- Illinois issued a letter ruling on the taxability of subscription-based health and fitness software and apps
- A foreign company requested the ruling for their services including coaching, workouts, meal plans, and tracking tools
- The software and content are accessed either via a web portal or a free downloadable app, with servers located outside Illinois
- The company charges for subscriptions but not for the app download
- Illinois law considers Information Services or Software as a Service accessed from out-of-state servers as non-taxable
- The state’s analysis determined that subscription fees and personal training fees are not subject to Retailers’ Occupation Tax
- However, the free app download is considered a taxable provision of computer software unless it qualifies as a non-taxable license
- The taxpayer did not prove the app download was a non-taxable license, but no use tax was due on the free downloads from an out-of-state source
Source: salestaxinstitute.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
