Ruling 90-35

Computer Services

You have inquired as to the applicability of the sales and use tax to a service that involves creating and maintaining a computer data base.

X Corporation, a Division of Y Corporation is entering into an agreement with a Connecticut firm to develop and maintain a customer data base that will be used for many purposes such as customer analysis and producing mailing lists. The Connecticut firm rendering the service has subcontracted the work to an out-of-state firm. The Y Corporation prepares a magnetic tape on a monthly basis containing the information that is used to create and maintain the customer data base and forwards it to the out-of-state firm. The out-of-state firm processes a mailing list from the customer data base and sends it to a New York Company who organizes the mailing list by zip code sequence and affixes mailing labels to the mailer. The mailer is provided by the Y Corporation to the New York company performing the mailing service. Response analysis reports are furnished to the division upon request which monitors the effectiveness of the mailer.

Based on the foregoing, it is ruled that the total gross receipts for creating and maintaining the computerized customer data base as well as processing the mailing lists, updating the mailing lists and generating response analysis reports are subject to sales and use tax as computer and data processing services pursuant to section 12-426-27(b)(1) of the Regulations of Connecticut State Agencies.

LEGAL DIVISION

March 16, 1990