Taxation of Video Programming Streamed Over the Internet
Friday, April 13th, 2012
Technology is evolving faster than sales tax laws. This creates potential for uncertainty in many areas, including whether charges paid to stream video programming over the Internet are subject to tax. States that specifically address whether video programming streamed over the Internet are few, and answering whether charges for video streaming are subject to sales tax in any given state can be tricky.
Typically, states impose sales tax on all sales of tangible personal property, but they tax only those services specifically identified as taxable. Accordingly, the first question is whether video streaming is considered a transfer of tangible personal property or the provision of a service. If the state considers video streaming to be a transfer of tangible personal property, then it will be taxable unless a specific exemption applies. For example, Arizona takes an expansive view of what constitutes tangible personal property and, therefore, taxes charges to stream video programming over the Internet in the same way it taxes rentals of tangible personal property. Nevertheless, Arizona's position is a minority view, as most states do not consider electronic transfers of video to be transfers of tangible personal property.
On the other hand, if the state considers video streaming to be a service, it will generally only be taxable if the state specifically taxes a service that encompasses video programming streamed over the Internet. For example, Texas taxes both cable television services and amusement services, and the definitions of both of those services are broad enough to include video programming streamed over the Internet.
There is yet another possibility: several states--mostly members of the Streamlined Sales and Use Tax Agreement (SSUTA)--specifically tax electronically transferred digital products. Because video streaming fits within the standard SSUTA definition of a digital audio visual work, which, in turn, fits within the definition of a specified digital product, SSUTA states that address specified digital products offer a clearer answer to whether they tax video programming streamed over the Internet.
The lawyers and legal researchers at TTR have analyzed the taxability of video programming streamed over the Internet in each state. TTR is pleased to announce that our subscribers now have access to this additional content.
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