Is a subscription fee for an online financial newspaper, and for interactive online stock screens and performance ratings, subject to Colorado sales or use tax?

Plain-English summary

A financial news and research company sells subscriptions to two things: (1) an online version of its daily financial newspaper (an exact duplicate of its printed paper, downloadable as a PDF), and (2) interactive online stock screens, comparative performance ratings, and emerging-stock tools. It asked whether either subscription is subject to Colorado sales or use tax. The Department issued a binding private letter ruling and concluded that neither is taxable — but for two different reasons.

The online newspaper — exempt as a "newspaper." Colorado taxes sales of tangible personal property but expressly excludes "newspapers" that qualify as a "legal publication" (§ 39-26-102(15); § 24-70-102). A "legal publication" is one printed and published daily (or daily except Sundays and legal holidays). The company's paper edition — published daily, formatted in columns, carrying news, editorials, and advertising — is a qualifying newspaper, so it isn't taxable. The harder question was the online edition, because the statute says "printed" and the legislature couldn't have imagined online papers when it wrote the exclusion in 1943. The Department held that "printed" is not a substantive requirement — the heart of the "legal publication" test is the frequency of publication, not how it's printed — and because the online edition is an exact duplicate of the printed daily, it's a newspaper too. So the online newspaper subscription is not tangible personal property and isn't taxed. (The Department flagged the contrast: magazines are not excluded and are taxable, and the line between newspaper and magazine "is, to say the least, subtle.")

The stock screens — exempt as a service. Whether the stock-screen subscription is taxable turns on the "true object" test (City of Boulder v. Leanin' Tree, 72 P.3d 361 (Colo. 2003)): is the customer commonly understood to be buying property or a service? The Department noted that static market-survey publications sold for general consumption — like a Kelley Blue Book — are taxable property, even though they contain data and some analysis. But the company's online products are not static: subscribers query databases with the company's software, build quasi-customized reports with search-and-filter tools, and get real-time data. That interactivity and real-time character make the true object a service. So the stock-screen, performance-rating, and emerging-stock subscriptions are not subject to state sales or use tax. (Colorado, unlike Ohio or New York, hasn't enacted a tax on "information services.")

What this means for you

Digital publishers and newspaper companies

If your online product is a faithful duplicate of a print newspaper published daily, Colorado treats it like the paper — exempt — and the word "printed" in the statute isn't the obstacle it looks like. The decisive feature is daily (or near-daily) frequency. But don't over-read this: a magazine (and, by extension, a magazine-like digital periodical) is not excluded and is taxable, and a standalone digital "book" of static data can be taxable property.

Sellers of data, research, and online tools

Interactivity is your friend on taxability. A static data publication sold to everyone (a price book) looks like taxable property; a queryable, real-time, customizable online system looks like a non-taxable service under the true-object test. How dynamic and individualized the product is — not just that it delivers data — drives the result. If you bundle a static publication with an interactive tool for one price, expect a closer look.

Accountants and tax professionals

Two independent grounds here: (1) the statutory newspaper exclusion (§ 39-26-102(15); § 24-70-102), where "legal publication" hinges on daily frequency and "printed" is non-substantive, so a duplicate online daily qualifies; and (2) the true-object test (Leanin' Tree), where interactivity/real-time/quasi-customization push an information product from taxable property toward non-taxable service. Note the magazine/newspaper distinction and that Colorado has no "information services" tax. Binding on the requesting taxpayer only.

Common questions

Q: Is an online newspaper subscription taxable in Colorado?
A: Not where the online edition is an exact duplicate of a newspaper published daily (or daily except Sundays/holidays). Colorado excludes qualifying daily newspapers from taxable tangible personal property, and the Department treats the duplicate online edition the same way — "printed" isn't a substantive requirement; frequency is what matters.

Q: What about a magazine or a magazine-style digital periodical?
A: Magazines are not excluded from the definition of tangible personal property, so they are taxable. The Department acknowledged the newspaper/magazine line is subtle.

Q: Are online stock screens and research tools taxable?
A: In this ruling, no. Because the products are interactive — subscribers query databases, build quasi-customized reports, and access real-time data — the true object is a service, which Colorado doesn't tax. A static data publication sold to the general public (like a price guide) would be taxable property.

Q: Can my business rely on this ruling?
A: Only the taxpayer it was issued to can rely on it, and only on its disclosed facts. A private letter ruling binds the Department as to that taxpayer; it can't be relied on by anyone else and is subject to modification or revocation under Reg. 24-35-103.5. It does not cover self-collected home-rule city taxes.

