Are subscriber access fees and advertising space on an online 'electronic bulletin board' subject to Kansas sales tax?

Plain-English summary

The ruling concerns a nationwide data bank the Department described as an "electronic bulletin board" — "similar to a trade magazine with information, articles and advertising space." Subscribers reach it "through their own computer and modem with no special communication software." The question was whether Kansas sales tax applies to the subscriber access fees and to the advertising space sold on the service.

The Department ruled both are non-taxable:

• Advertising space: "The sale of advertising space on the 'electronic bulletin board' would not be subject to Kansas sales/use tax."
• Subscriber access fees: "The fee paid by the subscribers for access to the 'electronic bulletin board' is not subject to Kansas sales/use tax."

The important caveat — tangible personal property is different. "However, if your client were to sell or lease computer software/hardware or any other tangible personal property within the state of Kansas, the respective sale or lease would be subject to the appropriate Kansas sales/use tax." So while the information service itself is not taxed, selling or leasing software, hardware, or other tangible goods in Kansas is.

Bottom line: access to an online information/advertising service, and the advertising space on it, fall outside Kansas sales and use tax; but the analysis flips the moment the operator sells or leases tangible personal property in the state.

What this means for you

Online information and bulletin-board services

Charging subscribers for access to an online data bank of information and advertising is not a taxable transaction in Kansas under this ruling, and selling advertising space on it is likewise not taxed. The service is treated like an information/advertising medium, not a sale of tangible goods.

Watch the line where you start selling goods

The exemption is for the information service. If you also sell or lease software, hardware, or any other tangible personal property to Kansas customers, those transactions are taxable — bill and remit tax on them separately.

Era caveat on "electronic" services

This is a 2000-era ruling analyzing an online service under the sales-tax categories of the time. If your facts involve prewritten software delivered electronically or other digital-product questions, confirm current Kansas treatment before relying on the general non-taxable framing here.

Common questions

Q: Are subscriber access fees for an online bulletin board taxable in Kansas?
A: No. The Department ruled the subscriber access fees are not subject to Kansas sales or use tax.

Q: Is selling advertising space on the service taxable?
A: No. The sale of advertising space on the electronic bulletin board is not subject to Kansas sales or use tax.

Q: What is taxable, then?
A: Selling or leasing computer software, hardware, or any other tangible personal property in Kansas — those transactions are subject to the appropriate Kansas sales or use tax.

Citations and references

• The Department did not cite a specific imposition statute; it held that the subscriber access fee and advertising space are not subject to Kansas sales or use tax, while cautioning that any sale or lease of software, hardware, or other tangible personal property in Kansas would be taxable. Because no statute is quoted for the non-taxable holding, none is listed above.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1999-279

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

March 8, 2000

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Dear Ms. TTTTTTT:

We wish to acknowledge receipt of your letter dated June 11, 1999, regarding the application of Kansas Retailers’ Sales tax.

The service described in the above referenced letter is a nationwide data bank or “electronic bulletin board” similar to a trade magazine with information, articles and advertising space. Subscribers will access this information through their own computer and modem with no special communication software. The sale of advertising space on the “electronic bulletin board” would not be subject to Kansas sales/use tax.

The fee paid by the subscribers for access to the “electronic bulletin board” is not subject to Kansas sales/use tax. However, if your client were to sell or lease computer software/hardware or any other tangible personal property within the state of Kansas, the respective sale or lease would be subject to the appropriate Kansas sales/use tax.

This is a private letter ruling pursuant to K.A.R. 92-19-59. It is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to an accurate determination by the department, this ruling is null and void. This ruling will be revoked in the future by the operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or published revenue ruling, that materially effects this private letter ruling.

If I may be of further assistance, please contact me at your earliest convenience at (785) 296-7776.

Sincerely yours,

Thomas P. Browne, Jr.
Tax Specialist

TPB

Date Composed: 03/15/2000 Date Modified: 10/11/2001

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