Were fees charged directly to learners for online courses and digital completion certificates subject to Florida sales or communications services tax?

Plain-English summary

The Florida Department of Revenue concluded that fees charged directly to learners for the taxpayer's online educational courses were not subject to sales and use tax or communications services tax.

Learners accessed course syllabi, modules, tests, assignments, planning tools, discussion forums, and digital completion certificates online. The platform also offered specializations and enterprise training using the same online features. No tangible personal property was transferred.

The course was not a communications service because it did not enable customers to communicate, and it was not a taxable video, audio, or other programming service under the facts presented. The ruling did not address university-recognized degree programs or revenue sharing between the platform and universities.

What this means for you

Online education platforms

Document the educational service, digital-only delivery, and absence of tangible materials or separately sold communications access.

Employers and training buyers

Customized enterprise course access received the same result under the described online features.

Accountants and tax professionals

Keep the scope narrow. The ruling addressed fees charged directly to learners, not degree tuition or university revenue-sharing arrangements.

Common questions

Q: Were digital course-completion certificates taxable property?
A: No.

Q: Did online video and course content make the service taxable communications programming?
A: No, under these facts.

Q: Did the ruling cover university degree programs?
A: No.

Citations and references

• Fla. Stat. §§ 202.11(1), (5), (24), 212.02, and 213.22
• Fla. Admin. Code r. 12A-1.062(5)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 19A-015

Original ruling text

Florida Department of Revenue
Technical Assistance and Dispute Resolution

5050 West Tennessee Street Tallahassee FL 32399

Jim Zingale
Executive Director

floridarevenue.com

QUESTION:
Are the Taxpayer’s charges to its customers for online educational courses subject to Florida
sales & use tax or CST?
ANSWER:
Review of documentation provided and the Taxpayer’s website, confirms that the Taxpayer's
charges to its customers for online educational courses are not subject to sales and use tax or
communications services tax.
June 19, 2019
XX
Subject: Technical Assistance Advisement 19A-015
STATUTE CITE(S): Sections 202.11 and 212.02, Florida Statutes (F.S.)
RULE CITE: Rule 12A-1.062, Florida Administrative Code (F.A.C.)
XX ("Taxpayer")
FEIN XX
Dear XX:
This is in response to your letter dated August 1, 2018, requesting this Department’s issuance
of a Technical Assistance Advisement (“TAA”) pursuant to section 213.22, F.S., and Rule Chapter
12-11, F.A.C., concerning the taxability of the services offered by your client. An examination of
your letter has established you have complied with the statutory and regulatory requirements
for issuance of a TAA. Therefore, the Department is hereby granting your request for a TAA.
Facts and Requested Advisement
Your letter provides the following in part:
[The Taxpayer] is a corporation headquartered outside of Florida and does not have any
facilities in Florida. [The Taxpayer] provides an education platform that partners with
top universities and organizations worldwide to offer courses online for anyone to take.
[The Taxpayer’s] customers are members of the general public (i.e., "learners")
interested in taking one of their online programs. For [the Taxpayer’s] regular catalog of
online courses, learners begin their training by creating an account directly with the

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Company. Once logged in, the learner chooses from 2,000+ courses taught by professors
from 160+ partnering universities located around the world. The learner registers for
the course of their choice, or the course required by their current university curriculum,
and begins the course.

Classes have a syllabus, modules, quizzes and tests, auto-graded and peer-reviewed
assignments, time planning tools, automated email communications, and community
discussion forums. While learners have little to no direct interaction with the instructor,
each course offers an online forum for peer discussion regarding the course. On this
forum, learners may post questions, answers, or general discussion topics to engage
with other learners enrolled in that course. . . .
Most of [the Taxpayer’s] courses are free to the general user. Learners can register and
complete the course without payment. However, [the Taxpayer] does offer "Course
Certificate" courses for a fee, which range from $XX to $XX per course, or in the
alternative, there is a monthly subscription option for $XX per month. The Course
Certificate” is issued by [the Taxpayer] and includes the University or industry partner
name. Certificates verify completion and confirm the learner’s identity . . . .
[The Taxpayer] also offers Specializations for learners who want to master a specific
career skill. Specializations are coherent series of courses designed to teach a high
demand skill. When a learner completes a Specialization, they receive a "Specialization
Certificate."
[The Taxpayer] also offers University-recognized degrees. . . . For degrees, [the
Taxpayer] does not sell directly to the learner, rather the degree-granting University
does. [The Taxpayer] provides a portion of online learning. The University may supply
some additional online education through their website.
Lastly, [the Taxpayer] also offers an enterprise product, which allows businesses to
either: (a) hand-pick courses to create customized training programs aligned to their
employees' specific needs; or (b) select an unlimited number of courses per employee
thereby allowing employees to take any course offered.
Specializations, Degrees, and Enterprise all utilize the same online features as described
with the regular catalog courses above.

