Are 'platform credits' that viewers buy on a live-streaming site and send to streamers — the kind that emphasize a chat message or unlock badges and overlays — subject to Colorado sales tax when bought or when redeemed?

Plain-English summary

A company that runs a live video-streaming platform (think viewers watching "streamers" play games or cook) asked whether its "Platform Credits" are taxable. Viewers buy these credits, then send them to streamers during a live stream — mostly to show support and get noticed. Sending credits doesn't unlock any video access; it emphasizes the viewer's chat message with a graphic, can grant time-limited chat privileges, and accumulates toward badges and emotes that mark the viewer as a supporter. Viewers can also redeem credits for third-party interactive overlays (sound effects, voice modulation, leaderboards). The Department held that neither buying nor redeeming the credits is subject to Colorado sales tax.

Buying the credits — not taxable. Colorado taxes sales of tangible personal property and a few enumerated services, but not intangible rights with no intrinsic value. The Department treated Platform Credits like gift cards: buying one just evidences the company's promise to provide benefits later when the credit is redeemed. The sale of that right isn't a sale of tangible personal property, so it isn't taxed at purchase. (As with a gift card, tax could apply at redemption if the credit is then used to buy something taxable.)

Redeeming the credits — also not taxable here. When a viewer spends credits, the question is whether they receive anything taxable. They don't:

• What the viewer primarily gets is a non-taxable service — having their chat message emphasized, plus recognition like badges. Colorado taxes no service unless it's specifically listed, and these aren't.
• To the extent the credits compensate the streamer, that's in the nature of a non-taxable gratuity (a tip).
• Some redemptions unlock third-party enhancements that could be described as software. But even though Colorado taxes digital goods, computer software delivered electronically is specifically excluded from tax. So that path isn't taxable either.

The Department also noted that "purchase price" is broad and includes the fair market value of property exchanged — so the fact that credits aren't denominated in dollars wasn't decisive. What mattered was that nothing taxable was acquired in the exchange.

What this means for you

Streaming platforms, games, and virtual-currency operators

Selling in-platform credits, tokens, bits, coins, or virtual currency generally isn't a taxable sale at the point of purchase — it's treated like a gift card, an intangible right. The taxability lands at redemption, and only if the credit is used to acquire something taxable. If your credits buy non-taxable services, recognition, tips to creators, or electronically delivered software, redemption stays untaxed. If they can be redeemed for taxable tangible personal property or taxable digital goods, that redemption would be taxable — so design and document what credits can actually be spent on.

Content creators receiving viewer support

Viewer "donations," tips, and support sent through credits are treated as gratuities here rather than taxable sales — the viewer isn't buying a taxable good or service. (This addresses sales tax only, not income tax.)

Accountants and tax professionals

The gift-card analysis (1 CCR 201-5, Special Rule 20) defers any tax to redemption; the broad "purchase price" definition (§ 39-26-102(7)(a)) means non-dollar consideration still counts, so the analysis turns on whether the redeemed-for item is taxable. Key carve-out: Colorado taxes digital goods under § 39-26-102(15)(b.5) but excludes electronically delivered software under § 39-26-102(15)(c) — a frequently decisive distinction. Services are taxable only if enumerated (A.D. Store, 19 P.3d 680). Watch the home-rule-city caveat; home-rule cities often tax digital products on their own terms.

Common questions

Q: Do we charge sales tax when a customer buys platform credits or virtual currency?
A: Generally no. Like a gift card, the credit is an intangible right and isn't taxed when purchased. Look instead at what the credit is redeemed for — tax applies only if the redemption acquires something taxable.

Q: Are viewer tips/donations to streamers taxable?
A: Not as sales tax in this ruling. Amounts that compensate the streamer are treated as gratuities, and the recognition/chat-emphasis the viewer receives is a non-taxable service. (Income-tax treatment is a separate question.)

