In a publication issued on August 20, 2013, the New Jersey Division of Taxation clarified its position on the taxability of certain information services. Any retail sale of information services to a customer in New Jersey is subject to New Jersey sales and use tax. “Information services” is defined as “the furnishing of information of any kind, which has been collected, compiled, or analyzed by the seller, and provided through any means or method, other than personal or individual information which is not incorporated into reports furnished to other people” (N.J.S.A. Sec. 54:32B-2(yy)).
The publication distinguishes what is or is not a taxable service on the determination of the “true purpose” of the transaction. If the true purpose of the transaction is the service itself, as opposed to the information provided, then the transaction is not taxable. The following transactions are not taxable: a lawyer gathers personal information to draft a will; or an accountant gathers information to prepare a tax return. In addition, services produced at the request of one client for that client’s exclusive use will generally not be taxable.
A fee charged for any type of information (such as stock quotes, financial, legal research, or property values) through any means, including an electronic database or a subscription to a hard copy report, is considered selling an information service. The publication provides a list of taxable enumerated services: mailing lists, credit reports; abstracted information; computer databases, and sales tracking.
The views express in this article are those of the author and do not necessarily reflect the position or policy of Berkeley Research Group, LLC.
TAX ADVICE DISCLOSURE: ANY TAX ADVICE CONTAINED IN THIS COMMUNICATION (INCLUDING ANY ATTACHMENTS) IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF (I) AVOIDING PENALTIES UNDER THE INTERNAL REVENUE CODE OR (II) PROMOTING, MARKETING, OR RECOMMENDING TO ANOTHER PARTY ANY TRANSACTION OR MATTER ADDRESSED HEREIN. BERKELEY RESEARCH GROUP, LLC IS NOT A LAW FIRM AND DOES NOT PROVIDE LEGAL ADVICE AND IS NOT A CPA FIRM AND DOES NOT PROVIDE AUDIT, ATTEST, OR PUBLIC ACCOUNTING SERVICES.