xbiz world
xbiz premiere

States Look Into Taxing All Media Downloads

WASHINGTON – With the rapid growth of online shopping, many state legislatures and tax officials are looking into the legality of taxing downloadable digital media. The proposed tax would cover the lucrative markets of music, movies and e-book downloads. “More states are beginning to tax downloaded products,” Steve Krantz of the Council on State Taxation told CNET News. “Some are doing it through specific legislation. Others are doing it through the interpretation of previous law.” With digital music sales alone accounting for more than $1.1 billion in revenue worldwide, taxable media downloads would bolster government spending and could act as a safety net for overextended state budgets. The U.S.-based recording industry accounts for $503 million of that figure, which doesn’t include movies, video games and other digital media. The burgeoning use of broadband Internet connections, coupled with the runaway success of music download service iTunes and its competitors, makes downloadable content fertile ground for states that don’t impose such tariffs already. New Jersey Gov. John Corzine proposed that music and video downloads would be subject to tax in his new state budget, with legislation to follow in June. Kentucky also is looking into fine-tuning state ledgers to include download taxes. House Republicans defeated a measure from Wisconsin Gov. Jim Doyle last year, which proposed a tax on iTunes purchases. Fifteen states plus Washington currently levy taxes on Internet media downloads. State accountants view the tax as a natural parallel to retail purchasing, just with different venues. Since tax laws vary by state, a movement is underway called the Streamlined Sales Tax Project, which seeks to implement a uniform taxation code for its participants. A clearly defined categorization of computer software could be a major stumbling block. Some states tax media downloads because they’ve stretched the definition to include music and movies, in the sense that the file is executable and gets the computer to perform certain functions. Opponents of the legislation claim the tax code was not written to cover digital downloads and should not be grouped along with traditional software. These are the types of discrepancies the Streamlined Sales Tax Project seeks to avoid. The 1992 case, Quill vs. North Dakota, in which the U.S. Supreme Court established a proprietary rule called “nexus,” states companies are immune to taxes if they have no established business presence there. This could make things sticky for e-tailers who don’t offer tangible goods.

Copyright © 2026 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

Ukrainian Legislators Revive Porn Decriminalization Push

The Verkhovna Rada, Ukraine’s parliament, is once again considering a bill that would decriminalize the creation and distribution of pornography in that country — an activity that currently carries a prison sentence of three to five years.

Ofcom Fines XGroovy $986,000 for AV Noncompliance

U.K. media regulator Ofcom on Thursday imposed a fine of 700,000 pounds (about $986,000) against adult website XGroovy for failing to comply with provisions of the Online Safety Act.

Segpay Opens New Global Headquarters in Boca Raton

Segpay has selected Boca Raton for its new global headquarters.

X3 Euro All-Stars Paint Amsterdam Red in Billboard Campaign

The X3 Expo Euro All-Stars are making a splash on the vibrant streets of Amsterdam as the creator-first fan event prepares to make its debut on the continent.

Tiny Secret Games Taps Pauline Schmiechen for Growth and Partnerships Advisor

Adult game studio Tiny Secret Games has named Pauline Schmiechen as its new growth and partnerships advisor.

BranditScan Names Aerie Saunders as Community Manager

BranditScan has named Aerie Saunders as its new community manager.

'Goddess' Charlotte Sins Blesses the September Issue of X3 Magazine

Charlotte Sins graces the cover of the September issue of X3 magazine, the premier publication capturing the real personalities, passions, and stories behind top stars.

Centrobill Names Len Garcia as Chief Sales Officer

Centrobill has named Len Garcia as its new chief sales officer.

Mistrezz.AI Joins ASACP as Corporate Sponsor

The UK-based adult AI companion platform Mistrezz.AI has signed on as the latest corporate sponsor for Association of Sites Advocating Child Protection (ASACP).

Woodhull Freedom Foundation Debunks Pornography Myths in Latest Edition of 'Fact Checked' Series

Woodhull Freedom Foundation is hosting the latest edition of its virtual series “Fact Checked by Woodhull,” addressing myths about pornography.

Show More