Are subscriber charges for access to a searchable database maintained for internet access subject to Kansas sales or use tax?

Plain-English summary

A taxpayer asked whether charges for access to a database maintained for internet access are subject to Kansas sales tax. The service lets subscribers search an archive and print out any information they find relevant. The Department's answer: no — those charges are not subject to Kansas sales or use tax.

Why. The Kansas retailers' sales tax act taxes only the services specifically enumerated in the act. Providing database access to internet users is not one of the enumerated services, so the subscriber charges are not taxable.

What this means for you

Online database and information-service providers

Selling access to a searchable online database — subscribers search and print results — was not a taxable service in Kansas under this 2002 ruling, because Kansas taxes services only if the statute lists them and this one isn't listed.

The enumerated-services rule is the key

In Kansas, a service is taxable only if the act specifically enumerates it. If your offering is a pure information/access service that isn't on that list, it generally isn't taxed as a service — but always check whether what you deliver is really a service versus a sale of tangible or (later) digital property.

Mind the date

This ruling is from 2002. The taxation of digital goods, software, and information services has evolved since; verify current Kansas law before relying on this outcome for a present-day product.

Common questions

Q: Do we charge Kansas sales tax on subscriptions to our online database?
A: Under this ruling, no — charges for database access over the internet are not subject to Kansas sales or use tax because database access isn't an enumerated taxable service.

Q: Why isn't it taxable?
A: Kansas taxes services only when the act specifically enumerates them, and providing database access to internet users is not one of the enumerated services.

Q: Does printing out the search results change anything?
A: No. The service described — searching an archive and printing relevant information — was still treated as nontaxable database access, not an enumerated taxable service.

Q: Can we still rely on this today?
A: Treat it cautiously. It's a 2002 ruling that predates later developments in taxing digital products and information services; confirm current law before relying on it.

Q: Does this ruling apply to my business?
A: A Kansas private letter ruling addresses only the requesting taxpayer's facts and cannot be relied on as precedent by others.

Citations and references

• Enumerated-services rule — the Kansas retailers' sales tax act taxes only services specifically enumerated in the act; database access for internet users is not among them, so the charges are not taxable.
• K.A.R. 92-19-59 — the regulation authorizing Kansas private letter rulings.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2002-095

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

November 12, 2002

XXXX
XXXX
XXXX

RE: Your letter postmarked November 1, 2002

Dear XXXX:

I have been asked to answer your recent letter. In it, you ask if charges for access to a data base maintained for internet access are subject to Kansas sales tax. The service allows subscribers to search an archive and print out any information that they find relevant. Please be advised that charges for data base access over the internet are not subject to Kansas sales or use tax. The Kansas retailers' sales tax act taxes only those services that are enumerated in the act. Providing a data base access to internet users is not one of the enumerated services.

I hope that my answer to your question is complete. If you have any more questions, please call me at 785-296-3081. This private letter ruling is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to make an accurate determination by the department, this ruling is null and void. This private letter ruling will be revoked in the future by operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or a published revenue ruling, that materially affects this private letter ruling.

Sincerely,

Thomas E. Hatten
Attorney/Policy & Research

Date Composed: 11/14/2002 Date Modified: 11/15/2002

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