Are a platform's webinar and live-stream products taxable, and what about its optional add-on services?

Plain-English summary

A cloud platform lets customers (associations, member organizations) make presentations available to viewers online via webinars (online-only) and live streams (filmed live events). Both include, at no extra charge, interactive player software, moderators, event managers, viewer registration, and reporting. The platform also sells various optional add-ons for extra charges (online library, e-commerce/payment handling, technical support call center, sponsor/advertising, multi-language, closed captions, and an evaluations & CE module). It asked what's taxable.

The Office of Counsel concluded:

• The webinar and live-stream products are not taxable. Providing a means to upload/transmit presentations and let viewers access them online isn't an enumerated taxable service (Tax Law § 1105; TSB-A-16(6)S).
• Free bundled extras are ancillary. Some included features (e.g., access to prewritten interactive software) would be taxable if sold alone, but because they're always included at no additional charge and are ancillary to the main function, they don't make the products taxable (Penfold v. State Tax Commission).
• Two optional add-ons ARE taxable because they give the customer's viewers access to prewritten software: (1) the evaluations & CE module (viewers take tests, fill out evaluations, track CE), and (2) the on-site/online evaluations component of the online library. These are taxable sales of prewritten software (Tax Law §§ 1101(b)(6), 1105(a)) to the extent viewers use the software in New York — tax is collected based on the proportion of viewers with New York addresses in their CE info, and must be separately stated.
• No separate charge = all taxable. If the platform sells the webinar/live-stream with these taxable options and doesn't break out a separate charge, the entire charge is taxable (Tax Law § 1132(c); 20 NYCRR 527.1(b)).
• The remaining optional services are not taxable.

What this means for you

Webinar, e-learning, and streaming platforms

The streaming/hosting core is non-taxable, and free, ancillary software bundled into it stays non-taxable (Penfold). But the moment you charge extra to put prewritten software in viewers' hands (interactive tests, CE tracking, evaluations), that add-on is a taxable software sale — sourced by where the viewers are.

Separate-state your taxable add-ons

A taxable software add-on bundled into a flat fee with no separate charge makes the whole fee taxable. List it separately and tax only that piece — apportioned by the New York share of viewers.

Accountants

The dividing test is ancillary-and-free (Penfold) vs. separately-charged access to prewritten software. Track viewer locations (CE addresses) to source the tax on the software add-ons.

Common questions

Q: Is the basic webinar/live-stream service taxable?
A: No. Making presentations available to viewers online isn't an enumerated taxable service.

Q: The product includes interactive software — doesn't that make it taxable?
A: No. Because that software is included free and is ancillary to the main streaming function, it doesn't make the product taxable (Penfold).

Q: Which add-ons are taxable?
A: The evaluations & CE module and the on-site/online evaluations in the online library — both give viewers access to prewritten software — taxed by the New York share of viewers.

Q: What if I don't separately state the taxable add-on?
A: Then the entire charge for the product plus the add-on is taxable.

Q: Can I rely on this opinion?
A: It binds the Department only as to the petitioner. Use it as guidance and confirm your own facts.

Citations and references

• Tax Law § 1105 (services subject to sales tax)
• Tax Law § 1105(a) (tax on tangible personal property, including prewritten software)
• Tax Law § 1101(b)(6) (prewritten software is tangible personal property)
• Tax Law § 1132(c) (presumption of taxability); 20 NYCRR 527.1(b); 20 NYCRR 526.7
• Penfold v. State Tax Commission, 114 AD2d 696 (3d Dep't 1985); TSB-A-16(6)S; TSB-A-08(62)S; TSB-A-15(36)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2017.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a17_21s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-17(21)S
Sales Tax
August 9, 2017

