Are paid subscriptions to a Florida-accessed live-streaming video platform subject to sales tax or communications services tax?

Plain-English summary

The Florida Department of Revenue ruled that paid subscriptions to an interactive live-streaming platform were subject to Florida communications services tax when the included video services were sourced to Florida. The platform let anyone watch live and saved videos for free, but subscribers paid for an enhanced experience that included ad-free video, special chat features, and other benefits.

The free tier was not a taxable sale of communications services because the platform received no consideration from those viewers. Paid subscribers, by contrast, exchanged subscription fees for video services and other features. When the video originated and terminated in Florida—or originated or terminated in Florida and was charged to a Florida service address—the subscription was subject to communications services tax.

The Department applied the tax to the full subscription fee because the taxpayer did not separately state components of the subscription and did not show a separate allocation in its regular books and records. The subscriptions were not subject to sales tax under chapter 212 because the taxpayer was not selling tangible personal property or a service taxable under that chapter.

What this means for you

Streaming-platform operators

Offering the same video free does not prevent a paid tier from being taxable. If subscribers pay for a bundle that includes video transmission, Florida may treat the subscription as a sale of communications services even when community support or chat features motivate the purchase.

Billing and finance teams

Bundling matters. This ruling taxed the whole subscription fee because the components were not separately itemized or reasonably allocated in the taxpayer's books and records. The statutory sales-price rules provide specific treatment for separately stated or supportably allocated noncommunications items.

Accountants and tax professionals

Analyze both the nature of the digital service and its Florida sourcing. For video services, the ruling identifies the service address as the Florida location where the customer receives the service.

Common questions

Q: Is free streaming subject to communications services tax?
A: Not on these facts. Without consideration from the viewer, the Department found no retail sale of communications services.

Q: Why were paid subscriptions taxable if subscribers mainly wanted to support broadcasters?
A: Subscribers still received video services and other features in exchange for the fee. The Department treated that exchange as a sale of communications services.

Q: Was ordinary Florida sales tax also due?
A: No. The Department found no sale of tangible personal property or service taxable under chapter 212.

Q: Was tax imposed on only the video portion?
A: No separate portion was used here. The taxpayer did not itemize or allocate subscription components, so communications services tax applied to the respective subscription fees.

Q: Which subscriptions were Florida-sourced?
A: The ruling covers services that originate and terminate in Florida, or originate or terminate in Florida and are charged to a Florida service address.

Citations and references

• Fla. Stat. §§ 202.11(1), (13), (14), and (24)
• Fla. Stat. §§ 202.12(1) and 202.35(4)
• Fla. Stat. § 212.02(15)(a) and (16)
• Fla. Stat. § 213.22

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 19A19-001

Original ruling text

QUESTION:

Whether Taxpayer’s XXX subscriptions are subject to sales tax or communications services tax
ANSWER:
Taxpayer’s sales of subscriptions that include communications services, such as video services that
originate and terminate in Florida, or originate or terminate in Florida and are charged to a Florida
service address, are subject to CST.

August 7, 2019

XX
Re:

Technical Assistance Advisement 19A19-001
Communications Services Tax
Chapter 202, Florida Statutes
Sales and Use Tax
Chapter 212, Florida Statutes
Taxpayer: X
Business Partner Number: X
FEIN: X

Dear X:
This letter is a response to your petition for the Department’s issuance of a Technical Assistance
Advisement (“TAA”), regarding the taxability of Taxpayer’s subscriptions. Your petition has been
carefully examined, and the Department finds it to be in compliance with the requisite criteria
set forth in Rule Chapter 12‐11, Florida Administrative Code (“F.A.C.”). This response to your
request constitutes a TAA and is issued to you under the authority of section 213.22, Florida
Statutes (“F.S.).

REQUESTED ADVISEMENT
Whether Taxpayer’s XXX subscriptions are subject to sales tax or communications services tax.

x
August 7, 2019
Florida Department of Revenue
Page 2

FACTS PROVIDED
Taxpayer provides an Internet-based platform where viewers can watch real-time streaming
videos licensed by third parties, commonly referred to as “broadcasters,” on the internet.
Specifically, viewers who visit Taxpayer’s website can watch broadcasters playing a variety of
different video games, playing music, painting, playing in live e-sports events, or other
activities. Viewers can also comment using the chat tool. In addition to live streaming of video,
broadcasters can save their past videos and post them for viewers to watch on demand
(“VOD”). Once enabled by broadcasters, VODs are saved by default for 14 days.
According to Taxpayer, all video content can be viewed free of charge, with viewers receiving a
basic free tier of engagement on Taxpayer’s website. The following benefits are available to all
viewers for free:
•

X

Viewers wanting an enhanced experience on Taxpayer’s website can purchase a subscription.
Taxpayer indicates that there are two types of subscriptions available for purchase and neither
subscription provides subscribers with any additional viewing content. Paying Subscribers
generally receive the following additional benefits:
X Subscription:
•

