Did an internet subscription company have to collect sales tax or communications services tax on admission certificates?

Plain-English summary

The Florida Department of Revenue concluded that the internet company's admission certificates qualified as gift certificates and were not taxable when sold. The participating admission provider, not the internet company, had to collect and remit admission sales tax when a paid certificate was redeemed.

Free-admission certificates obtained without payment were not taxed because no consideration was paid. If a certificate did not qualify under Florida gift-certificate law, the internet company could instead become the taxable collector of the admission.

The service also was not subject to communications services tax because using the internet to facilitate the programs did not mean the company provided a communications service.

What this means for you

Online certificate platforms

Gift-certificate treatment depends on continuing to comply with Florida gift-certificate law, including the represented refund or credit rights.

Admission providers

Tax was due at redemption on the applicable admission sales price under the detailed rules in the ruling.

Accountants and tax professionals

Do not treat internet delivery by itself as a communications service. Also verify whether the instrument truly qualifies as a gift certificate.

Common questions

Q: Was the platform's sale of qualifying certificates taxable?
A: No.

Q: Who collected admission sales tax?
A: The admission provider when the paid certificate was redeemed.

Q: Did communications services tax apply?
A: No.

Citations and references

• Fla. Stat. §§ 212.02, 212.04, 212.07, 212.12, 202.11(1), 213.22, and 501.95; ch. 202
• Fla. Admin. Code rr. 12A-1.005, 12A-1.018, and 12A-1.089

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 15A-006

Original ruling text

Executive
Director
Marshall Stranburg

QUESTION:
WHETHER TAXPAYER’S MUST COLLECT SALES TAX OR
COMMUNICATION SERVICE TAX FOR THEIR INTERNET BASED SUBSCRIPTION
SERVICE THAT PROVIDES FREE AND DISCOUNTED ADMISSIONS PROVIDED BY
OTHER COMPANIES.
ANSWER: NO. THE ADMISSION PROVIDER, NOT TAXPAYER, MUST COLLECT
AND REMIT SALES TAX ON THEIR ADMISSION SALES.
June 08, 2015
Subject: Technical Assistance Advisement (“TAA”) 15A-006
Sales and Use Tax; Communication Services Tax (“CST”)
Admissions
Section(s) 212.04, 212.02, Florida Statutes (“F.S.”); Chapter 202, F.S.
Rule(s) 12A-1.005, Florida Administrative Code (“F.A.C.”)
XXXXXX. (“Taxpayer”)(“Petitioner”)
FEIN: XXXXXX
Florida Sales Tax Number: XXXXXX
BPN: XXXXXX
XXXXXX (“Program One”)
XXXXXX (“Program Two”)
XXXXXX (“Admission Provider”)
XXXXXX (“Certificates”)
Dear XXXXXX:
This letter is a response to your petition dated March 12, 2014, for the Department’s issuance of
a Technical Assistance Advisement (“TAA”) to Petitioner, regarding whether Taxpayer’s
subscription based activities require Taxpayer to collect or remit sales and use tax or CST. Your
petition has been carefully examined, and the Department finds it to be in compliance with the
requisite criteria set forth in Rule Chapter 12-11, F.A.C. This response to your request
constitutes a TAA and is issued to you under the authority of section 213.22, F.S.

Child Support – Ann Coffin, Director  General Tax Administration – Maria Johnson, Director
Property Tax Oversight – Susan Harlan, Interim Director  Information Services – Damu Kuttikrishnan, Director

http://dor.myflorida.com/dor/
Florida Department of Revenue
Tallahassee, Florida 32399-0100

