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ALBANY � The Tax Appeals Tribunal has drawn a distinction between vendors of information services where the prime objective is to provide data rather than to facilitate other transactions. In that context, a Manhattan firm that provided clients with information on apartments for sale or rent is subject to sales tax, while a dating service is not. In Principal Connections Ltd., 818212, the tribunal made clear that when the primary aim is to provide information, the company is responsible for sales taxes. But when the ultimate goal is another transaction, such as a date between members of a matchmaking service, the activity is not taxable. The decision involved a Manhattan company, Principal Connections Ltd. (PCL), that maintained one of New York City’s largest databases of apartments for sale or rent. PCL provided information enabling apartment hunters to narrow their search to units meeting certain criteria and also provided owners and brokers with a means of disseminating information on available apartments. PCL came to the attention of state authorities in 1996 when a disgruntled employee reported that the firm was collecting but not reporting or remitting sales tax. An audit revealed that PCL had indeed collected sales tax that it did not turn over to the state, and the company attributed the problem to accounting errors and oversight. Ultimately, PCL was billed $97,986 in taxes and penalties, giving rise to a question of whether a business of its nature is responsible for sales taxes at all under Tax Law �1105. Tax Law �1105 generally subjects information sales to taxation. However, when the sale of information is incidental to another transaction, sales tax is not imposed. PCL argued that its information sales are similar to those provided by a Multiple Listing Service, which the Department of Taxation considers nontaxable, and it compared itself to a dating service. But both the administrative law judge and the Tax Tribunal disagreed. The tribunal said the difference between a dating service or Multiple Listing Service and PCL is that with the former, the dissemination of information is simply a means to achieve other results � namely, a date or a real estate transaction. Here, however, the tribunal said PCL’s “primary purpose was accomplished by furnishing information to its subscribers.” “It is clear that PCL concentrated on obtaining and providing its subscribers with as broad a base of information as possible on available apartments in New York City,” the tribunal said in an opinion by President Donald C. DeWitt and Commissioner Carroll R. Jenkins. “PCL did not, however, require nor expect that resultant rental or sale transactions would take place only between its members. Thus, its primary purpose was accomplished by furnishing information to its subscribers.” Cynthia McDonough appeared for the Division of Taxation. PCL was represented by its president, Elizabeth Ulang Wang.

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