- States are looking for ways to expand sales tax revenue due to the recession and budget shortfalls.
- Subscription streaming services are being targeted for new taxes and attempts to expand existing taxes.
- Most U.S. states currently tax digital products, but there are 16 states that do not.
- Subscription streaming services are different from downloaded digital products, as users gain access to an evolving library of content.
- 21 states do not currently tax subscription streaming services.
- West Virginia and Utah have interpreted existing laws to tax streaming services.
- Utah argued that a subscription streaming provider’s bundled transaction, including downloads, should be fully taxable.
- The provider was unable to prove that the download component was “de-minimus” or offered free of charge.
- If the opinion stands, Utah will have effectively imposed sales tax on streaming service providers without passing any legislation.
- Providers of digital streaming must be vigilant for new taxes or expanded taxes in the future.
Source: sovos.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.
