Were video-production and editing services subject to Florida sales tax when the finished video was delivered electronically?

Plain-English summary

The taxpayer produced and edited online videos, commercials, press releases, biographies, training materials, corporate presentations, and documentaries. It asked whether the delivery format changed Florida sales tax.

Florida ruled that video production and editing were not taxable when the finished product was transferred only through file-transfer protocol or email. A purely digital transmission did not transfer tangible personal property.

The same files became taxable when delivered on a hard drive, CD, flash drive, DVD, or similar physical medium because the customer received tangible personal property.

What this means for you

For this ruling, delivery method controlled the outcome more than the creative work performed. Contracts and fulfillment records should clearly show whether the customer receives only an electronic transmission or any physical storage medium.

Common questions

Was FTP delivery taxable? No.

Was email delivery taxable? No.

What delivery methods were taxable? Hard drives, CDs, flash drives, DVDs, and other tangible media.

Citations and references

• Fla. Stat. §§ 212.02(19) and 212.05, as quoted and discussed in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 11A-002

Original ruling text

SUMMARY
QUESTION:
Whether certain services provided by Taxpayer, such as video production and video pres
releases, are subject to sales tax when the products are delivered to its clients via the Internet.
ANSWER: Video production and editing is not subject to sales tax if the product is transferred
digitally via file transfer protocol or e-mail; however, files transferred via a hard drive, CD, flash
drive, DVD, etc., are subject to sales and use tax.
January 13, 2011
XXX
Re:

Technical Assistance Advisement 11A-002
Sales and Use Tax – Video Production
Sections 212.02, 212.05, Florida Statutes (F.S.)
XXX (Taxpayer)
FEI #: XXX

XXX:
This is in response to your letter dated October 12, 2010, requesting this Department’s issuance
of a Technical Assistance Advisement (“TAA”) pursuant to section 213.22, F.S., and Rule
Chapter 12-11, F.A.C., concerning the above referenced matter. An examination of your letter
has established you have complied with the statutory and regulatory requirements for issuance of
a TAA. Therefore, the Department is hereby granting your request for a TAA.
Issue
The issue is whether certain services provided by Taxpayer, such as video production and video
press releases, are subject to sales tax when the products are delivered to its clients via the
Internet.
Facts
Taxpayer is in the business of producing and editing videos. Taxpayer’s website provides the
following description of Taxpayer’s services:
Online Video
When today’s business customers visit a website, they expect to find video. At XXX, we
are storytellers at heart. Our Emmy Award winning team will produce an engaging 60
seconds video that will highlight what makes your business unique and help potential
customers understand what makes your business stand out.

Video Marketing

Technical Assistance Advisement
Page 2 of 4
As part of our online video marketing services, we will make sure that search engines can
easily find your video by applying effective search engine techniques that will get your
videos seen. We will distribute your video to the search sites across the Web, including
You Tube & Yahoo. We will also match your business listing on Google Local, so
customers can see it when they find your business in their Google search results.
Video Hosting & Viewer Tracking
As with all modern e-marketing strategies, analytics should be part of any online video
program. Our video hosting platform will help you identify your best content and track
audience behavior. You can see how long your audience is watching your videos and
monitor how often your video is watched. You can even track the usage of your video
via a plug into Google Analytics.
Our Specialties
At XXX, we specialize in corporate videos, tv commercials, video news releases, psa’s
and personal video biographies. Our goal is to understand your business. We begin
every project with a comprehensive discussion about your goals, budget and deadline.
We then develop a unique story, strategy and branded message that fits your vision.
Post Production Services
XXX is a full service production company providing editing, voice over and scriptwriting
services to help corporations deliver a powerful message. We also offer the highest
quality of CD, DVD & Blu-ray duplication services so your message is delivered in the
highest quality every single time.
Marketing & Web Design Agencies
The growth of video has been explosive and agencies are taking advantage of this
medium to better service their customers[’] needs. Savvy marketers and web design
agencies are now incorporating video as part of their marketing mix. Achieve your
marketing objectives with XXX’s combination of creative and affordable video
production & promotional packages.
An example of Taxpayer’s service agreement provides the following in part:
Project Scope:

