Is a company's online webinar training course subject to Texas sales tax as an amusement or information service?

Plain-English summary

The Texas Comptroller ruled that a company's online webinar training courses — covering topics from science and technology to harassment prevention and finance — are nontaxable educational services, not taxable amusement or information services. Students access the courses online with no software download, take pre- and post-course assessments, and can sometimes earn certifications or grades. Some customers also get training guides and quarterly impact reports.

The Comptroller walked through the two taxable-service categories that might have applied. Amusement services are out because the courses are "primarily instructional in nature" under the regulatory test — they teach specific subject matter and test comprehension, unlike entertainment. Information services are out too, because the company doesn't gather, maintain, or compile information for customers the way a news service, mailing list, or research/data-retrieval provider does — it delivers original instructional content instead. The training guides and answer keys the company hands out are treated as incidental to the course sale, not a separate taxable sale of tangible personal property — though the company still owes tax on what it buys to build and deliver the courses (e.g., materials purchased as inputs).

What this means for you

Online course and training providers

If your company delivers instructional webinars, e-learning, or corporate training — even with quizzes, certifications, or supplementary materials like guides and reports — Texas is likely to treat the charge as a nontaxable educational service rather than a taxable amusement or information service, as long as the primary purpose is teaching rather than entertainment or curated data delivery. Don't collect sales tax on tuition-style charges for this kind of course without confirming your specific facts against this reasoning.

Businesses bundling course materials with tuition

Training guides, answer keys, and similar handouts that are incidental to and included in the price of an educational course don't turn the whole transaction taxable, per this ruling. But remember the flip side: the education provider still owes tax on its own purchases of materials and supplies used to produce the course, since it's the end consumer of those inputs.

Accountants and tax professionals

The ruling leans on the Rule 3.298(a)(2) "primarily instructional in nature" carve-out from amusement services and the Rule 3.342(a)(6) information-service examples (newsletters, mailing lists, wire services, research/data retrieval) to draw the line — the company's courses simply don't fit either taxable category. The Comptroller also cited two same-year sister rulings (STAR 201809008L and 201809009L) reaching the same nontaxable-education conclusion, suggesting a consistent recent policy line rather than a one-off result.

Common questions

Q: Are online training courses automatically exempt from Texas sales tax?
A: Not automatically — this ruling applies specifically where the course is primarily instructional (teaches subject matter, uses assessments) rather than amusement/entertainment, and doesn't function as a curated information/data service. Facts matter; a course structured more like entertainment or a subscription data feed could come out differently.

Q: Does giving students a certificate or grade make the course taxable?
A: No — the ruling treats assessments, grades, and certifications as evidence the course IS instructional (supporting the exemption), not as a taxable add-on.

Q: What about the training guides and impact reports included with some courses?
A: They're treated as incidental to the nontaxable educational service when included in the course price, not as a separately taxable sale of goods.

Q: Can another training company rely on this ruling?
A: No. It binds the Comptroller only as to the taxpayer and facts presented in this specific request and cannot be relied on by any other taxpayer, though it reflects the Comptroller's consistent recent reasoning on similar facts.

Citations and references

Statutes and rules:

• Tex. Tax Code § 151.051 (sales tax imposed)
• Tex. Tax Code § 151.010 (taxable item)
• Tex. Tax Code § 151.0101(a)(1), (10) (taxable services)
• Tex. Tax Code § 151.0028 (amusement services)
• Tex. Tax Code § 151.0038 (information services)
• 34 Tex. Admin. Code Rule 3.298(a)(2) (Amusement Services)
• 34 Tex. Admin. Code Rule 3.342(a)(6) (Information Services)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/201902012L

Original ruling text

February 22, 2019

RE: Private Letter Ruling No. 20180914090201

Dear **:

We issue this private letter ruling in accordance with Rule 3.1, Private Letter Rulings and General Information Letters.[1] We are responding to your request dated Sept. 4, 2018, and supplemental submissions dated Oct. 12, 2018. Detrimental reliance relief is provided in accordance with Rule 3.10, Taxpayer Bill of Rights.

