Does an affiliate/performance-marketing company that sells merchants advertising space — plus tracking, reporting, data analytics, and platform access — have to charge Utah sales tax on what it bills the merchants?
Plain-English summary
An affiliate / performance-marketing company runs an online platform that connects merchants (who want their products advertised) with publishers (websites and email lists that display banner ads). The company sells the merchants advertising space, buys that space from the publishers, and pays the publishers commissions based on measurable actions — a visitor clicking a banner, completing a purchase, or filling out a lead form. Along the way the company also gives merchants platform access, tracking and reporting, data analytics, technical support, consulting, and a payment-management service that cuts the publishers' checks. The merchant pays the greater of a monthly minimum or transaction fees, plus a one-time setup fee and some optional data-feed fees.
The company asked whether any of this is subject to Utah sales tax. The Commission concluded it is not. The reasoning runs in four steps:
- The optional data-feed upload/download fees are delivery charges — they pay for moving the merchant's data into and out of the platform. Delivery charges aren't on the list of taxable transactions in § 59-12-103(1), and when separately stated they're excluded from the purchase price (§ 59-12-102(35), (107)(c)(ii)(B)). Not taxable.
- The setup fee and the monthly-minimum/transaction fees are part of the purchase price of the one item the company sells — they rise or fall with the core service, not a separate product.
- This is not a "bundled transaction." A bundle requires two or more distinct and identifiable items sold for one price. Here the components (ad space, platform/software use, data reports, support, consulting, payment handling) aren't distinct — they "work together as a single item." So the bundling rules don't apply.
- Essence of the transaction = nontaxable advertising services. Applying the Utah Supreme Court's B.J.-Titan test, the Commission weighed the parts. Most are nontaxable on their own (selling ad space, data/information services, technical support, consulting, payment management). The one potentially taxable piece — remote use of the company's prewritten software — exists only to support the ad-space sales and "does not have a purpose independent of the sales of advertising space." So the software is incidental, and the true object is the nontaxable sale of advertising/marketing services.
The whole charge to merchants is therefore nontaxable. (One footnote of practical note: the company had also asked for a voluntary disclosure agreement, and the Commission denied that request before issuing the ruling.)
What this means for you
Advertising, affiliate, and ad-tech platforms
Selling advertising — including digital banner space, performance/affiliate marketing, and the tracking and analytics that go with it — is generally a nontaxable service in Utah. The fact that you deliver it through your own software platform doesn't automatically make it taxable. The question Utah asks is whether the software is the true object of what the customer is buying, or just the tool that delivers a service. Here it was the tool, so the sale stayed nontaxable.
The danger line: when software becomes the product
This ruling came out nontaxable because the platform "does not have a purpose independent of the sales of advertising space." Flip that fact and the answer can flip too. If you license customers the right to use your software for their own purposes (a SaaS tool they operate themselves), Utah taxes the remote use of prewritten software — see PLR 17-003 and PLR 19-003, where SaaS came out taxable. The line is whether you're selling a service the software happens to power versus selling the use of the software itself.
Structuring fees
Two useful mechanics here: (1) separately stating delivery/data-transfer charges keeps them out of the taxable base; and (2) when several charges all support one nontaxable service and aren't independently sellable, Utah may treat them as a single nontaxable item rather than a taxable bundle. Keep your contracts and invoices consistent with how you describe the offering.
Accountants and tax professionals
This is a clean B.J.-Titan essence-of-the-transaction application and a useful companion to PLR 19-004 (an ad/referral business paid per click is not a "marketplace facilitator"). Together they map Utah's treatment of online-advertising businesses: selling ad space and referrals is nontaxable service activity, and embedding it in a software platform doesn't change that — provided the software isn't the product. Note this 2024 ruling uses the renumbered Title 59 Chapter 12 definitions (e.g., bundled transaction at § 59-12-102(19), prewritten software at (101)), versus the older numbering in the 2018-era rulings.
Common questions
Q: Is selling online advertising taxable in Utah?
A: Generally no. Sales of advertising and marketing space — including affiliate/performance marketing — are not among the transactions Utah taxes under § 59-12-103(1). Tracking, reporting, data analytics, technical support, and consulting that go with the advertising are likewise nontaxable services.
