Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013
 

Sales and Use Tax Annotations


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S

515.0000 SERVICE ENTERPRISES GENERALLY—Regulation 1501

Annotation 515.0005.510

(a) IN GENERAL—SERVICE DISTINGUISHED FROM SALE

515.0005.510 Database Transactions. Transfers of CD ROMs, diskettes, and printed matter (whether printed by mass printing techniques, computer, word processing, or otherwise) containing information extracted from a previously existing database are generally taxable without regard to the fact that a particular listing of information from the database may have been prepared to the special order of the customer.

However, there are two circumstances that are recognized as research service cases. First, in cases where the information is of personal relevance to the inquiring party and not likely to be furnished in duplicate form to other persons. Examples of the types of transactions treated as service transactions are (1) individual profiles based on a person's time, date, and location of birth and no two profiles are identical, and (2) custom computerized reports prepared by matching raw scholarship data supplied by client to scholarship information contained on a database.

Second, the inquiry is so specific and limited that the customer is not looking to acquire some duplicate part of the taxpayer's database but is simply trying to obtain a status report with respect to the subject of interest. The true object of the contract here is research, not the furnishing of an extracted portion (bulk data) of a file maintained by the taxpayer which would enable the customer to do his own research. Looking up information in the database for the customer is considered research. In this case, the information would likely be transferred in report form, for a fee based upon the cost to the taxpayer of making the specific inquiry. When the taxpayer provides the customer the reference work and the customer "looks it up" himself, it is a sale of tangible personal property.

Thus, tax applies in all cases where there is a transfer of information drawn from pre-existing database, except as noted above. Tax applies whether the information transferred from the database is transferred in book, pamphlet, or brochure form, or in CD ROM or diskette form, or as prepared by computer, word processor, or other method. However, tax does not apply if the information is transferred electronically. 10/9/96. (Am. 99–2).