TAA Sales and Use Tax TAA 17A-010 Membership Subscription
TAX: Sales and Use Tax
TAA NUMBER: 17A-010
ISSUE: Whether Taxpayer’s subscription membership fees are subject to sales
tax? STATUTE CITE(S): Section(s) 212.02(15)(a), 212.05, F.S.
RULE CITE(S):
QUESTION: Are Taxpayer’s on-line legal document drafting services sales of
tangible personal property?
ANSWER: No. Taxpayer does not transfer possession of, lease, or license tangible
personal property.
Subject: Technical Assistance Advisement (“TAA”)
TAA 17A-010
Membership Subscription
Section(s) 212.05, Florida Statutes (“F.S.”)
Rule(s) 12A-1.032, Florida Administrative Code (“F.A.C.”)
XXXXXXX (“Petitioner”) (“Taxpayer”)
Business Partner#: XXXXXXX
FEI#: XX-XXXXXXXX
Dear XXXXXX:
This letter is a response to your petition dated March 1, 2017, for the
Department’s issuance of a Technical Assistance Advisement (“TAA”)
to Petitioner, regarding whether Taxpayer’s on-line subscription
membership service charges. Your petition has been carefully examined,
and the Department finds it to be in compliance with the requisite criteria
set forth in Rule Chapter 12-11, F.A.C. This response to your request
constitutes a TAA and is issued to you under the authority of section
213.22, F.S.
Issue
Whether Taxpayer’s membership subscription fees are subject to Florida
sales or use tax?
Facts
Taxpayer sells membership subscriptions to its online support services
for authorized users. Taxpayer uses cloud computing and on-demand software.
Taxpayer and its members execute a Membership Agreement and XXXXXXX Agreement.
Members are licensed attorneys and their staff. Members gain access to
the membership portal on Taxpayer’s website with unique member identification
and password credentials. Members do not need to download any software
to their local computers or servers to gain access to membership services.
The services include access to legal document drafting (XXXXXXXX) software
located on Taxpayer’s servers or the cloud. The members may download
a ribbon to properly assemble the document they assembled. Members are
entitled to attend certain XXXX courses, or use Taxpayer’s online
XXXXX services. Members also have access to an interactive community with
other members. The completed documents are downloaded electronically.
Taxpayer Position
Taxpayer maintains that no sales tax is due, because there is no transfer
of tangible personal property and Taxpayer only provides professional services.
Applicable Law
Section 212.05, Florida Statutes (“F.S.”), provides that every
person is exercising a taxable privilege who engages in the business of
selling tangible personal property at retail. Section 212.05(1)(a)1.a.,
F.S., provides that for the exercise of such privilege, a tax is levied
on each taxable transactions at the rate of six percent of the sales price
of each item of tangible personal property sold. Section 212.02(15)(a),
F.S., defines the word “Sale” to include “[a]ny transfer
of title or possession, … license, lease, or rental, … of
tangible personal property for a consideration.”
Based on the facts provided, Taxpayer is not selling tangible personal
property, because Taxpayer does not transfer or license tangible personal
property. See Department of Revenue v. Quotron Systems, Inc., 615 So.2nd
774 (Fla. 3rd DCA 1993) (Transfer of electronic images is not a sale of
tangible personal property). See s. 212.02(19), F.S.
Response
Taxpayer’s membership subscription fees are not subject to Florida
sales tax imposed by section 212.05, F.S.
This response constitutes a Technical Assistance Advisement under section
213.22, F.S., which is binding on the Department only under the facts
and circumstances described in the request for this advice, as specified
in section 213.22, F.S. Our response is predicated on those facts and
the specific situation summarized above. You are advised that subsequent
statutory or administrative rule changes, or judicial interpretations
of the statutes or rules, upon which this advice is based, may subject
similar future transactions to a different treatment than expressed in
this response.
You are further advised that this response, your request and related backup
documents are public records under Chapter 119, F.S., and are subject
to disclosure to the public under the conditions of section 213.22, F.S.
Confidential information must be deleted before public disclosure. In
an effort to protect confidentiality, we request you provide the undersigned
with an edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses and any
other details which might lead to identification of the taxpayer. Your
response should be received by the Department within 10 days of the date
of this letter.
Respectfully,
Chuck Wallace
Technical Assistance & Dispute Resolution
850-717-7541
Record ID: 212925