Q: We deliver everything through our own software platform. Does that make it taxable?
A: Not by itself. If the software exists to deliver a nontaxable service and has no independent purpose for the customer, Utah treats it as incidental and the sale stays nontaxable. But if you're really selling customers the use of your software to run their own operations, the remote use of prewritten software is taxable.
Q: What about the data-feed and setup fees?
A: In this ruling the optional data-feed upload/download fees were delivery charges — nontaxable, and excluded from the purchase price when separately stated. The required setup fee and the monthly-minimum/transaction fees were part of the price of the (nontaxable) service, so they followed the service and weren't taxed either.
Q: Can my company rely on this ruling?
A: No. A Utah private letter ruling binds the Commission only for the taxpayer and facts it was issued to. It's strong guidance on how the Commission analyzes ad-platform sales, but your facts — especially how your software is sold and used — may lead to a different result.
Citations and references
Statutes, rule, and case:
- Utah Code § 59-12-103(1) — the transactions subject to Utah sales and use tax (advertising services are not listed)
- Utah Code § 59-12-102(19) — "bundled transaction" definition and exclusions
- Utah Code § 59-12-102(35), (107)(c)(ii)(B) — delivery charges; excluded from purchase price when separately stated
- Utah Code § 59-12-102(101), (136)(b)(v), (118)(b)(v) — prewritten computer software is taxable tangible personal property
- Utah Code § 59-12-102(103) — "product transferred electronically"
- Utah Code § 59-12-104(78) — database-access exemption (cited in support of nontaxable information services)
- Utah Admin. Code R865-19S-92 — custom software is a nontaxable personal service; computer-generated output taxable only if the output (not the service) is the primary object
- B.J.-Titan Services v. State Tax Comm'n, 842 P.2d 822, 825 (Utah 1992) — essence-of-the-transaction test
Related Utah ruling: PLR 19-004 (ad/referral business is not a marketplace facilitator).
Source
- Landing page: https://tax.utah.gov/commission/rulings/
- Original PDF: https://files.tax.utah.gov/tax/commission/ruling/21-004.pdf
Original ruling text
FINAL PRIVATE LETTER RULING
21-004
REQUEST LETTER
[THE REQUEST LETTER HAS BEEN REMOVED]
RESPONSE LETTER
2/13/2024
NAME-1, State & Local Tax Partner
COMPANY-1
ADDRESS
CITY, STATE - ZIP
EMAIL-1
Dear NAME-1:
This letter is in response to your request for a private letter ruling for an unnamed
corporation (“Company”). Your request concerns the taxability of certain sales by the Company
to the Company’s customers (“merchants”). The Company sells an advertising-related item to
merchants and provides other services, as well. You specifically presented the following
question in your request letter: “Are the Company’s receipts from the services described herein
subject to Utah sales tax?” This private letter ruling concludes that the Company’s sales to
merchants are not subject to Utah sales and use taxes.
This private letter ruling includes the following sections:
I. Facts
II. Issue
III. Applicable Law
IV. Analysis
V. Conclusion
I. Facts
The Company is involved in affiliate marketing. The Company sells to merchants
advertising space on web pages, emails, or other electronic means, for the display of the
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merchants’ banner advertisements. The Company purchases the advertising space from
affiliates/publishers with websites, emails, etc. The Company’s customers are the merchants but
not also the publishers. Although the Company’s customers only include the merchants, the
users of the Company’s platform include both merchants and publishers, as explained below.
The Company runs an online, third-party performance marketing platform, through
which merchants and affiliates can sign up to participate by entering into contracts with the
Company. Merchants post information or tools that the publishers can use to advertise the
merchants’ products. The merchants select which publishers they would like to use. Publishers
can view the merchants’ information, and decide which, if any, of the merchants’ information
they will publish on their websites.
