96-106
Response
July 16, 1996
Request
Office
of Commissioners
210
North 1950 West
Salt
Lake City, Utah 84134
Re:
Advisory Opinion
Dear
Sirs or Madams:
I
am an owner in a new Internet service company, XXXXX. We are resellers of
virtual servers, in other words, we lease space on remote Internet servers to
our clients and customers. Is this activity subject to state sales tax? I have
heard reports either way and need some clarification on this matter. Please
write me at the address above with your opinion. Thank you.
Sincerely,
XXXXX
XXXXX
Re:
Advisory Opinion - Sales Tax for Internet Services
Dear XXXXX
We received
your request for an advisory opinion whether Utah law requires that you collect
sales tax for space you lease on remote Internet servers to your clients. 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 should be completed
before the 1997 legislative session, so you may expect news on these issues
sometime after the session.
Please
let us know if we can be of further assistance.
For
the Commission,
Alice
Shearer,
Commissioner