Online Learning Subscriptions and SALT
Per New York Advisory Opinion TSB-A-20(18)S, released October 2020, sales of online learning subscriptions in New York State are not subject to tax. This is a very relevant issue for many businesses and consumers right now, as schools are still online and parents and teachers are looking for ways to entertain and educate students.
Generally, according to New York State tax law section 1105(a), sales of any tangible personal property are subject to sales tax. However, these services are not taxable, because they do not meet the definition of tangible personal property. Tangible personal property is defined in section 1101(b)(6) of New York State tax law as “corporeal personal property of any nature” among other caveats.
The business in question, in the above-mentioned advisory opinion, offers three levels of subscriptions:
- the basic level offers access to digital video courses to view online,
- the next level offers PDF downloads on top of the online videos,
- the top-level adds the ability to download the videos to view offline
The Advisory Opinion determined first that, because the basic subscription does not allow the videos to be seen offline, they are not tangible property. Also, because the subscriptions are designed to impart knowledge and assist the viewer in learning new skills, they do not meet the definition of information services that would otherwise be taxable. As for the PDF downloads available, these also do not meet the definition of tangible property, because they are delivered to the purchaser only in digital format. Finally, the downloadable videos provided with the top-level subscription could be considered tangible property because pre-written software is included in section 1101(b)(6). However, section 1105(a) provides that videos delivered to consumers electronically are intangible and thus are not subject to tax.
Contact EFPR Group for more information on sales of online learning subscriptions, or any other state and local tax issues.
The materials contained herein are intended for educational and informational purposes only and do not constitute tax or legal advice. Readers are responsible for obtaining such advice from their tax and legal counsel.