Page 2 of 6
Technical Assistance Advisement
Facts
Taxpayer conducts two Internet based subscription services, including Program One and
Program Two, throughout various States within the country, including Florida. Taxpayer
subscription members may access Taxpayer’s website to purchase Certificates. The Certificates
allow for free admissions or price discounts at the business location of a particular Admission
Provider that participates in Program One or Program Two. Taxpayer provided copies of the
agreements with the Admission Providers. The agreements require Admission Providers to
comply with Florida gift certificate law regarding redemption expiration dates, refunds, and
credits. The agreements require Admission Provider to provide instructions to Taxpayer’s
subscribers regarding refunds for unused Certificates obtained from Taxpayer. Also, the
agreement provides that the Admission Provider receives various marketing tools and customer
data from Taxpayer’s subscribers. The Admission Provider receives a share of the receipts
received from Program One and Program Two sales income from the sale of Certificates.
In regard to Program One, Taxpayer’s customers initially subscribe with Taxpayer. The
customers then receive certain membership benefits. The subscriber must choose one particular
Admission Provider. During this process, the customers provide Taxpayer with information.
The subscribing members enroll their family members. Certain family members receive free
admissions during certain periods with a particular Admission Provider. These family members
receive a Certificate which may be redeemed with the Admission Provider. This type of
Certificate is obtained without payment and has no cash value for refund.
Also in regard to Program One, Taxpayer also sells the subscribing member Certificates that may
be used by the other family members. This type of Certificate allows for a limited number of
admissions at no additional charge when the Certificate is redeemed at the Admission Provider.
This type of Certificate is used when other family members are using the other type of Certificate
obtained at no charge that provides free admission. This type of Certificate has no stated value
but Taxpayer provides for refund of unused Certificates. The subscribing member downloads
the Certificates and must present the Certificate to the Admission Provider when it is redeemed.
The price of this type of Certificate is determined by the Admission Provider. This type of
Certificate must be used in a certain period of time and use of the Certificate may be limited
based upon availability of the admission facilities at the Admission Provider. The use of
Certificates that allow free admission cannot be guaranteed at all times.
In regard to Program One, Admission Providers are not charged set fees by Taxpayer; however,
the Admission Provider is required to pay an annual fee to Taxpayer. The agreement between
the Admission Provider and Taxpayer regarding Program One requires Taxpayer to accept the
free admissions Certificates during a certain agreed period of time. The agreement authorizes
Taxpayer to sell the other Certificates at a predetermined price to be redeemed at the Admission
Provider. Subscribers are not required to purchase Certificates to be used at the Admission
Provider.

Page 3 of 6
Technical Assistance Advisement
The agreement for Program One allows the Admission Provider to receive an equal portion of
the proceeds from the sale of Certificates. Taxpayer sends checks twice during the Program One
period. Taxpayer is entitled to deduct refunds paid from unused Certificates when making
payment to the Admission Provider.
The agreement for Program One between Taxpayer and the Admission Provider provides that the
funds retained by Taxpayer from the sale of Certificates are for marketing, promoting,
advertising, and distributing the Certificates, and that the annual fee paid by the Admission
Provider is for Internet set-up, promotional cards, and marketing tools ordered by Admission
Providers.
In regard to Program Two, the agreement between an Admission Provider and Taxpayer requires
the Admission Provider to accept certain Certificates offered by Taxpayer referenced by the
agreement. As to Program Two, the customer accepts the Taxpayer’s offer online, and the
Admission Provider is bound by the Taxpayer’s Certificate terms. The customer may then
download the Certificate to print or store on a mobile device. The Certificate is then redeemed at
the Admission Provider.
There are four mandatory Certificates, which include games and rentals of tangible personal
property. The mandatory Certificates are sold as a lump sum bundled price. Each Certificate
provides a stated value which exceeds the stated purchase price of the Certificate. Also, the
redemption periods may be limited in time, availability, and amount. The Certificate allows for a
credit of the purchase price when used beyond the stated redemption period on the Certificate as
required by Florida law.
Admission Provider must pay an annual fee that is discounted if the Admission Provider also
participates in Program One. The agreement provides that the annual fee is for services provided
by Taxpayer.
The Program Two agreement allows the Admission Provider to send additional incentive
Certificate offers to Taxpayer’s subscribing members. The Program Two agreement provides for
additional Certificate offers that are optional to the Admission Provider. Taxpayer retains a
share of the proceeds from the sale of Taxpayer Program Two Certificates.
Taxpayer Position
Taxpayer is merely a facilitator of selling or distributing incentives which will provide customers
with a discounted price for the goods and services purchased from an Admission Provider. In
effect, the offers on Taxpayer’s website are not unlike those found on other websites that offer a
customer a discount for goods, services, and events where the provider of goods, services, or
events is not the same person as the website that solicits the discounted sale.