Office of Counsel
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S150821A

The Department of Taxation and Finance received a Petition for Advisory Opinion from
Petitioner REDACTED REDACTED REDACTED REDACTED REDACTED RE (Petitioner).
Petitioner asks about the sales taxability of its webinar and live stream products, and certain
related optional services. We conclude that the webinar and live stream products are not taxable,
but two of the optional services are subject to State and local sales tax.
Facts
Petitioner’s cloud-computing products offer a customer the ability to make live and
recorded events available to the customer’s clients and members through Petitioner’s web
platform. In that way, Petitioner’s customers are able to make presentations, such as those at
academic conferences, company meetings, lectures, training sessions, and continuing education
(CE) conferences, available remotely to audiences. Petitioner’s major customers include member
organizations and industry-specific associations. Petitioner’s customers or their clients develop
the content of the presentations.
Petitioner’s two main products are built around two different types of on-line
presentations – webinars and live streams. Webinars are presentations that are presented
exclusively online (i.e., no live audience). Webinars can range from an event where there is a
single presenter or a single session, to conference webinars that involve multiple presenters and
sessions. With regard to Petitioner’s webinar product, the customer is responsible for the
necessary telecommunication services to connect the presentation (an audio feed, video feed, and
any medium the presenter is using, such as a slideshow) to Petitioner’s studios, where the feeds
are captured, combined, and streamed over the Internet as an educational presentation on
Petitioner’s web platform. A live stream is an event held in front of a live audience. As part of
its live stream product, Petitioner’s camera crew and streaming team videotape the presentation
and transmit it, using Petitioner’s own telecommunication connection, to Petitioner’s studios,
from where it is then streamed over the Internet.
Both products offer at no additional charge interactive player technology that allows a
user to access the video presentation and to interact with the presenter, as well as with other
users, including the ability of the customer to verify that the viewer is paying attention, and the
ability of the viewer to pose questions to the presenter or other viewers, and to text with them.
Additional free optional services include editing (combining the audio and video streams to
deliver a high quality presentation), viewer registration, viewer information reporting, and the
services of an event moderator and an event planner.

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TSB-A-17(21)S
Sales Tax
August 9, 2017

In addition to these free optional services, Petitioner offers the following optional
services for an additional charge:
Online Library - Petitioner’s online library system includes a completely secure ecommerce system to allow for the purchase by non-attendees of the right to view video
recordings of sessions. The online library also includes a user profile system, username
and password account access, pre-conference handouts, streaming audio and slideshow
software, audio, PDF download, note taking, discount systems for marketing and
promotions, real-time statistics and reporting for administrator and users, a five star
review system, education review comments, and post-conference CE accreditation and
integration with certain social media sites. Petitioner’s charge for its webinar product
includes the posting of recordings of webinars to Petitioner’s online library system. If the
webinar requires any e-commerce transactions, a credit card processing fee is charged to
cover credit card merchant fees incurred by Petitioner.
Customers purchasing
Petitioner’s live streaming service must pay an additional charge for the on-line library
product. For an additional charge, Petitioner also provides on-site or online evaluations
as part of its on-line library product.
E-commerce Services – For its webinar product customers, Petitioner handles payments
by viewers patronizing the customer’s site. This service includes providing an accurate
accounting to the customer of all monies received from the customer’s viewers.
Petitioner retains a 5% credit card transaction fee.
Technical Support Call Center – Petitioner offers a full Technical Support Call Center
to handle any issues with its customers’ viewers and/or speakers, including registration
for customers’ events, or technical difficulties. The Call Center is open one hour before,
during, and one hour after the customer’s event.
Sponsors and Advertising -- Petitioner’s platform fully supports the addition of
sponsors’ logos or advertising from banners to video clips, before, after, or during the
event. The customer sends Petitioner the logo, which can be its own or that of a sponsor.
Petitioner then adds the logo to the banners and video clips.
Evaluations and CE Module - Petitioner’s evaluation and CE module can handle
evaluation (of the student or the instructor) and the CE needs for the customers’ virtual
audience. Petitioner provides all the technology for electronically taking tests, filling out
evaluations of the instructors, creating a certificate of attendance, and managing the
viewers’ CE for the year, including tracking the viewers’ CE activity.
Multi-Language - Petitioner can deliver webinars and live streams in multiple languages
via a translation service. The translation is done in real time. Petitioner sends the live
audio feed to a translator in real time, who translates it and immediately transmits it back
to Petitioner, who makes it part of the live video feed.

