95-061
Response
September 26, 1995
Request
XXXXX, Auditing
Utah State Tax Commission
Sales & Use Taxes
160 E. 300 South
Salt Lake City, Utah 84134
Re: Applicability of Sales
Tax to XXXXX Membership Fee
Dear Sir or Madame:
This letter is a request for a sales tax opinion relating to our credit
and marketing information divisions of XXXXX.
Specifically, we are questioning whether an annual membership fee
charged to our customers electing the credit sales billing option (discussed
below) is subject to sales tax.
By way of background, XXXXX is domiciled in the state of XXXXX and is
registered to collect and remit sales tax in all states for credit or market
information services to the extent that such information services are subject
to tax within your state.
Currently a customer pays up front for a set amount of Information
units. In XXXXX we will be introducing
a new billing option. This option will
be called XXXXX and customers will be allowed to pay for the units as they use
them. For this option we will charge
these customers a $$$$$ monthly fee.
This fee will be separately stated on each monthly invoice. We've had to charge this fee in order to
recoup administrative costs incurred from billing customers on a monthly basis
versus an annual basis.
In addition to the annual fee, the customer would also be subject to a
$$$$$ premium charge, as compared to our regular price list, for the actual
information units purchased. Therefore,
no discounts to the information units are offered as a result of electing to be
billed on credit purchases.
Based on the above facts do you see this $$$$$ annual fee charged for
this billing option as taxable or nontaxable in your state? I would appreciate
if your response could be sent to my attention at:
If you should have any
questions relating to this matter, please call XXXXX at XXXXX or me at XXXXX.
Sincerely,
XXXXX
Project Manager
XXXXX
RE: Advisory Opinion - Application of Sales Tax
to XXXXX
Dear
XXXXX,
We
have received your request for an advisory opinion regarding the application of
Utah sales tax to the month fee charged to customers who opt for the XXXXX
billing option. We find as follows:
Charges
for information units purchased by your Utah customers on a tangible medium are
subject to tax. The XXXXX fees
described in your letter are charges associated with a taxable sale, and,
therefore, should be included in the transaction costs used to calculate the
tax.
If
you have other questions that we have not addressed in this letter, please
contact us again.
For
the Commission,
Alice
Shearer
Commissioner