In Part I of this series, we shared our experience and insight regarding New York sales tax audits involving online services. We described our strategy of: (1) providing a highly technical description of how a service operates and what users can and cannot do; (2) emphasizing the role of employees or external data points, such as proprietary databases or communication links with third parties; and (3) comparing the primary purpose of the service to a more traditional (nontaxable) service.
Updated: