Washington – Taxability of Online Dating Services

SALT Report 2980 – The Washington Department of Appeals issued a decision regarding a Taxpayer who operates a website that provides dating advice and allows its members to enter personal information and upload photographs for other members to view.  At issue in this case is a letter ruling that the Taxpayer received from the Department of Revenue. In that ruling, the Taxpayer identified itself as a “membership based dating website” and requested guidance as to how it should report its prepaid membership fees.

The Department responded that because the Taxpayer was a self-described dating service it should be collecting retail sales tax on its membership subscription income as required by RCW 82.04.050(3)(g).  In addition, the Taxpayer was advised that it should report retailing B&O tax rather than the service and other activities B&O tax on its returns.

The Taxpayer disagreed with the Department’s ruling because it believes that it is not offering personal dating services.  The Taxpayer claims that its website simply allows members to upload their profiles and photos for other members to view.  And, in some cases the Taxpayer will facilitate an introduction, if the two parties are mutually agreed.

Upon review of the case, the Appeals Judge stated that although the term “dating service” is not defined by statute; its usual and ordinary meaning can be found in most dictionaries. In this case, the Judge stated that the common definition of a dating service is, “an organization that arranges introductions, for a fee, for strangers seeking romantic partners or friends.”

Based on that definition the Judge stated that dating services clearly include businesses who provide matchmaking services and those that make videotape, photographs, biographical data, member profiles, or other materials from which clients can match themselves to other clients.

Additionally, the Judge stated that it does not matter that the Taxpayer “does not actually match people.” The Taxpayer qualifies as a dating service because it provides its members with the means for “matching.”  Furthermore, even though the Internet has expanded the methods used to provide dating services it does not mean that the 1993 amendment, which added dating services to the definition of “retail sale”, does not apply to new dating service methods.   Specifically, the Judge stated that there is no language in the definition of a “retail sale” that would exclude Internet dating services from retail sales tax and retailing B&O tax.

Based on the facts presented, the Appeals Judge ruled that the gross income received from the Taxpayer’s dating services is subject to retail sales tax and retailing B&O tax.

For Further Information

Washington Department of Revenue – Tax Determination No. 11-0099


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