95-070
Response
October 17, 1995
Request
XXXXX
Utah
State Tax Commission
21
0 N 1 950 W
Salt
Lake City, UT 84134
Dear
XXXXX,
This
is a follow up letter as per our conversation on XXXXX.
Our
company, XXXXX of XXXXX, UT. Is in the process of setting up a local access
service to allow people in the XXXXX phone area to access the Internet and
XXXXX online services.
This
will entail charging the customer a fee for a particular number of hours on
line. If the customer uses more then the allotted time, there will be an
additional charge for the overage. The initial fee will be charged prior to
allowing the customer access to the network. The added charges will be billed
at the beginning of the following month and must be paid before access is
allowed for the following month.
This
service is provided so the customer can access the Net with a local phone call.
The customers must pay taxes on their personal phone, and our Company must pay
taxes on our phone lines that will allow us access to the Frame Relay which
then connects to the Internet and the XXXXX.
The
only fees that will be charged, are for access to the network and for
additional time (if any). There will be no hardware or software charges. If the
customer needs to upgrade their computer system, they must do this on their
own. The initial software to allow access to the net is called
"XXXXX" or "XXXXX" It is written and provided at no cost to
anyone.
Our
question is, must we charge the customer sales tax for our service.
We
are eagerly waiting your reply.
Thank
you for your time and consideration.
XXXXX
XXXXX
RE:
Advisory Opinion - Application of sales tax to charges for access to the
Internet.
Dear
XXXXX,
We
have received your request for an advisory opinion as to whether you are required
to collect sales tax on charges to your customers for on-line access to the
Internet. Under current Utah law, charges for access to on-line services such
as the Internet are not subject to sales tax. If XXXXX engages in the sale or
rental of computer equipment or "canned software," those transactions
are taxable.
From
the information provided in your letter, it appears that charges to your
customers are tax exempt under current Utah law. However, the legislature has
hired a consultant to review the entire telecommunications field and advise it
on possible changes in the future. The study will not be completed in time for
the 1996 legislative session, so you may expect news on these issues some time
after the 1997 legislative session.
Please
let us know if we can be of further assistance.
For
the Commission,
Alice
Shearer
Commissioner