Q: We let credits unlock software overlays — is that taxable?
A: Not where the software is delivered electronically. Colorado taxes digital goods but specifically excludes electronically delivered computer software, so redeeming credits for those enhancements wasn't taxable here.

Q: When would redeeming credits be taxable?
A: If the credits are redeemed to acquire taxable tangible personal property or taxable digital goods (or an enumerated taxable service). The gift-card rule defers tax to that redemption.

Q: Does this ruling apply to my business?
A: Not automatically. A private letter ruling binds the Department only for the taxpayer and facts it was issued to and explicitly cannot be relied on by anyone else. It shows the Department's reasoning, but your facts may differ.

Q: Does this cover city sales tax too?
A: No. The Department administers state and state-administered local sales tax only. Self-collected home-rule cities set their own rules and may tax digital products differently. Check with each home-rule city.

Citations and references

Statutes and rules:
- § 39-26-104(1), C.R.S. (imposition of sales tax on tangible personal property and enumerated services)
- § 39-26-102(15)(a)(I), C.R.S. (definition of "tangible personal property")
- § 39-26-102(7)(a), C.R.S. (definition of "purchase price"; includes fair market value of property exchanged)
- § 39-26-102(15)(b.5), C.R.S. (tangible personal property includes digital goods)
- § 39-26-102(15)(c), C.R.S. (electronically delivered computer software excluded from tax)
- 1 CCR 201-5, Special Rule 20 (gift cards/certificates not taxable until redeemed for taxable items)
- 1 CCR 201-1, Rule 39-26-104-6 (gratuities)
- 1 CCR 201-1, Rule 24-35-103.5 (private letter ruling procedure)

Case law:
- A.D. Store Co. v. Dep't of Revenue, 19 P.3d 680 (Colo. 2001) (no service is taxable unless specifically listed in the statute)

Source

• Landing page: https://tax.colorado.gov/sales-use-tax-letter-rulings
• Original PDF: https://tax.colorado.gov/sites/tax/files/documents/PLR-22-005.pdf

Original ruling text

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

PLR 22-005
July 22, 2022
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Via Electronic Mail: XXXXXXXXXX
Re: Sales tax on the sale and redemption of platform credits
Dear XXXXXXXXXX:
You submitted a request for a private letter ruling on behalf of XXXXXXXXXX (the “Company”)
to the Colorado Department of Revenue (“Department”) pursuant to 1 CCR 201-1, Rule 24-35103.5. This letter is the Department’s private letter ruling. This ruling is binding on the
Department to the extent set forth in 1 CCR 201-1, Rule 24-35-103.5. It cannot be relied upon
by any taxpayer other than the taxpayer to whom the ruling is made.
Issue
Whether Company’s sales of Platform Credits, and subsequent redemption by Viewers, are
subject to state and state-administered sales tax.
Conclusion
Company’s sales of Platform Credits are not subject to state and state-administered sales tax.
The redemption of Platform Credits by Viewers, both with and without Third-Party
Enhancements, are not subject to state and state-administered sales tax.
Background1
Company enables people (“Viewers”) to watch streaming videos on Company’s Internet-based
platform (“Platform”). Viewers may use the Platform by accessing Company’s website or by
downloading Company’s app to the Viewer’s device for free. Viewers can view real-time
streaming videos without registering with Company or paying to access or view the streaming

1 Paragraph (4)(b)(ii) of 1 CCR 201-1, Rule 24-35-103.5 requires the request for a private letter ruling to include a

statement of facts. This section generally recites the statement of facts provided in the request, which is not an
indication that the Department found such facts relevant to its analysis. Some relevant facts may be omitted to ensure
confidentiality as required by section 24-35-103.5(5), C.R.S. The terms used in this section to describe the factual
background are generally those of the requester.

