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

Lawsuit Alleging Meta Pirated VMG Content Will Move Forward

A U.S. district court on Thursday rejected Facebook parent company Meta’s motion to dismiss a suit by Vixen Media Group owner Strike 3 Holdings, which accuses Meta of pirating VMG content to train its artificial intelligence models.

Playboy Partners With Creator Platform Tango

Playboy has partnered with creator platform Tango, introducing Playmates to the livestreaming service.

Anti-Porn Senator Introduces Federal Age Verification Bill

U.S. Senator Jim Banks of Indiana, who last month urged the Department of Justice to ramp up obscenity prosecutions, on Wednesday introduced a bill that would make age verification by adult websites federal law.

AEBN Publishes Popular Searches by Country for April, May

AEBN has released the list of popular searches from its straight and gay theaters, by country, for April and May.

Ondato Joins Pineapple Support as Sponsor

Age and identity verification company Ondato has joined the ranks of over 70 adult businesses and organizations committing funds and resources to Pineapple Support.

2026 XBIZ Amsterdam Website Now Live, Registration Opens

XBIZ is pleased to announce that the website for its annual European conference, XBIZ Amsterdam, is now live.

MyMember.site Integrates FSC's 'PrivateAV' Age Verification Solution

MyMember.site has integrated Free Speech Coalition's PrivateAV age verification tool into its website-building platform.

Pearl Industry Network Opens Beta for Creator Networking App

Industry trade group Pearl Industry Network (PiN) has launched beta testing for the PiN Member App, a networking and collaboration tool for content creators.

FSC: W.V. Age Verification Law Takes Effect June 12

The Free Speech Coalition has issued a reminder notice that West Virginia's age verification law takes effect on June 12, 2026.

Pineapple Support Taps Brad Mitchell, Jean-Micheal Veen for Senior Leadership Positions

Pineapple Support has named Brad Mitchell as its new board president and Jean-Micheal Veen as technology and development chair.

Show More