95-065
Response October 4, 1995
Request
Commissioners
Utah State Tax Commission
210 N 1950 W
Salt Lake City, Utah 84134-0410
Gentlemen:
As
per instructions from the auditors at the Tax Commission, I am requesting you
to render an advisory decision regarding whether on-line advertising on the
Internet is subject to Utah State Sales Tax.
As
I understand it, currently there are no clear guidelines. I have been told the
State Legislature is looking at this area but as of yet nothing has been
decided. This advertising on the Internet consists of strictly electronic media
that would be viewed by people with access to the Internet, e.g., via a
computer and modem. There will not be any real or tangible property of any kind
involved.
I
would appreciate receiving a decision as soon as possible. Please send your
decision by return mail to the following:
XXXXX
If
you have any questions or need more information, please call me at work in Salt
Lake at XXXXX. Thank you for your time and assistance in this regard.
Sincerely,
XXXXX
XXXXX
RE:
Advisory Opinion - Application of sales tax to sales of advertising space on
the Internet.
Dear
XXXXX,
We
have received your request for an advisory opinion regarding the application of
sales or use tax on your sales of advertising space on the Internet.
On-line computer services is a rapidly developing field that is not
specifically addressed in our tax code. The Utah State Legislature is studying
issues like this. and we believe they will address computer-related services in
future statutes. In the meantime, we interpret current Utah sales tax
law as follows:
1.
The sale of advertising space in an on-line Internet service is not a taxable
transaction for purposes of the Utah sales and use tax. If your contractual
arrangement with your clients includes an initial charge and on-going monthly
fees. neither of these charges are taxable.
2.
If you provide advertising design services for your clients the charge for that
service is not subject to sales tax. However, you must pay sales tax on any supplies
purchased for use in the design or delivery of your advertising service.
If
you have additional questions. please address them to our Tax Policy Analyst,
XXXXX at XXXXX or our Technical Research Section at XXXXX.
For
the Commission,
Alice
Shearer
Commissioner