On April 10, 2019, the Utah Tax Commission issued a private letter ruling to a video streaming provider (“Taxpayer”) finding that the Taxpayer’s sales of subscriptions entitling subscribers to enhanced features on the Taxpayer’s streaming platform, are not subject to sales and use tax. On its internet-based platform, the Taxpayer provides a video streaming service that is available without charge. The Taxpayer also sells subscriptions to its platform that permit subscribers to enjoy ad-free viewing, chat function enhancements, additional time to save videos and customer support. The Commission determined that since none of the additional services provided through a subscription are separately subject to Utah sales and use tax, the Taxpayer’s sales of subscriptions were also not subject to tax. In particular, the Commission applied the “essence of the transaction” doctrine to find that even though some of the transactions involved use of the Taxpayer’s software and hardware, the Taxpayer was not selling prewritten computer software or tangible personal property to its subscribers.

Utah Tax Commission, Private Letter Ruling 18-002 (April 10, 2019).