The Company, through its platform, brings merchants and publishers together, as
explained above, and provides the tracking and reporting services needed for calculating the
commissions the Company pays to the publishers. According to the contract between the
Company and a merchant, the merchant pays to the Company the greater of either a monthly
minimum or the transaction fees which relate to the commissions the Company pays to the
publishers. Commissions paid by the Company to the publishers are based on measurable
actions, explained below. If a visitor to an affiliate web page clicks on a merchant’s banner
advertisement, the visitor is transferred through a link, to the merchant’s web page, where the
visitor can purchase the merchant’s items, complete a lead form, and/or take another specific
action defined by the merchant. Measurable actions earning commissions include the visitors’
clicks on the merchant’s banner advertisements, the visitors’ completing purchases or lead forms
on the merchant’s websites, and the visitors’ performing other predefined tasks on the merchant’s
websites.
According to the contract between the Company and a merchant, a merchant pays other
fees to the Company, as well. A merchant must pay a one time set-up/network-access fee. The
merchant also may pay a data feed upload fee if the merchant wants to upload a data feed with
more than a specific number of product SKU records. The merchant may pay a data feed
download fee if the merchant grants permission for an affiliate to download the merchant’s data
feed from the Company’s server.
The services that the Company provides to the merchants include bringing merchants
and publishers together for advertising/marketing services and providing the tracking and
reporting services necessary for calculating commissions, as explained previously.
Additionally, the tracking and reporting services also allow the Company to collect data. The
Company shares with the merchants data reports/information that merchants can use to
monitor the success of their advertising campaigns that use the Company’s platform. You
described the information provided to the merchants as follows in part: “The tracking and
reporting facilities provided as part of the Company’s suite of tools are data analytics services
which the Company provides to merchants to enable them to monitor the success of advertising
programs.” The Company also shares with publishers the data reports/information to allow them
to monitor the successfulness of their advertising spaces sold through the Company’s platform.
Additionally, the Company provides technical support services to merchants and publishers,
and provides consultation/support services to the Company’s largest partners. You explained
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in an email that “other consultation services offered to merchants include assistance in
determining key performance indicators, developing a budget, determining targeted audiences,
determining the most appropriate publishers, and calculating a targeted return on investment.”
You also mentioned a payment management service. Based on the contract between the
Company and the merchants, this service may correspond to the “check processing and paying of
[publishers],” through which “[the Company] processes and writes [the checks for a merchant’s
publishers] free of charge each month.”
II. Issue
You presented the following question in your request letter: “Are the Company’s receipts
from the services described herein subject to Utah sales tax?” This private letter ruling
concludes that the Company’s sales to merchants are not subject to Utah sales and use taxes.1
III. Applicable Law
Utah Code Ann. § 59-12-103(1) imposes Utah sales and use taxes on purchasers for
certain transactions including the following:
A tax is imposed on the purchaser as provided in this part on the purchase price or
sales price for amounts paid or charged for the following transactions:
(a) retail sales of tangible personal property made within the state;
....
(k) amounts paid or charged for leases or rentals of tangible personal property if
within this state the tangible personal property is:
(i) stored;
(ii) used; or
(iii) otherwise consumed;
(l) amounts paid or charged for tangible personal property if within this state the
tangible personal property is:
(i) stored;
(ii) used; or
(iii) consumed;
(m) amounts paid or charged for a sale:
(i) (A) of a product transferred electronically; or
(B) of a repair or renovation of a product transferred electronically; and
(ii) regardless of whether the sale provides:
(A) a right of permanent use of the product; or
(B) a right to use the product that is less than a permanent use, including
a right:
(I) for a definite or specified length of time; and
1
In your request letter for this private letter ruling, you explained that the Company requested a voluntary
disclosure agreement. The Tax Commission denied that request for a voluntary disclosure agreement before the
Commission issued this private letter ruling.
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(II) that terminates upon the occurrence of a condition.
....
Utah Code Ann. § 59-12-102 defines various terms, stating in part:
As used in this chapter:
....
(19) (a) "Bundled transaction" means the sale of two or more items of tangible
personal property, products, or services if the tangible personal property,
products, or services are:
(i) distinct and identifiable; and
(ii) sold for one nonitemized price.
....
(b) "Bundled transaction" does not include:
(i) the sale of tangible personal property if the sales price varies, or is
negotiable, on the basis of the selection by the purchaser of the items
of tangible personal property included in the transaction;
....
