Were one-time and monthly charges for shared web-hosting services subject to Florida sales and use tax?
Apply this to your situation
This page answers the general question as of 1998. Ask about yours and see what current Florida tax law says, with citations.
Subject
Web Hosting Services
Plain-English summary
The described shared web-hosting service was not subject to Florida sales and use tax. The provider installed, stored, and maintained customers' websites on a server it owned and controlled. Customers received an internet presence but did not rent server space, use the server to process data, or receive tangible personal property.
The conclusion depended on the service excluding the development, sale, rental, lease, or license of hardware and off-the-shelf or canned software delivered on physical media. It also excluded charges for telecommunications connecting internet users to the hosted site.
The Department did not decide the tax treatment of the provider's shopping-cart option or dedicated web-hosting services. Florida gross receipts tax did not apply to the shared-hosting service reviewed.
What this means for you
The ruling treated shared hosting as a service because the provider kept ownership and control of the server. Giving a customer control of equipment, providing a dedicated server, licensing canned software, or charging for connectivity could require a different analysis.
Common questions
Q: Were both setup and monthly hosting fees nontaxable? Yes, for the shared-hosting service described.
Q: Did the customer rent space on the server? No. The ruling's facts expressly said the customer did not rent web space.
Q: Did this ruling cover e-commerce shopping carts? No. The shopping-cart option and dedicated hosting were expressly left unresolved.
Citations and references
- Fla. Stat. § 212.05(1)(c)-(d) — leases and rentals of tangible personal property
- Fla. Stat. § 212.08(7)(v) — professional and personal service transactions
- Fla. Stat. § 213.22 — Technical Assistance Advisements
Source
- Landing page: Florida Tax Law Library
- Advisement: TAA 98A-076
Original ruling text
SUMMARY
Taxpayer's "shared web-hosting" services are not subject to sales and use tax if the following considerations apply: (1) the taxpayer retains ownership and control of the webserver; (2) taxpayer's shared web-hosting services do not include transactions regarding the development, purchase, sale, rental, lease, or license to use hardware, or "offthe-shelf" or canned software; (3) taxpayer's shared webhosting services do not include charges for telecommunication services connecting an Internet user to a customer's web site; and, (4) transactions associated with taxpayer's shared web-hosting option known as "shopping cart," and "dedicated web-hosting" services are not covered by this TAA.
Sep 28, 1998
Re: Technical Assistance Advisement 98A-076 Sales and Use Tax--Web Hosting Services Statute sections 212.05(1)(c)-(d), and 212.08(7)(v), Florida Statutes Petitioner: XXX (Taxpayer)
Dear
This response is a reply to your petition of May 5, 1998, in which you requested that the Florida Department of Revenue (Department) issue a Technical Assistance Advisement on whether web hosting services are subject to sales and use tax. The Department finds that your request is in compliance with the required criteria contained in Rule Chapter 12-11, Florida Administrative Code. Therefore, this response constitutes a Technical Assistance Advisement issued under the authority of section 213.22, Florida Statutes, and Rule Chapter 12-11, F.A.C.
FACTS
Your letter of May 5, 1998, stated the following as facts:
Taxpayer has affiliates which provide Internet-related services;
"web hosting" is one of the Internet-related services being provided by Taxpaye's affiliates (the affiliate is called an Internet Service Provider or ISP);
web hosting occurs when an ISP finds a home for a customer's web site, which gives the customer(s) a presence on the Internet;
the customer uses the web site to display advertising or information on the World Wide Web;
the customer does not rent web space;
the ISP's web server is a type of computer, and is located in Florida;
the ISP's computer is not used by customer(s) to process data or information;
there is no transfer of tangible personal property between the ISP and its customer(s); and,
the ISP imposes one-time charges and monthly fees for web hosting services.
LAW
The Florida Statutes which apply to the taxable status of web hosting services are:
FLORIDA SALES AND USE TAX:
212.05 Sales, storage, use tax.--It is hereby declared to be the legislative intent that every person is exercising a taxable privilege who engages in the business of selling tangible personal property at retail in this state... or
who rents or furnishes any of the things or services taxable under this chapter....
(1) For the exercise of such privilege, a tax is levied on each taxable transaction or incident, which tax is due and payable as follows:
(c) At the rate of 6 percent of the gross proceeds derived from the lease or rental of tangible personal property, as defined herein, except the lease or rental of a commercial motor vehicle....
(d) At the rate of 6 percent of the lease or rental price paid by a lessee or rentee, or contracted or agreed to be paid by a lessee or rentee, to the owner of the tangible personal property.
212.08 Sales, rental, use, consumption, distribution, and storage tax; specified exemptions.--The sale at retail, the rental, the use, the consumption, the distribution, and the storage to be used or consumed in this state of the following are hereby specifically exempt from the tax imposed by this chapter. (7) MISCELLANEOUS EXEMPTIONS.-(v) Professional services.--
- Also exempted are professional, insurance, or personal
service transactions that involve sales as inconsequential elements for which no separate charges are made....
FLORIDA GROSS RECEIPTS TAX:
Florida's Gross Receipts Tax statutes do not apply to the services discussed in this Technical Assistance Advisement.
ANALYSIS AND CONCLUSION
A) Charges by your company to install, store, and maintain a customer's web site on your web server (i.e. shared webhosting) are considered a service for sales and use tax purposes, and do not constitute the sale, the rental, or
the lease of tangible personal property. The Department's conclusions are based on the following considerations:
your company retains ownership and control of the web server;
the shared web hosting services discussed above do not include transactions associated with the development, purchase, sale, rental, lease, or license to use any hardware (other than as described above), or "off-theshelf" or canned software provided by CD, diskette, or other tangible means;
the web hosting services offered by your company to the customer(s) do not include charges to provide telecommunication services connecting an Internet user (a third party) to your customer's web site;
a determination of the taxable status of your company's following web hosting services is specifically not addressed in this Advisement:
*
the shared web hosting option known as "shopping cart;" and,
*
"dedicated web hosting" services.
B) Therefore, the "shared web hosting" services described above are not subject to sales and use tax under Chapter 212, Florida Statutes.
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 upon 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.
You are further advised that this response and your request are public records under Chapter 119, F.S., which are subject to disclosure to the public under the conditions of section 213.22, F.S. Your name, address, and any other details which might lead to identification of the taxpayer must be deleted by the Department before disclosure. In an effort to protect confidential information, we request you notify the undersigned in writing within 15 days of any deletions you wish made to the request or this response.
Sincerely,
Larry W. Green
Tax Law Specialist
Technical Assistance and Dispute Resolution
LWG/
Control #34111
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