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 © 2025 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

AEBN Publishes Report on Fetish Trends

AEBN has published a report on fetish categories from its straight and gay theaters.

Online Child Protection Hearing to Include Federal AV Bill

A House subcommittee will hold a hearing next week on a slate of bills aimed at protecting minors online, including the SCREEN Act, which would make site-based age verification of users seeking to access adult content federal law.

Industry Photographer, 'Payout' Founder Mike B Passes Away

Longtime industry photographer and publisher Michael Bartholomey, known widely as Mike B, passed away Saturday.

FSC Announces 2025 Board of Directors Election Nominees

The Free Speech Coalition (FSC) has announced the nominees for its 2025 Board of Directors election.

AdultHTML Launches Black Friday Web Design, Development Promo

AdultHTML has launched its annual Black Friday/Cyber Monday promo for web design and development, running through Dec. 5.

Canada Exempts Online Adult Content From 'CanCon' Quotas

The Canadian Radio-television and Telecommunications Commission (CRTC) has updated its broadcasting regulatory policies, exempting streaming adult content from “made in Canada” requirements that apply to other online material.

Creator Law Firm 'OnlyFirm' Launches

Entertainment attorney Alex Lonstein has officially launched OnlyFirm.com for creators.

German Court Puts Pornhub, YouPorn 'Network Ban' on Hold

The Administrative Court of Düsseldorf has temporarily blocked the State Media Authority of North Rhine-Westphalia (LfM) from forcing telecom providers to cut off access to Aylo-owned adult sites Pornhub and YouPorn.

FSC: NC Law Invalidating Model Contracts Takes Effect December 1

The Free Speech Coalition (FSC) has issued a notice that North Carolina's Prevent Exploitation of Women and Minors Act goes into effect on December 1.

NYC Adult Businesses Seek SCOTUS Appeal in Zoning Case

Attorneys representing a group of New York City adult businesses are asking the U.S. Supreme Court to hear an appeal of a lower court’s decision allowing enforcement of a 2001 zoning law aimed at forcing adult retail stores out of most parts of New York City.

Show More