Tax Type
Retail Sales and Use Tax
Description
Services; Professional or personal; Demographic reports used for marketing
Topic
Taxability of Persons and Transactions
Date Issued
05-19-1993
May 19, 1993
Re: §58.1-1821 Application: Retail Sales and Use Tax
Dear***************
This is in response to your letter of March 24, 1993 in which you seek correction of a sales and use tax assessment for********** (the Taxpayer) for the period August 1989 through July 1992.
FACTS
The Taxpayer prepares and sells demographic reports used by its customers in directing their marketing efforts. A variety of reports are available based on a wide range of demographic parameters including income, age, educational background, housing characteristics, etc. for specified geographic areas. These reports are prepared from demographic data purchased by the Taxpayer from various public and private information services and are provided to customers in hardcopy, diskette or tape.
The Taxpayer maintains that the demographic reports it sells to customers represent the sale of tangible personal property and not, as was previously determined by the department, the sale of a nontaxable service. Furthermore, the Taxpayer contests the tax on its purchases of census data, maps and other information used to prepare those demographic reports, maintaining that such purchases are exempt purchases for resale.
DETERMINATION
Each of the Taxpayer's concerns will be addressed separately as follows:
Sale of demographic reports: I have enclosed a number of rulings discussing whether a particular transaction involves the sale of tangible personal property or the provision of an exempt service. Especially on point is Public Document 91-224 (9/23/91) which addresses reports detailing the sales potential of the marketplace of a customer's business location. As noted in these prior determinations, the department has consistently held that transactions analogous to the Taxpayer's represent the provision of nontaxable services.
Purchases of Demographic data: Since it is determined that the Taxpayer is providing a nontaxable service, all of its purchases of tangible personal property used to provide that service are taxable, including the contested purchases of demographic data.
Furthermore, the contested purchases would be taxable even if the Taxpayer's products were deemed to be tangible personal property. The maps, census reports and other similar tangible purchases are not in themselves resold nor do they become a component part of the finished product. Rather, the information contained in those purchases is used by the Taxpayer as needed in preparing its final product.
Accordingly, I find that the assessment is correct and is now due and payable. A payment copy of the assessment, with interest accrued to date, will be mailed shortly. The assessment must be paid within 30 days to avoid the accrual of additional interest.
Sincerely.
W. H. Forst
Tax Commissioner
OTP/6878I
Rulings of the Tax Commissioner