Subscription Membership Fees Taxable as Rentals in Arizona

May 29th, 2015

The Arizona Department of Revenue released a letter ruling determining that a subscription fee for a membership that gives subscribers access to instant video, an e-book library, and shipping benefits is the taxable rental of tangible personal property. The instant video and e-book library portions of the membership are taxable as rentals of tangible personal property. Because the membership is a single bundled fee that includes these taxable components, the entire charge is taxable.

The ruling also determined that trial memberships offering the same benefits are not taxable because the taxpayer receives no payment for them, so there are no taxable gross receipts.