X

X Subscription:
•

X

Although the benefits referenced above are included as part of Taxpayer’s subscriptions,
Taxpayer indicates that the primary reason viewers purchase Taxpayer’s X subscriptions or
Taxpayer’s X subscriptions is to support the broadcaster community. The cornerstone of the
Taxpayer’s platform is the relationship between the broadcasters and their viewers, and
Taxpayer has taken steps over the years to foster the development of such relationships.
Unlike other platforms where visitors passively view streaming video, Taxpayer’s platform is
one designed with the intent of encouraging engagement among the broadcaster and the
viewer community.
According to Taxpayer there are multiple avenues for engagement available on broadcaster
pages. One of the primary methods of engagement, the chat function, allows viewers to
interact directly and in real time with broadcasters. Taxpayer indicates that non-paying viewers
can use the chat tool, as well; the only difference for subscribers is that they receive an

x
August 7, 2019
Florida Department of Revenue
Page 3

emoticon next to their name in chat, representing that they are a subscriber. Taxpayer
equates the chat tool to instant messaging, rather than a form of telecommunication.1
Broadcaster pages also often contain links and information about how viewers can further
engage with and financially support them. This includes links to x pages, buttons to donate via
x, and other similar services. Donating to broadcasters is so popular that Taxpayer recently
implemented a system for all viewers, not just subscribers, to donate to broadcasters through
Taxpayer’s X function. Broadcasters frequently provide additional playing opportunities to
subscribers and viewers who donate, including the opportunity to play a video game with the
broadcaster on a Taxpayer stream playing with a character, item, or other-in-game settings as
requested by a viewer, providing feedback, etc. These benefits vary among the broadcaster
community.
Additionally, Taxpayer recently rolled out a beta program to allow certain broadcasters to offer
different tiers of subscriptions to their subscribers. While a standard subscription costs $X per
month, two new tiers have been added at $X and $X. These two new tiers offer the same
benefits as the basic subscription one subscription, plus the following additional benefits:
•

1) X

•

2) X

The other benefits of higher tier subscriptions inure directly to broadcasters; specifically, the
broadcasters receive additional revenue from the higher-tier subscriptions, and the higher-tier
subscriptions count as multiple subscribers for purposes of unlocking additional emoticons (an
incentive for broadcasters to build larger and more active communities).
Taxpayer explains that the relationship and level of engagement between the viewers and
broadcasters make Taxpayer’s subscriptions fundamentally different from other streaming
subscription services, such as X or X. Not only do subscribers not pay for streaming video
content, as it is available for free to all visitors to Taxpayer, but they are actively paying
for subscriptions to obtain the community aspects that come from supporting
favorite broadcasters. The intangible benefits that come from supporting broadcasters are
the primary reason that viewers pay to subscribe, and are a unique aspect of Taxpayer.
Taxpayer’s Terms of Service provides in part:

5. Use of Devices and Services

1

According to Taxpayer’s website, chat is built into every stream. See XXXXXXXXXXXXXXXXXX.

x
August 7, 2019
Florida Department of Revenue
Page 4

Access to the X Services may require the use of your personal computer or
mobile device, as well as communications with or use of space on such devices.
You are responsible for any Internet connection or mobile fees and charges that
you incur when accessing the X Services.

8. User Content
   X allows users to distribute streaming live and pre-recorded audio-visual works,
   to use services, such as chat, bulletin boards, forum postings, wiki contributions,
   voice interactive services, and to participate in other activities in which you may
   create, post, transmit, perform, or store content, messages, text, sound, images,
   applications, code or other data or materials on the X Services (“User Content”).
   In response to questions regarding Taxpayer’s service offering and the facts provided in the
   initial TAA request, Taxpayer provided the following:
   X primarily refers to text messaging-type X (Taxpayer also noted that XX was
   briefly offered, but it was deprecated it as of X).
   Regarding an update to the facts, there has been a slight change. Originally, we
   believed that subscribers were not entitled to any additional or special video
   content access over-and-above that available to non-subscribers. However, we
   discovered in May 2018, that broadcasters have the ability to offer Video On
   Demand (VOD) exclusively to subscribers (as distinguished to VOD that is
   available to all viewers). This is controlled by the Broadcasters, not X; a
   Broadcaster can elect to put videos behind a subscription paywall at any time
   and can change their mind and make them available to everyone (i.e. subscribers
   and non-subscribers) at any time. X has no visibility or direct control over this.
   While this exclusive VOD option is available, experience shows that Broadcasters
   do not use it very frequently. It is not a well-known feature, nor is it a primary
   element of a subscription benefit. It is arguably inconsequential to the
   subscription benefit of enjoying an advertisement-free experience.

