Web and Video Conferencing Services are Taxable Telecommunications Services in Kansas.
Tuesday, July 23rd, 2013
Kansas released a private letter ruling discussing web and video conferencing services. These services are taxable in Kansas as telecommunications services.
The taxpayer sold audio, video, and web conferencing services and related digital media services. It wanted to know if these services, when sold to a user in Kansas, were subject to Kansas sales tax.
The Kansas Department of Revenue determined that these were taxable telecommunication services. The taxpayer therefore had to collect state and local sales tax on the charges for these services.
Kansas sales tax applies to sales of telecommunications and ancillary services. A telecommunications service is "the electronic transmission, conveyance or routing of voice, data, audio, video or any other information or signals to a point, or between or among points." An ancillary service is one associated with or incidental to the provision of telecommunications services. Kansas sources these services to the customer's place of primary use. This means that if a customer primarily uses the service in Kansas, the sale of the service takes place in Kansas and is subject to Kansas sales tax.
The Department of Revenue determined that the taxpayer's services were taxable telecommunications and ancillary services. The conferencing services conveyed voice, data, audio, and video between and among points. These were therefore telecommunications services. Because the customers primarily used the services in Kansas, the sale of the services was subject to Kansas sales tax.
In addition, the letter ruling addressed certain cloud computing services. Cloud computing services may be used to provide access to telecommunications services. Charges for these cloud computing services are subject to tax as charges for telecommunications services. Note that other cloud computing services may not be subject to tax.
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