Summary. The State of New Jersey’s Division of Taxation has issued guidance on when the retail sale of information services is subject to sales & use taxation.
Background. New Jersey subjects to sales & use tax the retail sale of information services received by New Jersey customers. The Division of Taxation has released ANJ-29, which provides guidance on which information services are subject to sales & use tax. In general, the customers of businesses that charge a fee to access any kind of information by any means can be subjected to this tax. How the information is accessed does not matter. For example, fees to access stock quotes, financial or legal research, property values, or marketing trends are subject to this tax. Information services do not include personal, professional, or other types of nonenumerated services where the service providers collect or review information to provide the purchaser with a service. For example, accountants gathering financial information to prepare tax returns, lawyers gathering personal information to prepare a will, or architects gathering information to design a building are exempt from this tax. The following chart summarizes the examples in Publication ANJ-29:
|Taxable Information Services||Excluded Information Services||Information–based Services Not Subject to Tax|
|Mailing Lists||Purchase and Sales Data||Multiple Listing Service|
|Credit Reports||Custom Market Research Reports||Real Estate Appraisal|
|Abstracted Information||Website Information||Criminal Background Checks|
|Computer Databases||News Clipping Service||Consulting Services|
|Sales Tracking||Environmental Testing Services|
|Internet User Statistics||
Payroll Process Service
|Legislative Tracking Services||
Court Stenography Services
|Sales Lead Generation||
Accident Reconstruction Services
|Educational Seminars, Classes, or Courses|
Prager’s Take. This guidance provides much-needed clarity to an evolving issue. ANJ-29 draws a distinction between purchasing information and purchasing custom services based on information. In general, purchasing market data is subject to tax, unless the marketing data has been customized for the purchaser. Similarly, purchasing pre-packaged legal research is subject to tax, but purchasing legal advice written for a particular client is not. Please contact us at Prager-Metis if you have any questions.