NEW YORK’S HIGHEST COURT UPHOLDS SALES TAX ON INFORMATION SERVICES AND INTERPRETS TAX EXCLUSION IN FAVOR OF DEPARTMENT -

Reversing a decision of the Appellate Division, a sharply divided New York Court of Appeals has upheld the assessment of sales tax on information services by interpreting the statutory exclusion for information services that are “personal or individual in nature” as inapplicable when the information is obtained from publicly available sources. Probably even more far-reaching is the Court’s holding on how tax statutes should be interpreted, with the Court (by a narrow 4-3 majority) concluding that ambiguities in a statutory exclusion – like the “personal or individual” exclusion for taxable information services – must be interpreted like tax exemption statutes, in favor of the government, rather than the taxpayer. Wegmans Food Mkts., Inc. v. Tax Appeals Trib., No. 56, 2019 NY Slip Op. 05184 (N.Y., June 27, 2019). The decision may be among the most significant tax decisions to be issued by the Court of Appeals in recent years.

Facts. Wegmans Food Markets, Inc. (“Wegmans”), a regional supermarket chain, contracted with RetailData, LLC to monitor its competitors’ retail prices through “competitive price audits” of competitor supermarkets. RetailData collected pricing information on specified retail products by scanning prices directly from competitors’ store shelves. It compiled the pricing information into confidential reports uniquely tailored for Wegmans, which Wegmans used for its own pricing strategies.