For many years, we have periodically reminded readers of this column of the uncertainties encountered in deciding whether transactions in the "knowledge" industry are subject to New York sales tax, a tax that was originally designed to tax the sales of tangible personal property. Nevertheless, as the world marches into the third decade of widely available electronic resources, distinguishing among consulting services, information services, and the provision of software, and then applying the differing sales tax rules to them, becomes only more difficult. The recent administrative law judge determination in MarketShare Partners, DTA No. 828562 (N.Y. Div. Tax App., Dec. 3, 2020) provides a rich text for those trying to classify a business as fitting into one of these categories.

N.Y. Tax Law §1105(a) generally imposes sales tax on the sale of "tangible personal property," which, under §1101(b)(6), includes "pre-written computer software … regardless of the medium by means of which such software is conveyed … ." Services are subject to sales tax only to the extent set forth in the statute. §§1105(c)(1) and (9) generally impose sales tax on "information services." The law provides an exception in the case 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." Consulting services are not specified as taxable, and, therefore, are not taxable.