Florida: Digital Video Content and Sales Tax
- Sales Tax News
- Jan 16, 2015 | Gail Cole
Rentals or sales of instant video content are generally not subject to Florida Department of Revenue. However, they may or may not be subject to Florida communication services tax.
So long as the digital video content being rented or sold are electronic images viewed on a screen, the state considers no tangible personal property to have been sold or rented. Sales tax only applies to the transfer of tangible personal property under Chapter 212, Florida Statutes.
According to the TAA:
“Rule 12A-1.062, F.A.C., clarifies that “…furnishing information by way of electronic images which appear on the subscriber's video display screen does not constitute a sale of tangible personal property nor does it constitute the sale of a taxable information service.” Therefore, such sales are not subject to sales tax.
The Taxpayer’s sales and rentals of digital video content are “…electronic images which appear on [a] …video display screen…” The Taxpayer does not furnish any tangible personal property for sale or rental to the customer. The video content is not the sale and rental of tangible personal property, or other taxable services under chapter 212, F.S., and is not, therefore, subject to sales tax under Florida law.”
Communication services tax
The situation becomes more complex when communication services tax enters into play, as taxability differs depending on whether the digital video content is sold or rented.
The rental of digital video content is considered a “video service,” and video services are subject to the Florida communication services tax “when charged to a Florida service address.” The tax applies to the sales price of the rental.
The sale of digital video content, however, is considered in Florida to be “the sale of an information service.” As a result, it is not subject to the communication service tax.
As explained in the TAA:
“[The] rental of digital video content falls within the definition of a “video service” as a pay-per-view or a digital video service for CST purposes. “Video services” are “communications services” and are subject to CST when charged to a Florida service address. Therefore, a charge to rent digital video content made to a Florida service address is subject to CST on the sales price charged….
When the taxpayer sells digital video content, it is “. . . offering of a capability for . . . acquiring ... storing . . . retrieving, using or making available” the digital video content. A customer’s purchase of digital video content, whether downloaded and/or stored on their online library, is the sale of an information service, pursuant to Florida law. It is not the sale of a communications service and is not subject to CST.”
Additional details are available on Technical Assistance Advisement 14A19-005. It should be noted that TAAs are binding on the Florida Department of Revenue only for the specific case being addressed. In addition, taxpayers are reminded that “subsequent statutory or administrative rule changes, or judicial interpretations of the statutes or rules, upon which this advice is based, may subject similar future transactions to a different treatment than expressed” in any specific TAA.