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TSB-A-17(21)S
Sales Tax
August 9, 2017

Closed Captions - Closed captions can be added to any webinar.
Generally, Petitioner charges a flat fee for its webinar and live-stream products, with the
amount of the fee depending on what additional services the customer requested. Where it is
paid on a flat fee basis, Petitioner remits to the customer any fees it receives for granting access
to the event, less a processing fee for the e-commerce services it provides. Petitioner is also paid
for granting access to recordings of the live-streamed events either on a flat fee or a percentage
of the revenue basis. The charge for any of the optional services discussed above sometimes is
separately broken out on the invoice to the customer, but sometimes is not.
Analysis
Through its webinar and live-stream products, Petitioner provides its customers a means
of making their presentations available for viewing over the Internet. There are two essential
aspects to this service. First, the service allows the customers to upload the presentations to
Petitioner’s website or, in the case of live streams, assists the customer in transmitting the
presentations to the website. Second, Petitioner deploys the necessary technology to allow
viewers, using their own telecommunication connection, to securely access that content on its
website, regardless of the device the viewer chooses to use (e.g., cellphones, tablets, or
computers). This is not a taxable service. See Tax Law § 1105; TSB-A-16(6)S.
Petitioner’s customers receive other benefits from the two products. The customers for
both products are able to work with an event manager who has expertise in structuring webinars
and live streams, along with the services of a moderator who will work with customers’ viewers.
Furthermore, Petitioner handles the registration of the viewers, and provides customers with
reports about the viewers. Both products also make prewritten software available to customers’
viewers that allows those viewers to interact with the presenter or other viewers during the
presentations. Finally, Petitioner, as a part of its webinar product, makes a recording of the
webinar available for viewing in its online library. Some of these additional aspects of
Petitioner’s live stream and webinar products, if sold separately, would be taxable, such as the
access to prewritten software. See Tax Law §§ 1101(b)(6), 1105(a). However, these additional
services and software are always offered as part of Petitioner’s live-stream and webinar products
at no additional charge. Thus, their tax status is not separable from that of the live-stream and
webinar products. See Penfold v State Tax Commission, 114 AD2d 696 (3d Dep't 1985). Because
these additional services and software are ancillary to the main function of Petitioner’s livestream and webinar products, they do not suffice to make those products taxable.
Turning to Petitioner’s optional products, the evaluations and CE module product is
taxable because that product provides a customer’s viewers with access to prewritten software
that allows the viewers to demonstrate their attentiveness, take tests, fill out evaluations, and
track their CE activity for the year. By giving the viewers the ability to use prewritten software
at an additional charge, Petitioner is making taxable sales of tangible personal property in New
York to the extent that the customers’ viewers are using the prewritten software in New York.
See Tax Law §§ 1101(b)(6), 1105(a); 20 NYCRR 526.7; TSB-A-08(62)S. Similarly, the

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TSB-A-17(21)S
Sales Tax
August 9, 2017

separate charge for the on-site or online evaluations optional component of the On-line Library
product is also taxable as prewritten software. See Id. Accordingly, Petitioner must separately
state the tax for those products on any invoice or memorandum of sale given the customers and
collect tax based on the proportion of the customers’ viewers who give New York addresses in
their CE information. If Petitioner sells the webinar or live stream product with these optional
products and does not break out a separate charge for the optional products, the entire charge is
taxable. See Tax Law § 1132(c); 20 NYCRR 527.1(b); and TSB-A-15(36)S.
Petitioner’s charges for its remaining optional services are not subject to sales and use
tax.

DATED: August 9, 2017

/S/
DEBORAH R. LIEBMAN
Deputy Counsel

NOTE:

An Advisory Opinion is issued at the request of a person or entity. It is limited to the
facts set forth therein and is binding on the Department only with respect to the
person or entity to whom it is issued and only if the person or entity fully and
accurately describes all relevant facts. An Advisory Opinion is based on the law,
regulations, and Department policies in effect as of the date the Opinion is issued or
for the specific time period at issue in the Opinion. The information provided in this
document does not cover every situation and is not intended to replace the law or
change its meaning.