Iowa Administrative Code › Agency 701 - Revenue Department › Title I - Administration › Chapter 17 - Exempt Sales › Rule 701-17.36 - Sale or Rental of Information Services

Current through Register Vol. 47, No. 3, July 24, 2024
Effective May 15, 2000, and retroactive to March 15, 1995,
				  the gross receipts from the service of the sale or rental of information
				  services are exempt from tax. This exemption does not repeal by implication the
				  tax on the performance of the services of investment counseling, of all
				  financial institutions, private employment agencies, test laboratories,
				  detective services, or any other services enumerated by statute. They remain
				  taxable; see 701-Chapter 26, generally.
"Information services" means every business activity,
				  process, or function by which a seller or its agent accumulates, prepares,
				  organizes, or conveys data, facts, knowledge, procedures, and like services to
				  a particular buyer (or its agent) of the information through any tangible or
				  intangible medium. Information accumulated, prepared, or organized for a
				  particular buyer, its agent, a group of buyers, or their agent, is an
				  information service even though it may incorporate preexisting components of
				  data or other information.
Information services include, but are not limited to,
				  database files, mailing lists, subscription files, market research, credit
				  reports, surveys, real estate listings, bond rating reports, abstracts of
				  title, bad check lists, broadcasting rating services, wire services, scouting
				  reports, white and yellow page listings, and other similar items of compiled
				  information prepared for a particular customer The furnishing of artwork
				  (including musical compositions and films), drawings, illustrations, or other
				  graphic material is not the performance of an "information service"; nor does
				  the term include information prepared for general dissemination to the public
				  in the form of books, magazines, newsletters, video or audio tapes, compact
				  disks, or any other medium commonly used to communicate with large numbers of
				  customers. The sale of a book, magazine, or similar item is not the sale of an
				  information service, even if the item contains material of practical use (e.g.,
				  in conducting a private, for-profit business) to its purchaser
The following specific examples illustrate the general
				  principles set out above.
Example A. John Doe buys a packaged set of preprinted
				  documents and instructions which anyone may purchase and which is entitled
				  "Legal Eagle." Mr. Doe prepares his own will by reading the instructions,
				  making choices and filling in the blanks on the preprinted documents. Mr. Doe
				  has purchased tangible personal property and not an information service. His
				  purchase is taxable.
Example B. A taxpayer buys a book entitled "Doing Your Own
				  Iowa Individual income Tax," which is written by an accountant and is available
				  to any buyer The taxpayer uses the book to prepare her own lA 1040. Since her
				  purchase contains information prepared for general dissemination to the public
				  in the form of a book, that purchase is a taxable sale of tangible personal
				  property and not an exempt sale of an information service.
Example C. The seller provides, for a fee, a weekly bulletin
				  listing information on real estate of use to brokers selling homes in a certain
				  Iowa county. The seller secures the information from a multiple listing service
				  without applying any independent thought during the compiling of that
				  information. The bulletin is useful only to those brokers and not to the
				  general public. Since the bulletin is a "real estate listing" and has been
				  prepared for a particular group of customers and not for the general public,
				  its sale is the sale of an information service rather than the sale of tangible
				  personal property and is thus exempt from tax.
Example D. A-1 Corporation sells gourmet meats through the
				  mail. A-1 rents its list of customers to whom it mails its catalog to other
				  retailers who specialize in sales of goods or services to the wealthy. Since
				  the list is a "mailing list" and made available only to a particular group of
				  buyers, its rental is the performance of an exempt information service and not
				  the taxable rental of tangible personal property.
Example E. company E is a tariff bureau which specializes in
				  compiling and preparing tariff schedules. E acquires these schedules from
				  various companies throughout the country. E then provides these schedules to
				  common carriers who subscribe to its service. Its printed tariff schedules are
				  published in bound and loose-leaf form; they may be updated daily. E's
				  providing the schedules is the performance of an exempt information service
				  because the schedules are compiled for a particular group of customers and they
				  are items of compiled information similar to the files, lists, reports, and
				  other information services named above.
Example F. company F compiles and prints telephone
				  directories. F purchases white and yellow page listings from various telephone
				  companies and uses those listings to make up its directories. F's purchases of
				  the white and yellow page listings are purchases of an exempt information
				  service. Any sales on F's part of the directories to the general public would
				  be sales of tangible personal property subject to tax.
Example G. company G purchases the assets of four businesses.
				  The primary asset of each of the businesses is a database containing names,
				  addresses, and other customer information of use to G but not to anyone other
				  than a company similar to G. G transfers the lists to its own computers by way
				  of paper or magnetic tape. G has purchased an exempt information service with
				  its purchases of the four databases.
This rule is intended to implement Iowa Code Supplement
				  section 422.45 as amended by 2000 Iowa Acts, chapter 1195, section
				  3.