PLR 22-005
July 22, 2022
Page 2
videos. Viewers may also view the videos of certain third parties (“Streamers”) on demand for a
limited period of time after they have aired live.2
Company obtains licenses for the videos from Streamers. Streamers often create videos of
themselves performing various activities, including playing video games and cooking. Streamers
may also watch TV shows or movies with Viewers. During these videos, Streamers may provide
commentary on their activities to the Viewers.
While viewing real-time streaming videos, Viewers can submit typed comments using the
Platform’s chat function. The chat function appears to Viewers as a chat box on the right side of
the screen. These comments are viewable by the Streamer and other Viewers. Each Streamer
has the ability to respond to the Viewers’ typed comments by speaking during the video or by
submitting its own typed comments via the chat function. Streamers and Viewers may also enter
a variety of emotes – i.e., small pictures – into the chat function. Emotes are usually static
images; they are occasionally short, repetitive animations.
A separate feature offered by Company is XXXXXXXXXX (“Platform Credits”). During the live
streaming of videos, Viewers may send Platform Credits to the Streamer. The primary reasons
that Viewers send Platform Credits to Streamers are to show support for that Streamer and be
more likely to be noticed and commended by the Streamer and other Viewers. It is important to
note that Viewers that send Platform Credits to Streamers do not receive additional access to
the Streamer’s videos. A Viewer may access the same videos regardless of how many Platform
Credits it sends to the Streamer or even if it does not send any Platform Credits at all. Thus,
when a Viewer send Platform Credits, it—in most instances—receives nothing of substance in
return. Further, as described in more detail below, the only visual aspect associated with a
Platform Credit is an image that may appear in the chat function that notifies the Streamer and
other Viewers that the Viewer has sent Platform Credits.
In order to send Platform Credits for a Streamer, Viewers must first purchase the Platform
Credits from Company. Viewers send Platform Credits to the Streamer using the Platform’s chat
function. Upon sending the Platform Credits, Company deducts the amount sent from the
Viewer’s account. The Platform informs the Streamer via his or her activity feed that he or she
has received Platform Credits and the number of Platform Credits sent. The Streamer does not
“receive” these Platform Credits or any dollar value conversion of the Platform Credits at that
time. Rather, as part of its monthly payout from Company, the Streamer is rewarded in the
amount of $XXXX for each Platform Credit used in the chat. Company occasionally runs limited
marketing campaigns wherein Streamers are rewarded with additional prizes for their
communities meeting collective Platform Credit usage goals in the Streamers’ channels.
However, these limited marketing campaigns are not part of the core product experience.
As noted above, each time a Viewer sends Platform Credits, the amount sent is displayed in the
chat box. This amount is accompanied by a small, animated graphic. The amount of movement
displayed is limited; the movements are only short, repeating loops. Viewers may choose from a
variety of animated graphics. The color, size, shape, and animation vary depending on the
amount of Platform Credits sent. Alternatively, the Viewer may select animated versions of
2 Access to the videos on-demand may require registration with Company and a subscription to view the videos of the

particular Streamer. Company is currently collecting and remitting Colorado sales tax on sales of subscriptions.