. . . [The Taxpayer] is not selling tangible personal property or providing a taxable service
to learners located in Florida. . . .

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The Taxpayer requested and received a Letter of Technical Assistance (LTA) regarding the
taxability of its online courses. In preparing a response, the Department requested additional
information from the Taxpayer. The Taxpayer provided the following information in a letter
dated March 18, 2016:
[The Taxpayer] provides course content on a wide variety of digital platforms, including
the [Taxpayer’s] website and the [Taxpayer] App, which is available for download on
iOS, Android, and Apple TV.
Students may stream or download the course lectures via the . . . website or the . . .
App. However, students cannot download music, any videos other than the course
lectures, quizzes, or the online forum for peer discussion.
Once a student has successfully completed a course, [The Taxpayer] provides a
shareable certified link that can be shared via the student's Linkedln account, which
allows users to access a digital certificate, grade, and course syllabus.

In response to the Department’s request for additional supporting documentation you
provided, among other things, copies of the following:
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The “Terms of Use,” effective July 11, 2018;
Sample Enterprise Contract;
Sample Enterprise Invoice;
Sample Course Certificate Invoice;
Sample Course Certificate Selection;
Sample Course Certification Election to Purchase;
Sample No Course Certificate Selection;
Sample Course Certificate Invoice;
Sample Course Certificate Listing;
Sample Specialization Invoice;
Sample Specialization Listing;
Online Course Hosting & Services Agreement; and,
Revenue Share Agreement

The Terms of Use provide the following in part:
. . . These Terms of Use (Terms) govern your use of [the Taxpayer’s] website, apps, and
other products and services (Services’). As some of our Services may be software that is
downloaded to your computer, phone, tablet, or other device, you agree that we may

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automatically update this software, and that these Terms will apply to such updates.
Please read these Terms carefully, and contact us if you have any questions. . . .
Subject to these Terms and our policies (including the Acceptable Use Policy, Honor
Code, and course-specific eligibility requirements and other terms), we grant you a
limited, personal, non-exclusive, non-transferable, and revocable license to use our
Services. You may download content from our Services only for your personal, noncommercial use, unless you obtain [The Taxpayer]’s written permission to otherwise use
the content. You also agree that you will create, access, and/or use only one user
account, and you will not share with any third-party access to or access information for
your account. Using our Services does not give you ownership of any intellectual
property rights in our Services or the content you access.

The sample Contract for Enterprise Services provides the following in part:

1. Obligations.
   a. As of the Launch Date (as defined herein), [the Taxpayer] grants to Organization and
   its users (“Users”) a non-exclusive, non-transferable, revocable right to access and use
   the User Services and Content Services (collectively, “Services”) subject to the terms and
   conditions set forth in this Order Form. “User Services” means (i) customized landing
   page featuring the Organization logo and selected courses, (ii) User engagement
   reports, (iii) payment solution(s) that allow Users to seamlessly access premium
   course experiences and skip checkout, and (iv) enterprise-level User support. “Content
   Services” means access to [the Taxpayer]’s Course and/or Specialization certificate
   service, including access to Course assessments and grades, for certain massive online
   open content offerings to be mutually agreed upon in writing by [The Taxpayer] and
   Organization.

