Are monthly satellite radio subscription fees subject to Kansas sales tax?

Plain-English summary

A grocery-store operator whose stores receive satellite transmissions of music and advertisements over their intercoms asked whether the monthly satellite radio subscription fees are subject to Kansas sales tax. The Department ruled they are taxable.

The tax. "Kansas sales tax is imposed on 'the gross receipts from cable, community antennae and other subscriber radio and television services.' K.S.A. 79-3603(k)."

What counts as subscriber radio service. Quoting Notice 98-04, the Department explained that a "'Subscriber radio and television service' means any business that, for a fee, regularly amplifies and transmits by wire, coaxial cable, light wave, radio wave, or microwave, simultaneously to multiple subscribers, programs broadcast by television or radio stations or originated by themselves or other parties. These services include digital satellite radio and television services." The notice carves out a master antenna system serving one building or a commonly owned complex that provides no outside broadcast signals.

The holding. "The statute and notice make clear that your payments are for a subscriber radio service and, accordingly, are subject to Kansas sales tax." Providers "are required to collect state and local sales tax on the total amount that they receive from their service."

What this means for you

Businesses paying for satellite/streamed in-store audio

Monthly fees for a satellite radio service piped through your store are taxable subscriber radio service in Kansas. Expect the provider to charge sales tax on the full subscription amount.

Providers collect on the total received

A subscriber radio (or television) service provider must collect state and local sales tax on the total it receives for the service — not just part of it.

Narrow exclusion for single-building master antennas

Notice 98-04 excludes a master antenna system that serves one building or a commonly owned complex and carries no outside broadcast signals. A satellite service delivering outside programming does not fit that exclusion.

Common questions

Q: Is a satellite radio subscription taxable in Kansas?
A: Yes. The Department ruled monthly satellite radio subscription fees are a taxable subscriber radio service under K.S.A. 79-3603(k).

Q: Does it matter that the audio is background music for a store?
A: No. The tax turns on the service being a subscriber radio service; the Department found the grocery-store satellite feed qualified.

Q: How much of the fee is taxed?
A: The provider must collect state and local sales tax on the total amount received for the service.

Citations and references

• K.S.A. 79-3603(k) — imposes Kansas sales tax on the gross receipts from cable, community antennae, and other subscriber radio and television services. The Department applied it, with Notice 98-04, to make satellite radio subscription fees taxable.
• Notice 98-04 — the Department's notice defining "subscriber radio and television service" to include digital satellite radio and television services, and requiring providers to collect state and local tax on the total received.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: O-2000-038

Original ruling text

Opinion Letter

Body:

Office of Policy & Research

November 29, 2000

XXXX
XXXX
XXXX

RE: Your e-mail of November 28, 2000

Dear XXXX:

Thank you for your recent e-mail inquiry. You ask if monthly fees for subscribing to a satellite radio service are subject to Kansas sales tax. Your grocery stores receive satellite transmissions of music and advertisements that are played over store intercoms.

Kansas sales tax is imposed on “the gross receipts from cable, community antennae and other subscriber radio and television services.” K.S.A. 79-3603(k). Notice 98-04 states:

“Subscriber radio and television service” means any business that, for a fee, regularly amplifies and transmits by wire, coaxial cable, light wave, radio wave, or microwave, simultaneously to multiple subscribers, programs broadcast by television or radio stations or originated by themselves or other parties. These services include digital satellite radio and television services. A subscriber radio and television service does not include a master antenna system that serves one residential, commercial, or government building, or a complex of buildings under common ownership, if that service does not provide any broadcast signals other than those that may be viewed in that facility.

The statute and notice make clear that your payments are for a subscriber radio service and, accordingly, are subject to Kansas sales tax. As the notice states, subscriber radio service providers are required to collect state and local sales tax on the total amount that they receive from their service.

I have enclosed a copy of Notice 98-04 for your review. I believe that my letter and the notice answer all of your questions. If not, please call me at (785) 296-3081.

Sincerely,

Thomas E. Hatten
Attorney/Policy & Research

Enclosure

Date Composed: 12/12/2000 Date Modified: 10/10/2001

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