PLR 22-005
July 22, 2022
Page 3

popular global emotes, or choose from custom emotes available for certain Streamers. The
graphic is displayed to the Viewers in only the chat message in which the Platform Credits are
sent; it cannot be displayed a second time without again sending Platform Credits. The graphic
and message remain visible in the chat stream, until they are hidden by the natural flow of the
chat. The graphic and message are still visible if a Viewer scrolls back to the earlier chat
messages, unless the page is reloaded.
The Viewer may (but is not required to) also submit a message to accompany the Platform
Credit amount and graphic. Like any other chat message, the message sent with Platform
Credits and a graphic is visible by the Streamer and other Viewers. It is not necessary to buy
Platform Credits to submit a message; a Viewer may submit a message in chat, even without
sending Platform Credits. Other than the amount of Platform Credits and the graphic, the
message looks otherwise identical to any other chat message. As noted above, chat messages
can be submitted at any time for no charge.
A Viewer may opt to send Platform Credits anonymously.3 The Viewer cannot send a message
or emote when sending Platform Credits anonymously.
At the Streamer’s option, sending Platform Credits also gives the Viewer access to the
Streamer’s Subscriber-only chat, even if the Viewer is not a Subscriber. Subscriber-only chat is
the same chat function typically available to all Viewers, but the Streamer is permitting only
Subscribers to submit chat messages. There is no default time period for a non-subscribing
Viewer that sent Platform Credits to continue sending chat messages on the Subscriber-only
chat. The length of the time period is solely at the Streamer’s option. As the Streamer and other
Viewers are notified of a Viewer’s Platform Credits via a chat message, they would not be aware
of the Platform Credits sent unless the non-Subscriber Viewer were granted the time-limited
ability to submit a chat message.
Upon reaching certain tiers of Platform Credits sent for a Streamer in total (for all streams of that
Streamer combined, not limited to a single stream), the Viewer unlocks varying badges. Badges
are small pictures. The Streamers can also replace the default badges with their own custom
designs. The badges are located next to the Viewer’s name in chat messages. The badges are
available only in the channel of the Streamer to which the Viewer has sent the Platform Credits
and cannot be used by the Viewer outside of the Platform. Badges thus identify the Viewer as a
charitable person that supports the Streamer.
When a Streamer’s Viewers send enough Platform Credits or give enough Streamer
subscriptions to themselves or others within a short period of time, a XXXXXXXXXX (“Special
Event”) occurs. Depending on the amount of contributions by all Viewers, contributing Viewers
will receive an emote to use in messages permanently in the Platform’s chat function for any
Streamer. A Viewer must send a certain amount of Platform Credits in order to qualify for the
emote award. Special Event emotes are awarded depending on all Viewers’ totals. Thus, an
emote award is not attributed to any singular Viewer unless the Viewer met the Special Event
reward total independently without additional Viewer contributions. In addition to badges, these
emotes further identify the Viewer as a charitable person that sends Platform Credits to its

3 The message may also—solely at the Streamer’s option—be overlaid on the video streaming feed.

PLR 22-005
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favorite Streamers, in general, without singling out the Platform Credits sent to any particular
Streamer.
Viewers may also redeem their Platform Credits for the ability to use XXXXXXXXXX (“ThirdParty Enhancements”). Third-Party Enhancements are interactive overlays and panels,
developed by third parties. Third-Party Enhancements allow Viewers to further interact with the
Streamer via heat maps and real-time game data overlays to mini-games, music requests, and
Viewer leaderboards. Leaderboards may illustrate which Viewers have sent the most Platform
Credits or Subscriptions to the Streamer. Other examples of Third-Party Enhancements
available to Viewers include:
•
•
•
•

Playing certain sounds that will be heard by all other Viewers;
Modifying the Streamer’s voice in real time;
Interacting with the game the Streamer is playing; and
Applying images to the live stream video.
Discussion

Company’s sales of Platform Credits are not subject to state and state-administered sales tax.
Colorado levies a sales tax on sales of tangible personal property and certain enumerated
services.4 The term “tangible personal property” embraces all goods, wares, merchandise,
products, and commodities, and all tangible or corporeal things and substances that are dealt in
and capable of being possessed and exchanged.5
Tangible personal property does not include intangible property constituting mere rights of
action and having no intrinsic value, such as contracts.6 In this respect, the sale of gift
certificates and gift cards, which evidence the issuer’s agreement to provide goods and services
when redeemed, are not subject to Colorado sales tax when acquired.7 If, however, the gift
card is redeemed to acquire taxable tangible personal property or services at retail in this state,
the sale would be subject to sales tax.8
Although not denominated in dollars, the Platform Credits are akin to gift cards. Their purchase
evidences the right of the Viewer to receive, and the agreement of Company to provide, benefits
and rewards when the purchaser chooses to redeem the Platform Credits. Therefore, the sale
and purchase of Platform Credits is not a sale of tangible personal property.
Furthermore, when the Viewer redeems the purchased Platform Credits, that transaction is also
not subject to sales tax. The fact that Platform Credits are not denominated in dollars when they
are redeemed is not dispositive to this question. The term “purchase price,” which is the basis
for the state sales tax, broadly means “the price to the consumer.”9 The term encompasses all
4 Section 39-26-104(1), C.R.S.
5 Section 39-26-102(15)(a)(I), C.R.S.
6 1 CCR 201-4, Rule 39-26-102(15), paragraph (2)(b).
7 1 CCR 201-5, Special Rule 20.
8 Id. See also, 1 CCR 201-4 Rule 39-26-102(7)(a), paragraph (2) (explaining that the term “purchase price” includes