1. A custom 60 second video of your hotel.
2. The shoot lasts 60 minutes. During this time, I will interview the owner and one
   testimonial. I will also shoot footage to highlight your facility.
3. Once the shoot is complete, I will edit the footage to tell a compelling story,
   including adding music (if appropriate), titles and any other elements needed to
   showcase the hotel.
4. When your video is complete, I will send you a link to your video where you can
   review and request changes.
5. You will have two rounds of edits to get everything just right.
6. After [you] approve your video, we will e-mail you the code and you can post it on
   your website or link it to an e-mail.

Technical Assistance Advisement
Page 3 of 4
Final Product Formats:
Encode video h.264 ready to play on the internet.
Upload video to your website or upload to an FTP site.
Requested Advisement
Taxpayer requests advice on whether the following services are subject to sales tax when the
product is delivered digitally via file transfer protocol, hard drive, or e-mail:
Video production services
Shooting, editing, scripting, storyboard, directing, lighting and audio
Media types
Online video
TV commercials
Video press releases
Video biographies
Training seminars
Corporate video presentation
Documentaries
Applicable Authority and Discussion
Section 212.05, F.S., provides Florida sales tax applies to sales of tangible personal property.
“Tangible personal property” is “personal property which may be seen, weighed, measured,
touched or is in any manner perceptible to the senses . . . .” Section 212.02(19), F.S. Florida
courts have held that electronic images of financial information displayed on a screen are not
“tangible personal property” as defined in section 212.02(19), F.S. See Department of Revenue
v. Quotron Systems, Inc., 615 So.2d 774 (Fla. 3rd DCA 1993); Henley Holdings Inc. v.
Department of Revenue, No. 89-4381 (Fla. 2d Cir.Ct. July 22, 1991), affd. 599 So.2d 1282 (Fla.
1st DCA 1992).
The Department has cited Quotron, supra, and Henley Holdings, supra, in regard to transactions
involving only digital transmissions via the Internet to a customer’s computer. The Department
has determined that such sales, without any other evidence of the transfer of something tangible,
are not sales of tangible personal property for purposes of Section 212.02(19), F.S., and Section
212.05, F.S. Sales of digital transmissions instead constitute services not subject to sales and use
tax. In this case, the services provided by Taxpayer to produce and edit videos are not subject to
sales tax when the product is transferred digitally via file transfer protocol or e-mail; however,
files transferred via a hard drive, CD, flash drive, DVD, etc., are subject to sales and use tax
because these items are tangible personal property.

Conclusion
Video production and editing is not subject to sales tax if the product is transferred digitally via

Technical Assistance Advisement
Page 4 of 4
file transfer protocol or e-mail; however, files transferred via a hard drive, CD, flash drive, DVD,
etc., are subject to sales and use tax.
This response constitutes a Technical Assistance Advisement under Section 213.22, F.S., which
is binding on the Department only under the facts and circumstances described in the request for
this advice as specified in Section 213.22, F.S. Our response is predicated on those facts and the
specific situation summarized above. You are advised that subsequent statutory or administrative
rule changes, or judicial interpretations of the statutes or rules, upon which this advice is based,
may subject similar future transactions to a different treatment than that expressed in this
response.
You are further advised that this response, your request and related backup documents are public
records under Chapter 119, F.S., and are subject to disclosure to the public under the conditions
of Section 213.22, F.S. Confidential information must be deleted before public disclosure. In an
effort to protect confidentiality, we request you provide the undersigned with an edited copy of
your request for Technical Assistance Advisement, the backup material, and this response,
deleting names, addresses, and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department within 15 days of the date of this
letter.

Sincerely,

Angel Sessions
Senior Tax Attorney
Technical Assistance and Dispute Resolution
(850) 717-7312
Record ID: 90961