(iv) the retail sale of tangible personal property and a service if:
(A) the tangible personal property:
(I) is essential to the use of the service; and
(II) is provided exclusively in connection with the service; and
(B) the service is the true object of the transaction;
(v) the retail sale of two services if:
(A) one service is provided that is essential to the use or receipt of a
second service;
(B) the first service is provided exclusively in connection with the
second service; and
(C) the second service is the true object of the transaction;
....
(29) "Computer" means an electronic device that accepts information:
(a) (i) in digital form; or
(ii) in a form similar to digital form; and
(b) manipulates that information for a result based on a sequence of
instructions.
(30) "Computer software" means a set of coded instructions designed to cause:
(a) a computer to perform a task; or
(b) automatic data processing equipment to perform a task.
....
(35) (a) "Delivery charge" means a charge:
(i) by a seller of:
(A) tangible personal property;
(B) a product transferred electronically; or
(C) a service; and
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(ii) for preparation and delivery of the tangible personal property,
product transferred electronically, or services described in
Subsection (35)(a)(i) to a location designated by the purchaser.
(b) "Delivery charge" includes a charge for the following:
(i) transportation;
(ii) shipping;
(iii) postage;
(iv) handling;
(v) crating; or
(vi) packing.
....
(101)(a) Except as provided in Subsection (101)(b)(ii) or (iii), "prewritten
computer software" means computer software that is not designed and
developed:
(i) by the author or other creator of the computer software; and
(ii) to the specifications of a specific purchaser.
....
(103) (a) Except as provided in Subsection (103)(b), "product transferred
electronically" means a product transferred electronically that would be
subject to a tax under this chapter if that product was transferred in a
manner other than electronically.
(b) "Product transferred electronically" does not include:
(i) an ancillary service;
(ii) computer software; or
(iii) a telecommunications service.
....
(107) (a)"Purchase price" and "sales price" mean the total amount of
consideration:
(i) valued in money; and
(ii) for which tangible personal property, a product transferred
electronically, or services are:
(A) sold;
(B) leased; or
(C) rented.
(b) "Purchase price" and "sales price" include:
(i) the seller's cost of the tangible personal property, a product
transferred electronically, or services sold;
(ii) expenses of the seller, including:
(A) the cost of materials used;
(B) a labor cost;
(C) a service cost;
(D) interest;
(E) a loss;
(F) the cost of transportation to the seller; or
(G) a tax imposed on the seller;
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(iii) a charge by the seller for any service necessary to complete the sale;
...
....
(c) "Purchase price" and "sales price" do not include:
....
(ii) . . . the following if separately stated on an invoice, bill of sale, or
similar document provided to the purchaser at the time of sale or
later, as demonstrated by the books and records the seller keeps at
the time of the transaction in the regular course of business,
including books and records the seller keeps at the time of the
transaction in the regular course of business for nontax purposes, by
a preponderance of the facts and circumstances at the time of the
transaction, and by the understanding of all of the parties to the
transaction:
....
(B) a delivery charge;
....
(118)(a) "Sale" means any transfer of title, exchange, or barter, conditional or
otherwise, in any manner, of tangible personal property or any other
taxable transaction under Subsection 59-12-103(1), for consideration.
(b) "Sale" includes:
....
(v) any transaction under which right to possession, operation, or use of
any article of tangible personal property is granted under a lease or
contract and the transfer of possession would be taxable if an
outright sale were made.
....
(136)
....
(b) "Tangible personal property" includes:
....
(v) prewritten computer software, regardless of the manner in which the
prewritten computer software is transferred.
....
(140)
....
(c) "Telecommunications service" does not include:
....
(iv) a data processing and information service if:
(A) the data processing and information service allows data to be:
(I) (Aa) acquired;
(Bb) generated;
(Cc) processed;
(Dd) retrieved; or
(Ee) stored; and
(II) delivered by an electronic transmission to a purchaser; and
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(B) the purchaser's primary purpose for the underlying transaction is
the processed data or information;
....
Utah Code Ann. § 59-12-104(78) provides an exemption for remote access to certain
databases, as follows:
Exemptions from the taxes imposed by this chapter are as follows:
....
