written reports are ancillary to the marketing service aspect of its activity. It also urges, in the alternative, that if its service is found to be an information service, its activities are not taxable in that the information provided to its customers is personal, is not incorporated in reports furnished to other persons and, therefore, falls within the exclusion of Tax Law § 1105(c)(1).
We find no merit to petitioner's contention that it is not an information service. Its business is to collect and disseminate information. In its petition for review of its tax liability, petitioner concedes that its service is informational but contends that it is excluded from tax liability.
Tax Law § 1105(c)(1) imposes a tax on:
The receipts from every sale, except for resale, of the following services:
(1) The furnishing of information by printed, mimeographed or multigraphed matter or by duplicating written or printed matter in any other manner, including the services of collecting, compiling or analyzing information of any kind or nature and furnishing reports thereof to other persons, but excluding the furnishing of information which is personal or individual in nature and which is not or may not be substantially incorporated in reports furnished to other persons * * * (id.).
Where an exclusion from taxability is involved, it must be strictly construed in the taxpayer's favor (Matter of Grace v. New York State Tax Comm., 37 N.Y.2d 193, 371 N.Y.S.2d 715, 332 N.E.2d 886). * An information service is defined by 20 NYCRR 527.3(a)(2) as "[t]he collecting, compiling or analyzing information of any kind or nature and the furnishing reports thereof to other persons".
Although there is some customizing of reports for individual customers by petitioner, the service provided is not of a personal and individual character. The service is furnished on a monthly basis and the reports furnished contain general information as well. All the information is gleaned from one general source. The reports are unlike those furnished by the taxpayer in Matter of New York Life Ins. Co. v. State Tax Comm., 80 A.D.2d 675, 436 N.Y.S.2d 380, affd. sub nom. Matter of Metropolitan Life Ins. Co. v. State Tax Comm., 55 N.Y.2d 758, 447 N.Y.S.2d 245, 431 N.E.2d 970. We hold, therefore, that petitioner's activities are an information service and are not excludable from taxation.
Petitioner also challenges the assessment of a deficiency for sales...
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