Requested Advisement
You request a TAA that confirms that the Taxpayer’s “online educational courses are not
subject to Florida sales & use tax or CST.” In an email dated May 1, 2019, you confirmed that
the Taxpayer’s request is regarding “the fee charged directly to the learners by [the Taxpayer],
and not in regards to the revenue share between the Taxpayer’s and the universities.” As a
result, this letter does not address the University-recognized degree programs.
Law and Discussion
Sales and Use Tax:

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All sales of tangible personal property in the State of Florida are subject to tax, unless
specifically exempt by Chapter 212, F.S. The term "sale" is defined in s. 212.02, F.S., to mean
"[a]ny transfer of title or possession, or both ... of tangible personal property for a
consideration." "Tangible personal property" is defined under s. 212.02(19), F.S., to mean and
include ". . . personal property which may be seen, weighed, measured, or touched or is in any
manner perceptible to the senses ...."Section 212.02(16), F.S., defines "sales price" to include
"any services that are sold as part of the sale" of tangible personal property. When tangible
personal property and services are sold as part of the same sale, the entire sales price is subject
to tax.

A charge solely for electronically transmitted information is not subject to sales tax, pursuant to
Chapter 212, F.S., as there has been no exchange of tangible personal property. See
Department of Revenue v. Quotron Systems, Inc., 615 So.2d 774, 778 (Fla. 3rd DCA 1993),
where the court held that electronic images that appear on video display screens are not
"tangible personal property" as defined in s. 212.02(19), F.S., and that transmission of such
images is not a "sale." See also Rule 12A-1.062(5), F.A.C., which provides that information
furnished by way of electronic images, which appear on the subscriber's video display screen,
are not subject to sales tax.
You have provided that all courses offered, including “Course Certificate," “Specialization
Certificate,” and “Enterprise” courses are conducted via the Internet. You also provide that the
Taxpayer “is not selling tangible personal property or providing a taxable service to learners
located in Florida. . . .” Review of the Taxpayer website and the documentation provided
confirms that all course content, including the verification of completion certificate, is delivered
in a digital format.
Communication Services Tax:
Chapter 202, F.S., imposes communications services tax on the retail sale of communications
services in Florida. Gross receipts tax is also imposed on these services, pursuant to Chapter
203, F.S. "Communications services" are defined, in part, as the transmission, conveyance, or
routing of voice, data, audio, video, or any other information or signals to a point or between or
among points by or through any medium or method, regardless of the protocol used for such
transmission or conveyance. The term includes such transmission, conveyance, or routing in
which computer processing applications are used to act on the form, code, or protocol of the
content for purposes of transmission, conveyance, or routing without regard to whether such
service is referred to as voice-over-Internet-protocol services or is classified by the Federal
Communications Commission as enhanced or value-added (See s. 202.11(1), F.S.) The definition
of communications services excludes information services and Internet access.

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Internet access is "... a service that enables users to connect to the Internet to access content,
information, or other services offered over the Internet. It includes services such as homepages,
electronic mail, instant messaging, and services related to the provision of Internet access.
However, Internet access "does not include voice, audio or video programming, or other
products and services ... that utilize Internet protocol or any successor protocol and for which
there is a charge . . . ." (See s. 1105(5) of the Internet Tax Freedom Act, 47 U.S.C. s. 151 note, as
amended by Pub. L. No. 110-108.)
The definition of communications services excludes "information services." "Information
services" are defined as the ". . . the offering of a capability for generating, acquiring, storing,
transforming, processing, retrieving, using, or making available information via communications
services, including, but not limited to, electronic publishing .... The term includes data
processing and other services that allow data to be generated, acquired, stored, processed, or
retrieved and delivered by an electronic transmission to a purchaser whose primary purpose for
the underlying transaction is the processed data or information. The term does not include
video service." (See s. 202.11(5), F.S.)
Video services are communications services and are specifically defined as “the transmission of
video, audio, or other programming service to a purchaser, and the purchaser interaction, if
any, required for the selection or use of a programming service . . . over facilities owned by the
provider or a third party. The definition goes on to include “. . . basic, extended, premium, payper-view, digital video, two-way cable, and music services.” See section 202.11(24) F.S.
Based upon the information provided, a charge for a course is not the sale of a communications
service, as the service being provided neither enables the customer to communicate nor is it a
video, audio, or other programming service.
Conclusion
Review of documentation provided and the Taxpayer’s website, confirms that the Taxpayer's
charges to its customers for online educational courses are not subject to sales and use tax or
communications services tax.
This response constitutes a Technical Assistance Advisement under section 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 section 213.22, F.S. Our response is predicated on 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 than that
expressed in this response.

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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 section 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,

Brinton Hevey
Brinton Hevey
Tax Law Specialist
Technical Assistance and Dispute Resolution
Record ID: 172335