ADP Automotive Claims Services, Inc. v. Tax Appeals TribunalADP Automotive Claims Services, Inc. v. Tax Appeals Tribunal
OPINION OF THE COURT
Petitioner operates a computer-generated information service known as Audatex which, among other things, assists its customers (predominantly insurance companies and automotive repair shops) in the preparation of automobile damage appraisals. The process works as follows. An appraiser employed by the customer performs an actual inspection of the damaged vehicle, fills out an Audatex worksheet listing the vehicle’s make, model and year, identifying the damaged parts, indicating whether the damaged parts can be repaired
While it is undisputed that the cost estimate can be prepared manually inasmuch as information contained on the Audatex computer regarding description, number, price and estimated labor time is readily available in widely circulated publications such as the Crash Estimating Guide, petitioner’s service is attractive because it eliminates the necessity of having to look up the cost of each particular part, the labor time and having to determine how much, if any, of the labor time must be eliminated as an included operation or overlap. In addition, it reduces mathematical calculation errors and increases appraiser productivity by freeing them up to inspect more vehicles. In addition to the foregoing service, Audatex also offers management reports to its insurance company customers. These reports contain statistical breakdowns of the cost estimates Audatex has prepared for a particular customer and are used by the customer to compare the relative efficiency of its various appraisers.
In 1985, the Department of Taxation and Finance conducted an audit of petitioner and concluded that because the cost estimate reports were generated from a common data bank which was not confidential and was widely accessible, they and the management reports constituted taxable information services within the meaning of Tax Law § 1105 (c) (1). Accordingly, it issued three notices of determination covering the period September 1, 1982 to November 30, 1986 seeking past
Under Tax Law § 1105 (c) (1), the "furnishing of information * * * including the services of collecting, compiling or analyzing information of any kind or nature and furnishing reports thereof to other persons” is subject to sales tax. This rule is subject to exception, however, in situations where, inter alia, the information furnished "is personal or individual in nature and * * * is not or may not be substantially incorporated in reports furnished to other persons” (Tax Law § 1105 [c] [1]). Here, petitioner urges that neither the cost estimates nor the management reports qualify as information services within the meaning of Tax Law § 1105 (c) (1) and, even if they do, they meet both necessary elements of the exclusion. We disagree.
Addressing first the cost estimate service, because Audatex simply does not convert the information received from the appraisers from one form into another but affirmatively analyzes it, adds information regarding cost and labor time and generates a report which contains intelligence that the customer did not have originally, there can be little doubt but that this service falls within the definition of information services upheld in Matter of Finserv Computer Corp. v Tully (
We also note at this juncture that petitioner’s reliance on Example 2 to 20 NYCRR 527.3 (b) (2) as a corollary basis in support of its argument for exclusion of the cost estimates is misplaced. That example suggests that "[a]utomobile insurance damage appraisals performed for insurance companies are individual reports” and thus excluded from taxation. Even assuming that petitioner’s cost estimates are automobile insurance damage appraisals (a dubious assumption since Audatex does not perform the appraisal but only provides generally available cost information to expedite the process), it is well established that illustrative examples are entitled to little judicial deference, especially in situations such as this where case law interpreting a statutory provision which has been handed down after inclusion of the example makes clear that the subject action is not within the contemplation of the statutory exclusion (see, Matter of St. Joe Resources Co. v New York State Tax Commn.,
As regards the taxability of petitioner’s management reports, a review of the record reveals that the issue of their taxability was not raised by petitioner in its initial application to the Division of Tax Appeals seeking revision of the notices of determination or in its subsequent exceptions to the Administrative Law Judge’s determination. While we recently have recognized that such failure operates to foreclose review of these subjects (see, Matter of Friesch-Groningsche Hypotheekbank Realty Credit Corp. v Tax Appeals Tribunal,
Weiss, P. J., Levine, Casey and Harvey, JJ., concur. Adjudged that the determination is confirmed, without costs, and petition dismissed.
Notes
. If the appraiser indicates the damaged parts can be repaired, he or she must note on the worksheet the nature of the repair and the time it will take. In addition, if the appraiser feels that the damaged part need not be replaced with a new part purchased from the vehicle’s manufacturer, it must be so specified on the worksheet and the price of the alternative part noted thereon.
. Included operations are those that are part of another task for which the same work will be performed. Overlap refers to a single task that need be performed only once in order to accomplish two separate repairs.