Page 4 of 6
Technical Assistance Advisement
The agreements provide Taxpayer and Admission Provider are not in an agency relationship.
Also, Taxpayer’s services are unlike a typical agency relationship involving the sale of a ticket to
a scheduled event, such as a sporting event, because the purchaser does not automatically choose
the time to use a coupon or certificate. As to Chapter 202, F.S., Taxpayer does not sell an
information service simply because it charges a subscription fee.
Law and Discussion
Section 212.04, F.S., applies to the sale of admissions made by Taxpayer or the Admission
Providers. The sales tax must be collected on the full sales price paid (actual consideration
amount) received from the sale of the admission. Taxpayer must collect and remit sales tax
when an admission is sold by Taxpayer even if the admission is provided by another party. See
s. 212.04(6), F.S., regarding collectors of admissions. This includes admissions sold online by
sales agents on the behalf of an admission provider. See Rule 12A-1.005(1)(c)2., Florida
Administrative Code (“F.A.C.”). In the event that Taxpayer makes sales of admission on the
behalf of an Admission Provider, Taxpayer is liable for the collection of sales tax imposed by
Chapter 212, F.S.
Rule 12A-1.089, F.A.C., provides:
The sale of a gift certificate is not taxable. When the owner of a gift certificate
redeems it for tangible personal property, or a part thereof, the transaction is
taxable as a sale. For example, if the owner of a gift certificate valued at $25
purchases a $15 pair of shoes, tax of 90 cents must be collected by the dealer and
remitted to the Department of Revenue.
The sale of a gift certificate is for intangible personal property. The Taxpayer’s sales of
Certificates addressed by the request are required by virtue of the agreements to comply with the
Florida gift certificate law. The Certificate purchasers are entitled to receive a refund or credit of
the purchase price for unused certificates when the Certificate is not used within a stated
redemption period. See s. 501.95, F.S. Therefore, Rule 12A-1.089, F.A.C., applies to
Taxpayer’s Certificates.
The Admission Provider is required to collect sales tax when the Certificates are redeemed. In
regard to Program One Certificates with free admission received at no cost to the subscribing
members sales tax does not apply because no consideration was paid based on the information
provided by the request. In regard to the Program One Certificates sold to subscribing members,
sales tax must be remitted by the Admission Provider. The sales tax is computed on the total
amount paid by the subscribing member to Taxpayer. This assumes that the Admission Provider
is aware of the amount paid by the subscribing members. If the Admission Provider does not
know the amount paid to Taxpayer, then the Admission Provider must collect sales tax on the
full retail sales price of the admission sold. The sales tax must be remitted at the earlier date of
when Taxpayer pays the Admission Provider for the Certificate or when the Certificate is
redeemed.

Page 5 of 6
Technical Assistance Advisement
In regard to Program Two, the Admission Provider must collect and remit the sales tax when the
Certificate is redeemed. The sales tax must be computed on the sales price (total consideration
amount received) of the admission. The Admission Provider must separately state the sales price
of the admission and the sales tax amount on the receipt provided to the subscribing member
redeeming the Certificate. In the event that the sales price and sales tax are not separately stated
to the subscribing member, the sales tax must be computed and remitted by the Admission
Provider on the amount paid for the Certificate. If the amount paid for the Certificate is to be
applied as a credit because the Certificate was not used within the allowable redemption period,
the Admission Provider must compute sales tax on the full retail sales price charged without
deduction for the credit. Taxpayer must separately state the sales price and the sales tax at the
proper bracket rate. See s. 212.07 and 212.12, Florida Statutes (“F.S.”).
In the event that a Certificate sold by Taxpayer does not qualify as a gift certificate under Florida
law, then Taxpayer is a collector of an admission and is required to collect sales tax on the
consideration paid by the subscribing member to obtain the admission. See s. 212.04(1) and (6),
F.S. Also, Rule 12A-1.018, F.A.C., may apply for the sale of admissions. For such sales, Rule
12A-1.005(1)(c)2., F.A.C., may apply.
In regard to CST, Chapter 202, F.S., imposes CST on the retail sale of communication services
in Florida. “Communication services” are defined, in part, as the transmission, conveyance, or
routing of voice, data, audio, video, and/or any other information or signals to a point or between
or among points, regardless of the medium or methods used. See s. 202.11(1), F.S. The Internet
is used to access and facilitate the Taxpayer’s services and sales. However, the Taxpayer does
not provide Admissions Providers or subscription members communication services. Therefore,
the Taxpayer’s sales are not subject to CST.
Conclusion
Based on the information provided in the request and during the telephone conference,
Taxpayer’s sale of Certificates are the sale of gift certificates and are not subject to sales tax as
provided by Rule 12A-1.089, F.A.C. As such, Taxpayer is not required to collect sales tax from
the sale of the Certificates. The sale of the Certificates must continue to be in compliance with
the Florida law regarding gift certificates. In addition, the provisions of Chapter 202, F.S., do
not apply.
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 expressed
in this response.

Page 6 of 6
Technical Assistance Advisement
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 10 days of the date of this
letter.
Respectfully,

Charles Wallace
Technical Assistance & Dispute Resolution
850-717-7541
Record ID: 164618