Were charges for online consumer-survey analytics and electronically delivered reports subject to Florida sales tax?

Plain-English summary

The Florida Department of Revenue concluded that this data-analytics company's baseline and additional service charges were not subject to Florida sales tax, as long as they were not part of a sale of tangible personal property.

The provider developed online consumer surveys, collected responses on its own servers, analyzed the results, and published custom reports to customer portal sites. Additional services included more detailed usage analysis, executive summaries, expert reports, web conferences, and industry benchmarking.

Customers accessed the information electronically rather than receiving it in tangible form. Under Rule 12A-1.062(5), the Department did not treat the electronic images and reports as tangible personal property or a taxable information service.

What this means for you

Analytics and research providers

Document electronic-only delivery and whether any physical product is transferred. Service charges can become part of a taxable sales price when they accompany a sale of tangible personal property.

Subscription and portal businesses

Hosted access to custom reports was central to the facts. The ruling did not treat the provider's portal delivery as a taxable tangible product.

Accountants and tax professionals

Review each offering and its delivery method. The ruling expressly addressed sales and use tax only and did not decide communications-services tax.

Common questions

Q: Did customers own their collected survey data?
A: Yes. The ruling says the data became the customer's property and could not be provided to others.

Q: Were reports delivered in paper form?
A: No. Customers accessed them electronically.

Q: Did the ruling decide communications-services tax?
A: No.

Citations and references

• Fla. Stat. §§ 212.02(15)(a), 212.02(16), 212.05, and 213.22
• Fla. Admin. Code r. 12A-1.062(5)
• Department of Revenue v. Quotron Systems, Inc., 615 So. 2d 774 (Fla. 3d DCA 1993)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 17A-002

Original ruling text

Executive
Director
Leon M. Biegalski

QUESTION: WHETHER, BASED UPON THE FACTS PROVIDED, TAXPAYER’S
CHARGES FOR ITS BASE LINE AND ADDITIONAL SERVICES ARE SUBJECT TO SALES
TAX?
ANSWER: TAXPAYER CHARGES FOR BASE LINE AND ADDITIONAL SERVICES,
WHICH INVOLVES FURNISHING INFORMATION AND REPORTS ELECTRONICALLY,
ARE NOT SUBJECT TO SALES TAX PROVIDED SUCH CHARGES ARE NOT PART OF
THE SALE OF ANY TANGIBLE PERSONAL PROPERTY.
January 27, 2017
Re:

Technical Assistance Advisement 17A-002
Sales and Use Tax- Computers, Software, Information Services
Sections: 212.02; 212.05, Florida Statutes (F.S.)
Rule: 12A-1.062, Florida Administrative Code (F.A.C.)
XXXX (“Taxpayer”)
FEI: XXXX

Dear XXXX:
This letter is a response to your petition received on XXXX, for the Department's issuance of a
Technical Assistance Advisement ("TAA") concerning the above referenced party and matter.
Your petition has been carefully examined and the Department finds it to be in compliance with
the requisite criteria set forth in Chapter 12-11, F.A.C. This response to your request constitutes
a TAA and is issued to you under the authority of s. 213.22, F.S.
Issue
Whether, based upon the facts provided, Taxpayer’s charges for its base line and additional
services are subject to sales tax.
Facts Provided
[Taxpayer] is a data service analytics company that utilizes a unique online data-collection and
manipulation platform to provide consumer experience analytic services to various companies.
…[Taxpayer’s] base service line is the development of online consumer surveys to help
businesses gather information from consumers visiting their websites. To initiate [Taxpayer’s]
survey collection process for a new customer, [Taxpayer] facilitates an up-front planning and
strategy discussion to develop a customized survey instrument and to ensure [Taxpayer] is in
Child Support – Ann Coffin, Director  General Tax Administration – Maria Johnson, Director
Property Tax Oversight – Dr. Maurice Gogarty, Director  Information Services – Damu Kuttikrishnan, Director

www.floridarevenue.com
Florida Department of Revenue
Tallahassee, Florida 32399-0100

Technical Assistance Advisement
Page 2
sync with its customer’s strategies, perceived strengths, and perceived weaknesses.
Subsequently, [Taxpayer] develops XXXX and delivers it to the customer to add to the
customer’s website, which prompts the customer’s website visitors to complete a survey at the
end of their experience. …Clicking on the survey link routes customers who choose to take the
survey to [Taxpayer’s] servers [outside Florida]. …Once a sufficient sample data size has been
complied, [Taxpayer] publishes the reports to their customer’s portal site. The site is hosted on
the [Taxpayer] servers and allows customers to log-in and access reports on an on-going and ondemand basis. …All of the data collected through [Taxpayer’s] base service line becomes the
property of [Taxpayer’s] customers, and [Taxpayer] is contractually prohibited from providing
this information to others.
For example, the survey may ask the survey participant to rate on a scale from 1 to 10 (1 being
poor and 10 being excellent) how well the product images on the customer’s website show the
product details or how well the site layout helped the online consumer find what they were
looking for. This data is then collected and summarized by the [Taxpayer] data analyst and made
available to the customer via the online portal…. As part of its overall survey and analysis
service, [Taxpayer] calculates average scores by industry and includes the relevant benchmarks
in each individual [client’s] custom data analysis report. These statistics allow the customer to
compare its own scores against industry averages as a whole.
Beyond this base service line…[Taxpayer] has a variety of incremental service offerings that
enhances its base service line by utilizing the survey data collected to illustrate different user
considerations to its customers. Typically the customer chooses from among these measures
based on the customer touch point that is most relevant to its market: web, mobile, tablet, or instore….
These services include: XXXX.