(78) amounts paid or charged to access a database:
(a) if the primary purpose for accessing the database is to view or retrieve
information from the database; and
(b) not including amounts paid or charged for a:
(i) digital audio work;
(ii) digital audio-visual work; or
(iii) digital book;
Utah Administrative Code R865-19S-92 states the following in part:
(1) "Computer-generated output" means the microfiche, microfilm, paper, discs,
tapes, molds, or other tangible personal property generated by a computer.
(2) The sale, rental or lease of custom computer software constitutes a sale of
personal services and is not subject to the sales or use tax, regardless of the
form in which the software is purchased or transferred. Charges for services
such as software maintenance, consultation in connection with a sale or lease,
enhancements, or upgrading of custom software are not taxable.
(3) The sale of computer-generated output is subject to the sales or use tax if the
primary object of the sale is the output and not the services rendered in
producing the output.
....
IV. Analysis
This Analysis Section includes the following subsections:
A. Summary of this Analysis Section’s conclusion.
B. The optional data feed upload and download fees are not subject to Utah sales and
use taxes.
C. Both the required one time set-up fee and the greater of the monthly minimum or
the transaction fees are included in the purchase price of the item the Company
sells to the merchants.
D. The Company's sale of the item to the merchants is not a bundled transaction.
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E. The essence or primary object of the transaction is for the nontaxable
advertising/marketing services.
A. Summary of this Analysis Section’s conclusion.
You presented the following question in your request letter: “Are the Company’s receipts
from the services described herein subject to Utah sales tax?” This private letter ruling
concludes that the Company’s sales to merchants are not subject to Utah sales and use taxes, as
explained below.
B. The optional data feed upload and download fees are not subject to Utah
sales and use taxes.
The merchants compensate the Company through:
● The greater of either a monthly minimum or the transaction fees which relate to
the commissions the Company pays to the publishers
● A required one time set-up/network-access fee
● An optional data feed upload fee
● An optional data feed download fee
The optional data feed upload fee and optional data feed download fee are specifically for the
delivery of the merchant’s data from the merchant to the Company and from the Company to
publishers. Delivery charges are generally not subject to Utah sales and use taxes; they are not
among the taxable transactions listed in § 59-12-103(1).2 Furthermore, under
§ 59-12-102(107)(c)(ii)(B), delivery charges are not part of the purchase price of an item if the
delivery charges are separately stated on an invoice, bill of sale, or similar document. Thus, the
optional data feed upload and download fees are not subject to Utah sales and use taxes.
C. Both the required one time set-up fee and the greater of the monthly
minimum or the transaction fees are included in the purchase price of the
item the Company sells to the merchants.
The remaining components of compensation paid by the merchants to the Company
include the following:
● The greater of either a monthly minimum or the transaction fees which relate to
the commissions the Company pays to the publishers
● A required one time set-up/network-access fee
By paying these fees, the merchants receive the following components from the Company:
2
“Delivery charge” is defined in § 59-12-102(35).
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● Advertising/marketing space
● Use of the Company’s software in the form of the online, third-party performance
marketing platform
● Data reports/information to help monitor the success of advertising campaigns
that use the advertising/marketing space purchased from the Company
● Technical support services
● Consultation/support services for the Company’s largest partners
● A payment management service
Subsection 59-12-102(107) defines, in part, “purchase price” as “(a) . . . the total amount of
consideration . . . for which tangible personal property, a product transferred electronically, or
services are: . . . sold; . . . leased; or . . . rented. . . . (b) ‘Purchase price’ . . . include[s]: . . . (iii) a
charge by the seller for any service necessary to complete the sale . . .” Applying
§ 59-12-102(107)(a), the greater of the monthly minimum or the transaction fees is part of the
purchase price of the Company’s item sold, which has the components listed previously.
Applying § 59-12-102(107)(b)(iii), the required one time set-up/network-access fee is also part
of that purchase price. Thus, if the Company’s item sold is subject to Utah sales and use taxes,
both the required one time set-up fee and the greater of the monthly minimum or the transaction
fees are included in the taxable purchase price. Alternatively, if the Company’s item is not
subject to Utah sales and use taxes, both the required one time set-up fee and the greater of the
monthly minimum or the transaction fees are included in the purchase price of the nontaxable
service.