Citations and references

Statutes:
- § 39-26-102(15), C.R.S. — definition of tangible personal property; excludes newspapers (per § 24-70-102)
- § 24-70-102, C.R.S. — definition of "legal publication" / newspaper (daily, or daily except Sundays and legal holidays)
- § 39-26-104(1)(a), 202, C.R.S. — imposition of sales and use tax

Cases and guidance referenced:
- City of Boulder v. Leanin' Tree, 72 P.3d 361 (Colo. 2003) — the "true object" test
- GIL-07-27 (12/04/2007) — market-survey publications (e.g., Kelley Blue Book) are taxable property
- Reg. 24-35-103.5 (private letter ruling procedure)

Related Colorado rulings (true object / digital goods vs. services):
- [[gil-13-022-material-safety-data-sheet]]
- [[gil-13-020-electronically-delivered-software]]
- [[gil-15-025-digital-photographs]]
- [[gil-16-015-credentialing-services]]
- [[plr-16-003-billing-services]]

Source

• Landing page: https://tax.colorado.gov/sales-use-tax-letter-rulings
• Original PDF: https://tax.colorado.gov/sites/tax/files/documents/PLR-12-007.pdf

Original ruling text

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

PLR-12-007

December 31, 2012

xxxxxxxxxxxxxxxxx
ATTN:XXXXXXXXXXXX
xxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxx
Re: Private Letter Ruling

DearXXXXXXXXXXXX,
You submitted on behalf of XXXXXXXXXXXXXXXX ("Company") a request for a
private letter ruling to the Colorado Department of Revenue ("Department") pursuant to
Regulation 24-35-103.5. This letter is the Department's private letter ruling.
Issues
1. Does sales tax apply to the subscription fee charged to customers for access to
Company's publication on Company's Web site?
2. Is Company's subscription fee charged to customers for access to Company's
online proprietary stock screens and comparative performance ratings subject to
sales or use tax?
Conclusion
1. Sales tax does not apply to Company's subscription fee charged to customers for
access to Company's publication on Company's Web site.
2. Company's online proprietary stock screens and comparative performance ratings
are not subject to sales or use taxes.
Background
Company is a financial news and research organization that provides finance
information to customers, who typically are investors in financial instruments such as
stocks and bonds. Company has historically published, in paper form, a daily (except
Sundays) publication containing financial information. Company characterizes this
publication as a newspaper. Company has more recently provided its customers

access to an exact duplicate of this publication on its Web site. The publication can be
downloaded as a PDF file. Company also provides financial proprietary stock screens,
comparative performance ratings, and identifies stock leaders as they emerge on its
Web site. Customers pay a subscription fee to receive the publication and access to
financial information provided by Company on its Web site. It is not clear from the
ruling request whether customers pay one fee for access to both the publication and
the financial information or whether customers can purchase them separately.
Discussion

Newspaper
Colorado levies sales and use tax on the sale or use of tangible personal property.
§§39-26-104(1)(a) and 202, C.R.S.1 Colorado has, by statute, expressly excluded
newspapers that qualify as a "legal publication" from the definition of tangible personal
property.2 As such, newspapers that meet the qualifications of this section are exempt
from sales and use tax. Newspapers that are "printed and published" daily, or daily
except for Sundays and legal holidays, qualify as a "legal publication."3
Two issues arise when addressing the taxability of Company's online publication. First,
we must decide whether Company's publication is a newspaper.4 Colorado statutes do
not define what constitutes a newspaper. In the absence of such definitions, we look to
how the term is commonly used and understood. A newspaper is commonly
understood to be a paper publication printed on a daily or some other frequent basis
and contains news and other information useful to its consumers.5 As noted above,
Company characterizes its publication as a newspaper. The publication is formatted in
columns, typical of newspapers, and contains news, editorials, and advertisements. It
is printed and published daily, which is also typical of newspapers. Although the issue
is not particularly clear, we rule that Company's paper publication is a newspaper and,
because it is published daily, is a qualified legal publication. Therefore, this publication
is not tangible personal property and its sale is not subject to sales or use taxes.
The second issue, and the question posed in the request for ruling, is whether the
online version of the publication also qualifies as a newspaper. We note that the
statutory definition of a "legal publication" refers to a publication that is "printed." The
1
2

3
4
5

Statutes can be viewed at www.Colorado.gov/revenue/tax > Tax Library> Statutes
"Tangible personal property means corporeal personal property. The term shall not be construed to
include newspapers, as legally defined by section 24-70-102, C.R.S., reprinted newspaper
supplements ... "§ 39-26-102(15), C.R.S.
Section§ 24-70-102, C.R.S.
The characterization is important because, for example, magazines are not excluded from the
definition of tangible personal property and are subject to sales and use taxes.
The Merriam-Webster dictionary defines a newspaper as "a paper that is printed and distributed
usually daily or weekly and that contains news, articles of opinion, features, and advertising." The
dictionary defines "magazine" as, "(a) a periodical containing miscellaneous pieces (as articles,
stories, poems) and often illustrated; also : such a periodical published online, (b) : a similar section of
a newspaper usually appearing on Sunday." The distinction between newspaper and magazine is, to
say the least, subtle.