You requested guidance on the taxability of webinar training courses.

Facts Presented

** (Taxpayer) develops educational courses that teach students, consumers, employees, and communities. Students access the courses via the internet and no software is downloaded. Courses range from science and technology, to courses in harassment, and finance. Pre- and post-course assessments are given to assess the student’s knowledge and effectiveness of the course. Customers can earn certifications, sometimes actual grades for class, while other courses do not provide any assessments or surveys depending on the topic. Some of Taxpayer’s customers receive training guides and quarterly impact reports measuring changes in knowledge, attitudes, and behaviors as a result of training. Taxpayer also provides in-person teaching support and network hosting events.

Question, Ruling, and Analysis

Our restatement of your question is shown below, followed by our response and analysis.

Question: Are charges for Taxpayer’s training courses subject to sales and use tax under Tax Code, Chapter 151 (Limited Sales, Excise, and Use Tax)?

Ruling: No. Taxpayer’s training courses are nontaxable educational services.

Analysis: Texas imposes a sales tax on each sale of a taxable item in this state. Section 151.051 (Sales Tax Imposed). The term “taxable item” includes tangible personal property and taxable services. Section 151.010 (Taxable Item). Only specifically enumerated services are taxable in Texas. Amusement services and information services are both taxable services. Section 151.0101(a)(1), (10) (“Taxable Services”).

An amusement service is “the provision of amusement, entertainment, or recreation, but does not include the provision of educational or health services if prescribed by a licensed practitioner of the healing arts for the primary purpose of education or health maintenance or improvement.” Section 151.0028 (“Amusement Services”). Rule 3.298 (Amusement Services) explains that “nonamusement services” include “activities that are primarily instructional in nature….” Rule 3.298(a)(2).

Taxpayer’s courses are not an amusement service because the online training courses educate customers on specific topics or subject matters. The courses also use assessments and surveys to test the knowledge of the trainees and in some cases the trainees can earn class grades. Accordingly, Taxpayer’s webinar services are primarily instructional in nature. See Rule 3.298(a)(2) (Amusement Services).

Section 151.0038 (“Information Service”) defines an information service as “furnishing general or specialized news or other current information” or “electronic data retrieval or research.” Rule 3.342(a)(6) (Information Services) states that information “gathered, maintained, or compiled and made available by the provider of the information service to the public or to a specific segment of industry for a consideration is subject to sales tax.” The rule provides examples of these services, including “newsletters, scouting reports and surveys, mailing lists and bad check lists, real estate listings, financial reports, and news clipping services and wire services. See Rule 3.342(a)(6).

Taxpayer’s courses do not resemble the types of services described in Rule 3.342(a)(6) and are not taxable information services. Taxpayer does not gather, maintain, or compile information for its customers. Based on the examples in Rule 3.342, Taxpayer’s courses are also not general or specialized news or other current information. The Comptroller has treated these kinds of services as nontaxable educational services. See STAR Accession Nos. 201809008L (Sept. 11, 2018) and 201809009L (Sept. 11, 2018). Although Taxpayer provides networking events and training materials such as guides and answer keys, which are tangible personal property, the materials are incident to and included in the sales price of the educational courses. Therefore, Taxpayer owes tax on the taxable items purchased to provide Taxpayer’s nontaxable online educational courses.

Comptroller’s Decisions and STAR documents cited can be found on the Comptroller’s State Tax Automated Research (STAR) system. The Texas Tax Code, Texas Administrative Code, and the STAR system are accessible at www.comptroller.texas.gov/taxes/.

If you have questions about this private letter ruling, please email us through our website at https://comptroller.texas.gov/web-forms/tax-help/ and reference Private Letter Ruling No. 20180914090201.

Sincerely,

Tax Policy Division – Indirect Taxes

Texas Comptroller of Public Accounts

ENDNOTE:

[1] Unless otherwise indicated, all references to “Section” are to the Texas Tax Code, and all references to “Rule” are to Title 34 of the Texas Administrative Code.