D. The Company's sale of the item to the merchants is not a bundled
transaction.
This private letter ruling next considers whether the Company’s item sold involves a
bundled transaction. Subsection 59-12-102(19)(a) defines “bundled transaction” as “the sale of
two or more items of tangible personal property, products, or services if the tangible personal
property, products, or services are: (i) distinct and identifiable; and (ii) sold for one nonitemized
price.” As listed previously, the components of the item sold by the Company include the
following:
● Advertising/marketing space
● Use of the Company’s software in the form of the online, third-party performance
marketing platform
● Data reports/information to help monitor the success of advertising campaigns
that use the advertising/marketing space purchased from the Company
● Technical support services
● Consultation/support services for the Company’s largest partners
● A payment management service
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The components listed above are not distinct; instead they work together as a single item sold by
the Company to the merchants. The Company’s sales to the merchants are not bundled
transactions.3
E. The essence or primary object of the transaction is for the nontaxable
advertising/marketing services.
This private letter ruling next considers whether the essence or primary object of the
transaction is for nontaxable services or for a taxable item. The Utah Supreme Court has
explained the essence of the transaction as follows:
[T]he essence of the transaction theory[] focuses on the nature of what was sold
and whether it primarily entails tangible personal property. . . . This theory
examines the transaction as a whole to determine whether the essence of the
transaction is one for services or for tangible personal property. The analysis
typically requires a determination either that the services provided are merely
incidental to an essentially personal property transaction or that the property
provided is merely incidental to an essentially service transaction. . . .
B.J.-Titan Services v. State Tax Comm’n, 842 P.2d 822, 825 (Utah 1992) (internal citations
removed). To decide whether the essence of the transaction is for nontaxable services or for
taxable products or services, the Commission must consider the nature and extent of both the
nontaxable services and the taxable products or services.
As listed previously, the components of the item sold by the Company include the
following:
● Advertising/marketing space
● Use of the Company’s software in the form of the online, third-party performance
marketing platform
● Data reports/information to help monitor the success of advertising campaigns
that use the advertising/marketing space purchased from the Company
● Technical support services
● Consultation/support services for the Company’s largest partners
● A payment management service
The general taxability of the six components listed above is considered below. First, sales of
advertising/marketing space alone are generally not taxable. Second, the sales of remote use of a
3
In your request letter, you had mentioned § 59-12-102(19)(b). If the components had been distinct and
identifiable, then the private letter ruling next would have considered § 59-12-102(19)(b)(iv) and (v). Subsections
59-12-102(19)(b)(iv) and (v) consider situations involving a main service and other property or service components
sold. Under those subsections, there is no bundled transaction if the other components sold are essential to the use
of the main service, provided exclusively in connection with the main service, and the main service is the true object
of the transaction.
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seller’s prewritten computer software alone is generally taxable.4 Third, the sales of data
processing and information services alone are generally not taxable.5 Fourth, the sales of
technical support services that do not include repair services are generally not taxable. Fifth, the
sales of consultation/support services are also generally not taxable. Sixth, the payment
management service of the Company is not a taxable service.
The nontaxable sale of the service of selling advertising/marketing space is a key
component of the transaction. The data reports/information and the consultation/support services
provide information and guidance on how to best utilize the advertising/marketing space
purchased from the Company. The payment management service is essential for the Company to
acquire and sell the advertising space to the merchants.
The potentially taxable sale of the remote use of the Company’s computer software is an
essential component of the transaction. However, the software primarily supports the sales of the
advertising space, and the software does not have a purpose independent of the sales of
advertising space. The technical support services support the Company’s computer software, and
as stated previously, the computer software supports the Company’s sales of advertising space.
After considering the nature and extent of nontaxable services and the taxable products or
services, this private letter ruling concludes that the essence or primary object of the transaction
is for the nontaxable advertising/marketing services.
4
“Computer” and “computer software” are defined in § 59-12-102(29) and § 59-12-102(30), respectively.
