UT PLR 97-080 Sales & Use Tax 1998-01-13

Is charging Utah customers for internet access subject to Utah sales tax?

Short answer: No, not in 1998. The Utah Tax Commission said it was treating internet access charges as nontaxable under the statutes in place at the time, while cautioning that a future legislative change could override that position.

Apply this to your situation

This page answers the general question as of 1998. Ezel answers yours, under current Utah tax law, with citations.

Disclaimer: This is an official Utah State Tax Commission private letter ruling (governed by Utah Admin. Code R861-1A-34). It states the Commission's interpretation only as to the specific taxpayer and facts to which it was issued; taxpayer-identifying details have been redacted. Another taxpayer cannot rely on it as binding, and any weight it carries in a later appeal depends on how closely that taxpayer's facts match. This is one of the Commission's earliest published rulings on internet taxation; the ruling itself warns that a later statutory change would supersede it, and Utah tax law has in fact been revised many times since 1998: verify the current statute before relying on this conclusion. This summary is informational only and is not legal or tax advice. Consult a licensed Utah tax professional about your specific situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

A nationwide retail and wholesale internet service provider preparing to launch internet access service in Utah asked the Tax Commission, in a short letter, whether its service would be subject to Utah sales tax so it could finalize its billing system.

The Commission's answer was equally short: at that time, the Commission was treating internet access charges as nontaxable under Utah's then-current sales tax statutes. It couldn't offer guidance on any other internet services the company might offer, since the company hadn't described them.

Notably, the Commission flagged its own answer as provisional. It said internet taxation was actively "under discussion and consideration" in Utah and other states, and that if the Legislature later enacted a statute directing the Commission to tax internet access, that new law would supersede this opinion.

What this means for you

Internet service providers

This 1998 ruling reflects an early, unsettled moment in internet taxation policy -- the Commission itself said not to treat its answer as permanent. Don't rely on this ruling for current internet access tax treatment; check today's Utah Code and Commission rules, since the ruling explicitly anticipated being overridden by later legislation.

Accountants and tax professionals

This is a useful historical data point showing how early (pre-broadband-era) internet access was classified in Utah, and a reminder that agency guidance predicated on "current statutes" carries an inherent expiration risk when the underlying law is actively being debated.

Common questions

Q: Is internet access still nontaxable in Utah today?
A: This ruling only reflects the law as of January 1998, and it expressly says a later statutory change would override it. Confirm current Utah sales tax law before relying on this conclusion for today's transactions.

Q: Did the Commission address other internet services besides basic access?
A: No. The company didn't describe any other services it planned to offer, so the Commission said it couldn't advise on their taxability.

Q: Does this ruling apply to my business?
A: No. It binds the Commission only for the requesting company and the facts described. Another taxpayer can't rely on it as binding, though it may carry some persuasive weight in a dispute with closely similar facts.

Source

Landing page: https://tax.utah.gov/commission/rulings/
Original PDF: https://files.tax.utah.gov/tax/commission/ruling/97-080.htm

Original ruling text

97-080

Response January 13, 1998

December
6, 1997

Dear
Attorney General,

COMPANY
A is a nationwide provider of retail and wholesale Internet Services, offering
comprehensive solutions and high quality customer and technical support to
individuals, business and other Internet Service Providers.

COMPANY
A will soon be offering Internet Access and providing Internet Services in the
State of Utah.

We
are in the process of setting up our billing system for your state and we would
like to know if our service is subject to a/an Utah State sales or any other
tax.

Please
respond on your letterhead, using the enclosed return envelope, as this will
help

determine
our billing process.

Sincerely,

NAME

January
13, 1998

NAME

ADDRESS

CITY
STATE ZIP

Advisory
Opinion - Application of sales tax to internet access charges.

Dear
NAME,

We have received your request for
sales tax guidance pertaining to charges for internet access. At this time, the Utah State Tax Commission
is treating internet access charges as nontaxable under our current statutes. You do not describe the other internet
services that you will offer to Utah customers, so we cannot advise you whether
such services are subject to sales tax.

You may be aware that taxation of
the internet is a subject that is under discussion and consideration in Utah as
well as other states across the nation.
Should our state legislature enact a statutory change that directs us to
impose sales tax on internet access some time in the future, that action will
supersede this opinion.

For
the Commission,

Joe B.
Pacheco,

Commissioner

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