New York to Exempt Electronic News Services and Electronic Periodicals

Wednesday, February 22, 2012

New York recently enacted legislation, which is set to take effect on March 1, that provides a sales tax exemption for electronic news services and electronic periodicals. While New York taxes information services, this legislation makes it clear that services meeting the definition of either an electronic news services or electronic periodical are not subject to tax. There are multiple requirements built into the definition of an "electronic news service." First and foremost, an electronic news service is a service that has the predominant purpose of presenting news content and that is delivered, furnished or provided to, or accessed by, the purchaser electronically or digitally. Additionally, the services news content must (1) be prominently featured; (2) include general news that is accessible without the use of a search function; (3) be newly published or updated at least daily unless the service specifies some other interval; and (4) be predominantly written or produced by employees or by independent contractors engaged by the person providing the service or be purchased from contracted wire services. Similarly, an "electronic periodical" is a publication that is delivered, furnished or provided to, or accessed by, the purchaser electronically or digitally, and its content must meet several conditions. An electronic periodical's predominant purpose is the presentation of news content, which it prominently features, and that content must be predominantly written or produced by employees or by independent contractors engaged by the person providing the service or be purchased from contracted wire services. Furthermore, to qualify as an electronic periodical, the publication must be published at stated intervals, at least as frequently as four times a year, but no more than weekly. The exemption for electronic news services is subject to a cap, but the exemption for electronic periodicals is not capped. The Department of Taxation and Finance recently published guidance that explains the operation of the cap and clarifies circumstances in which an electronic periodical or news service is combined with other components and sold for a single price. See N.Y. Technical Memo. TSB-M-12(1)S (Dept. of Taxn. and Fin. Jan. 31, 2012)

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