the fair market value of property taken in exchange).
9 Section 39-26-102(7)(a), C.R.S.

PLR 22-005
July 22, 2022
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forms of consideration, including the fair market value property taken in exchange.10 If the
Viewer were to receive anything taxable in exchange for redeeming Platform Credits, that
transaction would be subject to tax.
In this case, however, the Viewer’s redemption of the Platform Credits is not subject to state
sales tax because the credits are not being used to acquire taxable tangible personal property
or services. In exchange for the Platform Credits, the Viewer is primarily receiving the service of
having their chat message emphasized to the Streamer and other Viewers on the Platform.
Ultimately, the Viewer may be purchasing the special recognition of earning certain badges.
These services are not among those explicitly subject to state sales tax,11 and therefore, the
exchange of Platform Credits for these services is not taxable. Furthermore, to the extent the
Platform Credits compensate the Streamer, their redemption is in the nature of a non-taxable
gratuity.12
Finally, the Viewer’s redemption of Platform Credits in exchange for Third-Party Enhancements
is not subject to state sales tax. As described, some of the Third-Party Enhancements seem to
be additional ways for the Viewer to have their message emphasized on the Platform. As we
concluded above, these services are not subject to tax. In some cases, the Third-Party
Enhancements could likely be described as computer programs or program upgrades. This
distinction, however, is immaterial. Although Colorado taxes digital goods,13 computer software
that is delivered to the purchaser electronically is explicitly excluded from taxation.14 Therefore,
even when used to purchase Third-Party Enhancements, the Platform Credits are not being
used to acquire taxable tangible personal property or services.
Miscellaneous
This ruling is premised on the assumption that Company has completely and accurately
disclosed all material facts, that all representations are true and complete, and that Company
has otherwise complied with the requirements of section 24-35-103.5, C.R.S., and the rules
promulgated pursuant thereto. The Department reserves the right, among others, to
independently evaluate Company’s facts, representations, and assumptions. The ruling is null
and void if any such fact, representation, or assumption is incorrect and has a material bearing
on the conclusions reached in this ruling. This ruling is binding on the Department and is subject
to modification or revocation, in accordance with 1 CCR 201-1, Rule 24-35-103.5.
The Department administers state and state-administered local sales and use taxes. This letter
does not address sales and use taxes administered by self-collected home-rule cities. You may
wish to consult with those local governments that administer their own sales or use taxes about
the applicability of those taxes. Visit our website at tax.colorado.gov for more information about
state and local sales taxes.

10 1 CCR 201-4 Rule 39-26-102(7)(a).
11 See A.D. Store Co., Inc. v. Dep’t of Revenue, 19 P.3d 680, 683 (Colo. 2001) (“[N]o service is taxable, except those

services specifically listed in the statute itself.”).
12 1 CCR 201-1, Rule 39-26-104–6.
13 See section 39-26-102(15)(b.5), C.R.S. (defining “tangible personal property” to include digital goods).
14 See Section 39-26-102(15)(c), C.R.S.

PLR 22-005
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Thank you for your request.
Sincerely,
Office of Tax Policy
Colorado Department of Revenue
This ruling cannot be relied upon by any other taxpayer other than the taxpayer to whom
the ruling is made.