x
August 7, 2019
Florida Department of Revenue
Page 5

LAW AND DISCUSSION
Sales Tax
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(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. However, when services are sold as part of the same
sale as tangible personal property, the services are part of the sales price on which sales tax is
computed. 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.
Based upon the facts provided, Taxpayer is not selling tangible personal property or a service
subject to tax under Chapter 212, F.S.
Communications Services Tax
Chapter 202, F.S., imposes Communications Services Tax (“CST”) on the retail sale of
communications services. Communications services tax is comprised of the Florida
communications services tax and the local communications services tax. The Florida
communications services tax includes the state tax, as well as the gross receipts tax imposed by
Chapter 203, F.S. (See ss. 202.12 and 202.35(4), F.S.)
The term “communications services” is defined broadly and means, in pertinent part, “… the
transmission, conveyance, or routing of voice, data, audio, video, or any other information or
signals, including video services, to a point, or between or among points, by or through any
electronic, radio, satellite, cable, optical, microwave, or other medium or method now in
existence or hereafter devised, regardless of the protocol used for such transmission or
conveyance….” (See s. 202.11(1), F.S.) The term “video services” means 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 …. The term includes basic,
extended, premium, pay-per-view, digital video, two-way cable, and music services.” (Emphasis
added). (See s. 202.11(24), F.S.)
Despite the broad definition of the term “communications services,” there are some services
that are excluded from the definition of communications services, such as Internet access
service, electronic mail service, electronic bulletin board service, and similar online computer
services.
A sale of communications services occurs when communications services are provided for a
consideration. Communications services tax applies, generally, to the retail sales price of

x
August 7, 2019
Florida Department of Revenue
Page 6

communications services that (1) originate and terminate in Florida, or (2) originate or
terminate in Florida and are charged to a Florida service address. (See s. 202.12(1), F.S.) Service
address generally means the location of the equipment from which communications services
originate or are received by the customer. For video services, the service address is the
location where the customer receives the service in Florida. (See s. 202.11(14), F.S.)
As stated above, communications services tax is computed on the “sales price,” which is
defined in s. 202.11(13), F.S., and means in part:
… the total amount charged in money or other consideration by a dealer for the
sale of the right or privilege of using communications services in this state,
including any property or other service, not described in paragraph (a), which is
part of the sale and for which the charge is not separately itemized on a
customer’s bill or separately allocated under subparagraph (b)8. The sales price
of communications services may not be reduced by any separately identified
components of the charge which constitute expenses of the dealer, including,
but not limited to, sales taxes on goods or services purchased by the dealer,
property taxes, taxes measured by net income, and universal-service fund fees.
(a) The sales price of communications services includes, whether or not
separately stated, charges for any of the following:

1. The connection, movement, change, or termination of communications
   services.
2. The detailed billing of communications services.
3. The sale of directory listings in connection with a communications service.
4. Central office and custom calling features.
5. Voice mail and other messaging service.
6. Directory assistance.
7. The service of sending or receiving a document commonly referred to as a
   facsimile or “fax,” except when performed during the course of providing
   professional or advertising services.
   (b) The sales price of communications services does not include charges for any
   of the following:

7. Charges for property or other services that are not part of the sale of
   communications services, if such charges are stated separately from the charges
   for communications services.

x
August 7, 2019
Florida Department of Revenue
Page 7

8. Charges for goods or services that are not subject to tax under this chapter,
   including Internet access services but excluding any item described in paragraph
   (a), that are not separately itemized on a customer’s bill, but that can be
   reasonably identified from the selling dealer’s books and records kept in the
   regular course of business. The dealer may support the allocation of charges with
   books and records kept in the regular course of business covering the dealer’s
   entire service area, including territories outside this state. (Emphasis Added.)
   Based upon the facts provided, Taxpayer provides video services, as well as other services, to
   viewers (nonpaying customers) and to subscribers (paying customers). Viewers receive video
   services, use of the chat function, and other services. CST applies when consideration is paid in
   exchange for supplying or providing communications services at retail. The provision of free
   communications services by Taxpayer does not constitute a sale of communications services
   since the services are not being offered by Taxpayer in exchange for a consideration. Since
   Taxpayer does not receive any consideration from viewers (nonpaying customers), there is no
   sale of communications services by Taxpayer to viewers.
   Conversely, subscribers receive ad free video services, special chat functionality, and other
   services, in exchange for payment of the respective subscription fee(s) to Taxpayer. Here, a
   sale of communications services is occurring, as Taxpayer is receiving consideration in exchange
   for the provision of video services. Taxpayer sales of subscriptions that include
   communications services, such as video services that originate and terminate in Florida, or
   originate or terminate in Florida and are charged to a Florida service address, are subject to
   CST. CST is computed on the sales price, which based upon the facts provided is the amount of
   the respective subscription fees2 charged by Taxpayer.

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
expressed in this response.
You are further advised that this response and 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
2

Taxpayer does not separately state and itemize any components of the subscription, nor has Taxpayer indicated
that it separately allocates any of the charges in its books and records.

x
August 7, 2019
Florida Department of Revenue
Page 8

an edited copy of your request for Technical Assistance Advisement and 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 10
days of the date of this letter.
Sincerely,

Heather Miller
Heather Miller
Technical Assistance & Dispute Resolution
AMS# 7000227913