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

Segpay Partners With Corey Silverstein for Legal Services

Segpay has partnered with adult industry attorney Corey D. Silverstein for specialized legal compliance and policy support for its merchant network.

AEBN Reveals Kasey Kei as Top Trans Star for Q2 of 2026

AEBN has named its top trans stars for the second quarter of 2026, with Kasey Kei landing atop the leaderboard.

Missouri Governor Signs Bill Making AV Regulations State Law

Missouri Governor Mike Kehoe signed a bill into law on Thursday requiring adult websites to age-verify users in the state, finalizing a legislative “stamp of approval” for AV rules after Missouri’s attorney general unilaterally imposed similar regulations last year.

Utherverse Launches 'Adult Game Fest' Virtual Convention

Virtual reality and metaverse technology company Utherverse is launching its inaugural Adult Game Fest convention and trade show, taking place Sept. 24-26.

Ofcom Fines Fapello $845,000 for AV Noncompliance

U.K. media regulator Ofcom on Thursday imposed a fine of 630,000 pounds (about $845,000) against adult website fapello.com for failing to comply with provisions of the Online Safety Act.

KiwiSourcing Joins Pineapple Support as Sponsor

Outsourcing and consulting firm KiwiSourcing has joined the ranks of over 70 adult businesses and organizations committing funds and resources to Pineapple Support.

AdultHTML Introduces AI-First Development Services

AdultHTML has introduced an AI-first development service, giving clients access to experienced software developers who use AI to streamline software development.

Texas Court Orders Adult Site Domain Locked for AV Violations

A district court in Texas has issued a writ requiring domain registry Verisign to “lock” an adult website’s domain over noncompliance with the state’s age verification law.

Adult Web Hosting Service 'QloudHost' Launches

QloudHost, a new web hosting service for adult websites, has launched.

Peter Hooke Launches New Paysite

Peter Hooke has launched an official website through PAYSITE.

Show More