Tax Type
Retail Sales and Use Tax
Description
Services; Professional or personal; On-line data
Topic
Taxability of Persons and Transactions
Date Issued
02-27-1995
February 27, 1995
Re: Request for Ruling: Retail Sales & Use Tax
Dear********
This will reply to your letter of September 29, 1994 in which you seek a ruling on the tax status of electronic publications.
FACTS
A company produces various print publications and electronic compilations of information. The print publications are available from the company, but the electronic compilations are available through online service providers. The online service providers generally are authorized to reproduce, distribute and display the electronic compilations. Individuals who access the electronic information pay fees to the online service providers based upon the amount of time the service is accessed or the number of searches performed by the individual. Separate charges may also be incurred by the user for printouts of information ordered. The user is billed by the online service provider which then compensates the company based upon the time or number of searches accessing the electronic information or through other arrangements.
You seek a ruling as to the tax status of charges for access to electronic information.
RULING
Code of Virginia § 58.1-609.5(1) provides an exemption from the retail sales and use tax for "[p]rofessional, insurance, or personal service transactions which involve sales as inconsequential elements for which no separate charges are made...."
The department traditionally has held that transactions involving data accessed online by personal computers are nontaxable service transactions under the above Code section. However, the same data, provided in tangible form generally is taxable as the sale of tangible personal property. [See P.D. 89-179 (5/31/89) and P.D.88339 (12/27/88), copies enclosed.]
Code of Virginia §58.1-609.6(3) provides an exemption from the retail sales and use tax for "[a]ny publication issued daily, or regularly at average intervals not exceeding three months, and advertising supplements and any other printed matter ultimately distributed with or as part of such publications; however, newsstand sales of the same are taxable." The exemption for publications, however, encompasses only publications in tangible form, as it is the tangible nature of property which subjects it to the sales and use tax. Intangible property or services generally are exempt from the tax unless provided in connection with the sale of tangible personal property. The department has recently recognized that there may be other forms of exempt publications, other than the traditional print format, i.e., microform, CD-ROM, which could qualify for the publications exemption, however, these, too are tangible in nature. [See P.D. 94-248 (8112194), copy enclosed.]
Accordingly, charges for access to electronic information are nontaxable service charges under Code of Virginia § 58.1-609.5(1).
I trust this answers your questions but should you have any further questions about this matter, please contact****************.
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- Sincerely,
Danny M. Payne
Tax Commissioner
- Sincerely,
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Rulings of the Tax Commissioner