2

online version of the publication is not printed, but it is the duplicate of a printed
newspaper. We also note that the legislature could not have contemplated online
newspapers when, in 1943, it enacted the exclusion of newspapers from the definition
of tangible personal property. However, we do not view the term "printed" as a
substantive term of this statute. The gravamen of the "legal publication" requirement is
the frequency in which the newspaper is published, not how often it is printed. As to
the issue of the legislative purpose or intent at the time of this exclusion, it is not clear
why the legislature excluded newspapers. It may have been to avoid difficulties related
to collecting a penny or two on each sale, particularly when sold at coin-operated
newspapers stands - a problem not faced by Company's subscription fee for its online
version. In any event, we are persuaded that the online version is a newspaper
because it is a duplicate of the paper version.6
Therefore, we conclude that the online publication is not tangible personal property and
is not subject to state and state-administered local sales and use taxes.
Stock Screens and Comparative Performance
Company requests a ruling whether the subscription fee for its stock screens,
comparative performance information, and other similar information are subject to
sales tax. The principal question presented here is whether the transaction is the sale
of tangible personal property or a non-taxable service.7 The Department uses the "true
object" test to measure whether a transaction is a non-taxable service or a sale of
tangible personal property. In City of Boulder v Leanin' Tree, 72 P.3rd 361 (Colo.
2003), the Colorado Supreme Court, after discussing the "true object" test, as well as
others, concluded that the most appropriate question to ask is whether the transaction
is one which is commonly understood to be for tangible personal property or a service.
See, also, Hellerstein & Hellerstein, State Taxation, 1{13.03[2][a]. This is a particularly
difficult issue when discussing transactions for the access to information.8
On the one hand, we have previously concluded, as have most other states, that
market survey publications made available for general consumption, such as a Kelley
Blue Book on car prices, and not made to order for one customer or one group of
customers, are tangible personal property and not the sale of a service.9 These
publications consist primarily of data but can include some analysis of the data.
Company's online product is similar in that it provides access to a variety of financial
data and analysis, such as identifying emerging stocks. On the other hand, the online
products are not static as is commonly found in at least the paper version of taxable
publications. Subscribers to Company's online products have the ability to query the
6

7
8
9

We purposefully have not addressed the issue of whether Company's online publication is tangible
personal property. We have held in other contexts that the digital goods such as music, videos, and
books downloaded to a customer's computer or other device is tangible personal property.
Colorado generally does not impose sales tax on services, although inseparable services or services
bundled with the sale of taxable goods can be subject to tax. 39-26-104, C.R.S.
As Hellerstein notes, it is extremely difficult to create a consist theory in this area. Hellerstein, ,115.11.
Colorado General Information Letter No. GIL-07-27,12/04/2007

3

databases using its computer software and create quasi-customized reports based on
search and filter functionally options. Customers also have access to real time data.
The interactive nature of this system, as well as the real-time information provided, is
more suggestive of a service than they are of the sale of a product.
The issue here would be easier to resolve had the information services been made
available by an investment company. Investment companies, through which clients
can buy and sell financial investments, are clearly providers of services. Information
services, such as those provided here, would likely be viewed as a service, primarily
because such information services are generally incidental to the investments services.
In this case, however, the information services are not offered in conjunction with other
clearly service oriented transactions.
A number of states have directly addressed transactions for acquiring information by
enacting sales tax legislation on "information services."10 We think this is a particularly
apt description of these online systems because of the interactive and real time
characteristics of the product.
Therefore, we conclude that the true object of the stock screens, comparative
performance ratings, and emerging stock services are the provisioning of a service,
and, thus, not subject to state sales or use tax.
Miscellaneous
This ruling applies only to sales and use taxes administered by the Department. Please
note that the Department administers state and state-collected city and county sales
taxes and special district sales and use taxes, but does not administer sales and use
taxes for self-collected home rule cities and counties. You may wish to consult with
local governments which administer their own sales or use taxes about the applicability
of those taxes. Visit our web site at www.colorado.gov/revenue/tax for more
information about state and local sales taxes.
This ruling is premised on the assumption that Company has completely and
accurately disclosed all material facts. The Department reserves the right, among
others, to independently evaluate Company's representations. This ruling is null and
void if any such representation is incorrect and has a material bearing on the
conclusions reached in this ruling. This ruling is subject to modification or revocation in
accordance to Department Regulation 24-35-103.5.
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
10

Ohio Rev. Code § 5739.01(B}(3)(e), (Ohio defines a taxable sale to include automatic data
processing, computer services, or electronic information services.); NY Tax Law §§ 1105(c}(1),
1105(c)(9), (New York distinguishes between taxable information services and the provision of
information that is "personal or individual" in nature.)

4

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

5