New York Court Ruling Puts Informational Service Providers & Their Clients at Risk

New York has once again narrowed its interpretation of a commonly used sales tax exemption, with consequences that extend far beyond any one industry. In a recent Court of Appeals decision, Dynamic Logic Inc. v. New York Tax Appeals Tribunal (2025 NY Slip Op 02262), the state’s highest court dramatically limited the scope of the personal and customized information sales tax exemption, a move that will result in higher costs for clients who purchase or receive certain benchmarking and analytics data and create new compliance responsibilities for many firms offering these informational and benchmarking services.

As businesses navigate the remainder of 2025, companies operating in New York and providing these services should carefully reassess their tax exposure and service models. The ruling is likely to have a significant impact on professional service firms, media and advertising agencies, technology firms, and other businesses that rely on customized data analysis and reporting.

Informational Services Face New Tax Burden

At the heart of the case was the question of whether certain benchmarking and analytics reports qualify for a tax exemption. The reports in question assess the performance metrics by comparing one client’s results to broader market data drawn from the service provider’s database. Historically, firms providing these customized, individualized reports were able to avoid having to charge clients New York sales tax. However, the court determined that because the service provider, in this case, incorporated benchmark data shared among multiple clients into its reports, the service constituted a taxable information service.

Under the new interpretation, reports personalized for a specific client can be taxed if any part of the underlying data is reused across multiple engagements. This significant departure from prior rules sharply limits the use of the individual and custom information exemption and effectively reclassifies many services —once thought to be exempt—as subject to sales tax under New York law.

Impacts on Clients and Service Quality

The financial impact of this change will immediately burden New York-based clients, who will now likely see sales tax added to the cost of customized benchmarking and informational reports. The additional tax may force clients to reconsider the value of detailed competitive benchmarking services, which have historically been a cornerstone of performance assessments.

Service providers, meanwhile, face the challenge of complying with New York sales tax responsibilities, an obligation that most have not been confronted with in the past. Collecting and remitting the sales tax will now need to be implemented.

Planning Ahead

Given the implications of this ruling, companies providing these types of services as well as those that rely upon them should act now to evaluate the potential financial impact and adjust accordingly. Companies that use these reports should review their contract terms carefully and consider the possibility of higher costs related to sales tax obligations. Meanwhile, firms providing these reports must now familiarize themselves with New York’s online sales tax registration and filing system in order to ensure prospective compliance.

In this evolving environment, providers of these services and data should work with a knowledgeable tax advisor to proactively mitigate risk and ensure compliance with New York’s tax expectations. Those receiving these services and data should look to understand how this ruling impacts their budgets and financial positions.

For more information, please contact Alan Goldenberg, Principal and Leader of the State and Local Taxation (SALT) and Tax Controversy groups, or your Anchin Relationship Partner.