Louisiana Exempts Video on Demand and Pay-Per-View Cable Services

Wednesday, January 7th, 2015

A cable tv remote.

The Fifth Circuit Court of Appeals of Louisiana affirmed that video on demand (VOD) and pay-per-view (PPV) programming are exempt.

The taxpayer was a cable provider that sold basic cable services, premium channels, VOD, and PPV. The Parish of Jefferson assessed the taxpayer for sales tax on its VOD and PPV services. The taxpayer appealed, and the trial court ruled that VOD and PPV were exempt cable services. The parish appealed, but the appeals court upheld the trial court's findings.

In Louisiana, local parishes may impose tax on sales of tangible personal property and certain services. "Tangible personal property" is personal property which is in any manner perceptible to the senses. Computer software is tangible personal property. However, Louisiana exempts fees for "regular" cable services provided to consumers. "Regular" services are any services necessary in connection with the installation and service of cable television. These services include providing channels offered to the public on a regular basis.

VOD and PPV services are exempt regular cable services and not taxable tangible personal property. VOD and PPV cannot be perceived by the senses and are not stored on tangible media by the customer, so they are not tangible personal property. They also do not qualify as computer software because the videos are merely streams of data that must be interpreted by software or firmware. VOD and PPV qualify as services, which are ordinarily taxable in Louisiana. However, VOD and PPV qualify for the cable services exemption. These services are channels offered to the public on a regular basis, so they are exempt regular cable services.


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