Are PDF documents that customers pay for and download from the internet subject to Colorado sales or use tax?

Plain-English summary

A business asked about a client that sells educational PDF documents over the internet — customers pay, click a link, and download the documents to their computer to print and use as instructional tools. The question: are those downloads subject to Colorado sales or use tax?

The Department's answer is yes. Colorado imposes sales and use tax on the sale, use, storage, or consumption of tangible personal property, which the statute defines as "corporeal" property. The Department's position is that electronic data is corporeal property, so the sale of downloaded documents is subject to sales and use tax.

This was issued as a General Information Letter, and the Department noted the taxpayer could resubmit as a private letter ruling for a binding determination on its specific facts.

Note: this reflects the Department's stated position in 2009. Anyone relying on it for a current transaction should confirm whether the law or Department guidance on digital products has changed since.

What this means for you

Sellers of downloadable digital products

Under this guidance, selling documents, PDFs, or other electronic data for download to Colorado customers is treated like selling tangible personal property — taxable. Don't assume "it's just a download, so it's a nontaxable service." The Department's stated view is that electronic data is corporeal and its sale is taxable.

Buyers and businesses purchasing digital documents

If the seller doesn't charge sales tax on a taxable download, use tax can apply to the purchaser. Track digital purchases the same way you would tangible goods.

Accountants and tax professionals

The reasoning rests on the statutory definition of tangible personal property as "corporeal property" (§ 39-26-102(15)) and the Department's characterization of electronic data as corporeal. Because this is a GIL and the digital-goods landscape evolves, verify current law and consider a private letter ruling for a client with material exposure.

Common questions

Q: Are digital downloads taxable in Colorado?
A: In this 2009 letter the Department said yes — electronic data is corporeal property, so the sale of downloaded documents is subject to sales and use tax.

Q: Does it matter that the document is "just information"?
A: Under this guidance, no. The Department focused on the data being delivered as corporeal (tangible) property, not on the informational content.

Q: Is this binding on the Department?
A: No. It's a General Information Letter — general guidance, not binding. The Department invited a private letter ruling for a determination on specific facts.

Citations and references

Statutes:
- §§ 39-26-104 and 39-26-202, C.R.S. — imposition of Colorado sales and use tax
- § 39-26-102(15), C.R.S. — tangible personal property defined as "corporeal property"

Source

• Landing page: Colorado Sales & Use Tax Letter Rulings
• Original PDF: GIL-09-025.pdf

Original ruling text

Office of Tax Policy
P.O. Box 17087
Denver, CO 80217-0087
[email protected]

GIL-09-025
May 13, 2009
XXXXXXXXXXXXXXX
Attn: XXXXXXXXXXX
XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX
Re: Taxability of downloaded documents
Dear XXXXXXXXXXXX,
You request guidance regarding the taxability of documents downloaded from the Internet. The
department issues general information letters and private letter rulings. A general information
letter provides a general overview of the applicable tax law, does not provide a specific
determination, and is not binding on the department. A private letter ruling is a determination of
the applicability of tax to a specific set of circumstances and is binding in the department. A
party requesting a private letter ruling must provide certain information and remit a fee. For
more information about general information letters and private letter rulings, please refer to the
Department’s regulation 24-35-103.5, C.R.S., which is available on our web site at:
www.taxcolorado.org > FYI/Publications > Rulings.
We will initially treat your request as one for a general information letter. You may resubmit
your request as a private letter ruling.
Issue
Are documents downloaded by customers from the Internet subject to sales or use tax?
Background
You have a client that dispenses educational knowledge documents to customers via the
Internet. The client provides a link on its website that allows a paying customer access to pdf
documents, which are downloaded to the customer’s computer. These documents can then be
printed and used as instructional tools.
Discussion.
Colorado imposes sales and use tax on the sale, use, storage, or consumption of tangible
personal property. §§39-26-104 and 202, C.R.S. Tangible personal property is defined as

corporeal property. §39-26-102(15), C.R.S. Electronic data is corporeal property and the sale
of this data is subject to sales and use tax.
As noted earlier, you can submit your request as a private letter ruling if you would like a
specific determination regarding the circumstances set forth above.
Miscellaneous
Enclosed is a redacted version of this ruling. Pursuant to statute and regulation, this redacted
version of the ruling will be made public within 60 days of the date of this letter. Please let me
know in writing within that 60 day period whether you have any suggestions or concerns about
this redacted version of the ruling.

Sincerely,

Office of Tax Policy
Colorado Department of Revenue

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