1. XXXX: … captures information about the user experience, including the amount of time
   consumer spent on the customer’s site, the page names the customer visited, navigation
   through the pages viewed, information entered, scrolling, mouse clicks, and movements,
   among others….
2. XXXX: … allows the customer to generate the detailed reports highlighting specifics
   beyond the basic survey results such as time spent on the site, number of pages viewed,
   etc. Additionally, the XXXX is an additional detailed report capturing areas where a
   customer is receiving repeated comments from consumers….
3. XXXX: … allows customers to generate C-level executive summaries of the survey results
   for more advanced reporting to the customer’s Board of Directors and executive
   management….
4. XXXX: This service includes expert analysis of the raw data collected from the consumer
   surveys. The deliverable is a written report presented via web-based conference call held
   periodically over the survey collection period….
5. XXXX: …The XXXX includes expert analysis of the least usable features of the
   customer’s website or mobile site. …These results are communicated via a written report
   and web conference call periodically over the survey collection period at the request of
   the customer. …

Technical Assistance Advisement
Page 3

6. XXXX: This service provides a detailed benchmarking analysis of [Taxpayer’s]

customer’s survey results as compared against industry competitors…. [Taxpayer]
obtains industry data from an unrelated third-party regarding user satisfaction with key
competitor sites and uses that data to develop a benchmark for its current customer.
…[Taxpayer] is granted a license to utilize its customer’s survey results in the analytic
reports given all the data collected through [Taxpayer’s] base service line is the property
of the customer.
Taxpayer Position
Your letter provides the following in part:
… [I]t is our opinion that [Taxpayer’s] services are excluded from the sales tax assessed
on information services. The information produced by [Taxpayer] is produced for and
provided only to the single customer for which the survey results were generated. The
information gathered is the sole property of [Taxpayer’s] customer, and [Taxpayer] is
contractually prohibited from furnishing the information to or incorporating it in reports
for others. Furthermore, the information gathered by [Taxpayer] is provided to its
customers electronically via the customer’s portal site. Therefore, [Taxpayer’s] base line
and additional services are not subject to sales or use tax in Florida….
Law and Discussion
Section 212.05, F.S., generally imposes tax on the sale or lease of tangible personal property.
The term “sale” is defined in s. 212.02(15)(a), F.S., to mean "[a]ny transfer of title or possession,
or both ... of tangible personal property for a consideration." Pure service transactions that do not
involve the sale of tangible personal property are generally not subject to tax under Florida law,
unless the taxation of the service is specifically authorized by Chapter 212, F.S. When services
are provided as part of the sales of tangible personal property, the services are part of the sales
price1 subject to sales tax.
Taxpayer has indicated that all information and reports are accessed by the customer
electronically and are not provided in tangible form. Therefore, a determination of whether
taxpayer provides a taxable information service is not necessary as Rule 12A-1.062(5), F.A.C.,
provides that a charge for 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. See also Department of Revenue v.
Quotron Systems, Inc., 615 So.2d 774 (Fla. 3rd DCA 1993)

Section 212.02(16), F.S., defines the term “sales price” in part as “the total amount paid for tangible personal
property, including any services that are a part of the sale, valued in money, whether paid in money or otherwise,
and includes any amount for which credit is given to the purchaser by the seller, without any deduction therefrom on
account of the cost of the property sold, the cost of materials used, labor or service cost, interest charged, losses, or
any other expense whatsoever….”
1

Technical Assistance Advisement
Page 4
Conclusion
Taxpayer charges for base line and additional services, which involves furnishing information
and reports electronically are not subject to sales tax provided such charges are not part of the
sale of any tangible personal property.
Please be advised that this letter only applies to Sales and Use Tax and does not consider the
applicability of Communications Services Tax.
This response constitutes a Technical Assistance Advisement under s. 213.22, F.S., which is
binding on the department only under the facts and circumstances described in the request for
this advice, as specified in s. 213.22, F.S. Our response is predicated upon those facts and the
specific situation summarized above. You are advised 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 from that which is
expressed in this response.
You are further advised that this response, your request and related backup documents are public
records under Chapter 119, F.S., and are subject to disclosure to the public under the conditions
of s. 213.22, F.S. Confidential information must be deleted before public disclosure. In an effort
to protect confidentiality, we request you provide the undersigned with an edited copy of your
request for Technical Assistance Advisement, the backup material and this response, deleting
names, addresses and any other details which might lead to identification of the taxpayer. Your
response should be received by the Department within 15 days of the date of this letter.
Sincerely,

Taylor Hikes, Esq.
Senior Attorney
Technical Assistance and Dispute Resolution

Control # 211864