Florida Office of Income Concludes That Online Studying Company Is Subject to Communications Solutions Tax

The Florida Division of Profits issued a Technological Help Advisement concluding that a taxpayer’s on-line studying services were topic to the state’s Communications Providers Tax (“CST”) as a “video service” (statutorily outlined as “the transmission of video, audio, or other programming assistance to a purchaser …” and involves “digital video”), whilst the taxpayer’s profits of an internal email provider ended up nontaxable “information products and services.” Florida Dep’t of Revenue, Technical Assistance Advisement 22A19-002R (Oct. 7, 2022).

The taxpayer operated an on the internet skilled networking system that allowed its members to link and check out occupation options. The taxpayer’s inside electronic mail service permitted customers to send out each individual other interior electronic mail messages. The taxpayer’s on the net finding out company provided educational online video classes obtainable to stream or obtain.

The Department concluded that the taxpayer’s profits of the interior e-mail provider ended up nontaxable “information services” (which are statutorily excluded from the CST) simply because the purchaser’s “primary purpose” was to receive info or information.

On the other hand, the Division concluded that the on the web discovering services was matter to CST simply because it “involved” the transmission of electronic video. The taxpayer asserted that the on line studying service must be characterized as a tax-exempt data company and the Division did not disagree that this may possibly be the fundamental goal of the services. Having said that, the Office mentioned that the “the underlying reason of the video clip services is irrelevant” since there is no “primary purpose” examination in analyzing irrespective of whether a little something is a “video service” for CST functions (in contrast to pinpointing no matter if a little something is a nontaxable “information service”).

In new several years, we have seen the Department consider progressively broader interpretations of “video service” as it tries to increase the scope of the CST. The Department’s summary right here that the on the internet discovering provider is a taxable movie support simply since it “involves” the transmission of a digital video appears to be an expansion of the statutory language (“involve” is not a statutory term) and a slim watch of the character of the certain transaction at situation. Without a doubt, it is unclear why the Division believes a “primary purpose” exam really should use only to nontaxable “information service” determinations and not to other taxability determinations less than the CST statute. Also, the Office makes an attempt to override the “primary purpose” take a look at for nontaxable facts products and services by concluding that any services involving features of a “video service” is taxable, no matter of irrespective of whether it could usually qualify as a nontaxable facts provider. This is a questionable interpretation of the statutory language.

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