Were subscription fees for an online newsletter and electronic financial information subject to Florida tax?

Plain-English summary

Florida found that subscription fees for the described web-based information service were not subject to sales and use tax or gross receipts tax. Subscribers used their own computers to access an electronic newsletter, financial data, research, and editorial information, and the provider did not publish or sell a printed version.

The service was not taxable telecommunications because the cited statute excluded internet access, email, electronic bulletin boards, and similar online computer services from the definition of telecommunication service.

It also was not a taxable sale of tangible personal property or printed information. The Department relied on decisions treating electronically transmitted screen images as intangible. A subscriber's option to download the material or print it using the subscriber's own printer did not change the result.

Common questions

Was the subscription taxable as telecommunications? No. The online computer service fell outside the cited definition of telecommunication service.

Was electronic financial data taxable as printed information? No. The provider furnished the information electronically and sold no printed version.

Did downloading the information make it taxable? No. The TAA included charges to view, access, download, or obtain electronically delivered information.

What if the customer printed the newsletter? Printing on the customer's own computer printer did not affect the Department's conclusion.

Citations and references

• Fla. Stat. §§ 203.012(5), 212.05(1)(e)1.a., 212.08(7)(v)2., and 213.22
• Department of Revenue v. Quotron Systems, Inc., 615 So. 2d 774 (Fla. 3d DCA 1993)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 98A-096

Original ruling text

SUMMARY

Charges to view, access, download, or obtain an electronic
newsletter, financial data, research, or other information
are not subject to Florida Sales and Use Tax, as long as
the information is provided in an electronic format.
Therefore, a charge to access a Web based information
service on the internet that provides research, financial
data and editorial information on non-investment financial
products is not subject to sales and use tax.

Dec 24, 1998

Re: Technical Assistance Advisement 98A-096
Sales and Use Tax; Computer Information Service
Section 203.012(5), F.S.; Section 212.08(7)(v)2., F.S.
XXX ("Taxpayer")

Dear :

Your letter of October 27, 1998, requested a Technical
Assistance Advisement concerning the above referenced matter.
This response constitutes a Technical Assistance Advisement
(TAA) under Chapter 12-11, Florida Administrative Code, and is
issued to you under the authority of s. 213.22, Florida
Statutes.

STATED FACTS

Your letter imparts the following facts:

[Taxpayer], with its on-line operation, [taxpayer].com,
provides on-line users, via the world wide web and other
on-line computer environments (collectively, the "world
wide web"), research, financial data and editorial
information on non-investment financial products. On a
national basis, [Taxpayer] collects interest rate and fee
information on products such as mortgages, credit cards,

auto loans, money market accounts, checking accounts, and
certificates of deposit. The information is compiled into a
large database that is accessible free of charge to on-line
users.

[Taxpayer] plans to provide an electronic newsletter
discussing national and international economic and
financial conditions. For a subscription fee, the
newsletter can be viewed via the world wide web. On-line
users with independent access to the world wide web can
view the newsletter using a personal computer and video
display. [Taxpayer] will not provide the personal computers
or video displays. The newsletter is only transmitted
electronically. At the option of the on-line user, the
electronic newsletter can be printed on a printer attached
to a personal computer. [Taxpayer] does not publish or sell
the newsletter in any printed form.

REQUESTED ADVISEMENT

You are requesting a determination regarding the sales tax
consequences of the activities described above.

DETERMINATION

A. Whether Subscription Fees to Access an On-line Newsletter
are Taxable as "Telecommunication Service."

Chapter 203, F.S., imposes a tax on the gross receipts received
by a utility provider for any utility service, which includes
"telecommunication service." Sales tax is also levied upon
"telecommunication service," as defined in Chapter 203, F.S., at
a rate of seven percent. Section 212.05(1)(e)1.a., F.S.

However, Section 203.012(5), F.S., states that "[t]he term
`telecommunication service' does not include any Internet access
service, electronic mail service, electronic bulletin board
service, or similar on-line computer service."

Since the web-based on-line computer service operated by
Taxpayer is not a "telecommunication service," subscription fees

charged by Taxpayer to access parts of the web page or the
electronic newsletter are not subject to Florida Sales and Use
Tax or Florida Gross Receipts Tax as charges for
telecommunication service.

B. Whether Subscription Fees to Access an On-line Newsletter
are Taxable Under Other Provisions of Chapter 212, F.S.

The sale of the electronic newsletter that Taxpayer provides
does not constitute the sale of anything taxable under Chapter
212, F.S.

Section 212.08(7)(v)2., F.S., provides that information services
become subject to sales tax only when they involve the
furnishing of printed matter:

(v) Professional services.1. Also exempted are professional, insurance, or personal
service transactions that involve sales as inconsequential
elements for which no separate charges are made.

2. The personal service transactions exempted pursuant to
   subparagraph 1. do not exempt the sale of information
   services involving the furnishing of printed, mimeographed,
   or multigraphed matter, or matter duplicating written or
   printed matter in any other manner, other than professional
   services and services of employees, agents, or other
   persons acting in a representative or fiduciary capacity or
   information services furnished to newspapers and radio and
   television stations. As used in this subparagraph, the
   term "information services" includes the services of
   collecting, compiling, or analyzing information of any kind
   or nature and furnishing reports thereof to other persons.

In Department of Revenue v. Quotron Systems, 615 So. 2d 774
(Fla. 3d DCA 1993) (per curiam), the Third District Court of
Appeal affirmed the trial court's holding that the transmission
of electronic images to video display screens does not
constitute a sale of tangible personal property and is therefore
not subject to sales tax. As a result of Quotron Systems, the
Department now takes the position that the sale of an

"electronic image" is not considered to be the sale of tangible
personal property, and is not subject to sales tax. Quotron
Systems also dismissed the Department's contention that payment
for the information service constituted a rental of Quotron's
computer equipment. Id. at 778 (Conclusions of Law nos. 14-16).

Similar decisions were rendered in Henley Holdings v. Department
of Revenue, No. 89-4381 (Fla. 2d Cir. Ct. 1991), aff'd per
curiam, 599 So.2d 1282 (Fla. 1st DCA 1992); and Attorney's Title
Insurance Fund v. Department of Revenue, No. 91-1832 (Fla. 2d
Cir. Ct. 1992).

Therefore, any charges to view, access, download, or obtain an
electronic newsletter, financial data, research, or other
information are not subject to Florida Sales and Use Tax, as
long as the information is provided in an electronic format.
The fact that a subscriber may choose to print the newsletter or
other information using his or her own computer printer does not
affect this conclusion.

This response constitutes a Technical Assistance Advisement
under s. 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 s. 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.

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 s. 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,

Ralph G. Pepe
Tax Law Specialist
Technical Assistance & Dispute
Resolution
(850) 922-4802

Control #: 35651