Online training platform was primarily educational & exempt from tax in Texas

If your firm provides employees with training directly through an online platform affiliated with a college or university, the fee for accessing the platform isn’t subject to sales tax in the Lone Star State.

That’s according to a recent private letter ruling from the Texas Comptroller of Public Accounts. In Private Letter Ruling No. 20210419122306, a healthcare company wanted to know if the purchase of a cloud-based online platform to provide nursing students and other healthcare pros with continuing education courses that involve various clinical care simulations was taxable.

The comptroller said the service wasn’t subject to sales tax. Reason: It was a tax-exempt educational service under the law. Purchasing the platform didn’t just count as a sale of information. Through the platform, students received feedback on their performance and were evaluated based on how well they did, key features of an educational service.

In addition, although certain elements of the platform involved data processing (e.g., compiling students’ responses, automatically generating scores, and sending all that info to professors for feedback) that could be taxable, its overall purpose was to provide instruction and evaluation to participating students – meaning the software ultimately counted as an educational service exempt from sales tax.