“Prewritten computer software” is defined in § 59-12-102(101). “Tangible personal property” is defined in part in
§ 59-12-102(136)(b)(v) to include prewritten computer software. “Sale” is defined in part in § 59-12-102(118)(b)(v)
to include “any transaction under which right to possession, operation, or use of any article of tangible personal
property is granted under a lease or contract and the transfer of possession would be taxable if an outright sale were
made.” Sales of the remote use of prewritten computer software are generally taxable under § 59-12-103(1)(a), (k),
and (l) as “amounts paid or charged for . . . retail sales of tangible personal property made within the state . . .”
(under Subsection (1)(a)); as “amounts paid or charged for leases or rentals of tangible personal property if within
this state the tangible personal property is . . . used . . . or . . . otherwise consumed” (under Subsection (1)(k)); and as
“amounts paid or charged for tangible personal property if within this state the tangible personal property is . . . used
. . . or . . . consumed . . .” (under Subsection (1)(l)).
5
In the definition of “telecommunications service” found in § 59-12-102(140), data processing and
information services are recognized as a specific type of service. Furthermore, in § 59-12-103(1), sales of data
processing and information services are not listed as being taxable. The generally nontaxable nature of sales of
information is also seen in the exemption found in § 59-12-104(78). That exemption provides that sales of access to
a database is not subject to sales and use taxes “(a) if the primary purpose for accessing the database is to view or
retrieve information from the database; and (b) not including amounts paid or charged for a: (i) digital audio work;
(ii) digital audio-visual work; or (iii) digital book” (emphasis added). Furthermore, Utah Administrative Rule
R865-19S-92(1) discusses “computer-generated output,” which potentially could include reports on paper or on
tangible storage media. The rule explains in Subsection (3), “The sale of computer-generated output is subject to the
sales or use tax if the primary object of the sale is the output and not the services rendered in producing the output.”
For the unique information generated for particular clients, the primary object of a report with that information
would generally be the information rather than the media upon which the information is stored. In your request
letter, you asserted that the Company did not sell a product transferred electronically, taxable under
§ 59-12-103(1)(m), when the company provided certain analytical data to its clients in order to help them with their
advertising efforts utilizing the Company’s platform. This private letter ruling agrees with that conclusion.
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V. Conclusion
This private letter ruling concludes that the Company’s sales to merchants are not subject
to Utah sales and use taxes.
The Tax Commission’s conclusions are based on the facts as you described them and the
Utah law currently in effect. Should the facts be different or if the law were to change, a
different conclusion may be warranted. If you feel we have misunderstood the facts as you have
presented them, you have additional facts that may be relevant, or you have any other questions,
please feel free to contact the Commission.
Additionally, you may also appeal the private letter ruling in the following two ways.
First, you may file a petition for declaratory order, which would serve to challenge
the Commission's interpretation of statutory language or authority under a statute. This petition
must be in written form, and submitted within thirty (30) days after the date of this private letter
ruling. You may submit your petition by any of the means given below. Failure to submit your
petition within the 30-day time frame could forfeit your appeal rights and will be deemed a
failure to exhaust your administrative remedies. Declaratory orders are discussed in Utah
Administrative Code R861-1A-34 C.2. and in Utah Administrative Code R861-1A-31. The Utah
Administrative Code is currently available at https://adminrules.utah.gov.
Second, you may file a petition for redetermination of agency action if your private letter
ruling leads to an audit assessment, a denial of a claim, or some other agency action at a division
level. This petition must be written and may use form TC-738, available online
at http://tax.utah.gov/forms/current/tc-738.pdf. Your petition must be submitted by any of the
means given below, within thirty (30) days, generally, of the date of the notice of agency action
that describes the agency action you are challenging.
You may access general information about Tax Commission Appeals online
at http://tax.utah.gov/commission-office/appeals. You may file an appeal through any of the
means provided below:
• Best way—by email: [email protected]
• By mail: Tax Appeals
USTC
210 North 1950 West
Salt Lake City, UT 84134
• By fax: 801-297-3919
For the Commission,
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Jennifer N. Fresques
Commissioner
JNF/aln
21-004
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