SALT LAKE CITY — A bill that would tax adult websites and make them liable if minors circumvent geolocation has passed the Utah state legislature and will soon head to the office of Gov. Spencer Cox for signature or veto.
In addition to updating investigation and enforcement rules for age verification in Utah, SB 73 would impose an excise tax of 2% on adult sites operating in the state. The new tax would apply to transactions for “access to digital images, digital audio-visual works, digital audio works, digital books, or gaming services,” including streaming or subscription access to those works and services.
Industry attorneys have cited a number of potential legal hurdles such a tax might face. However, Alabama passed a similar 10% tax, while legislators in Virginia and Pennsylvania have floated the idea of doing the same.
Revenue from the proposed new tax in Utah would be directed to a state account for funding “(a) mental health treatment programs for minors affected by material harmful to minors; (b) educational programs for parents, guardians, educators, and minors on the mental health risks associated with material harmful to minors; (c) early prevention and intervention programs for minors at risk of mental health harm from material harmful to minors; and (d) research and public awareness campaigns addressing mental health harm to minors caused by material harmful to minors.”
VPN Requirements
The legislation also includes a provision stating: “An individual is considered to be accessing the website from this state if the individual is actually located in the state, regardless of whether the individual is using a virtual private network, proxy server, or other means to disguise or misrepresent the individual’s geographic location to make it appear that the individual is accessing a website from a location outside this state.”
As XBIZ reported in December, the state of Indiana is suing Aylo, alleging that the company and its affiliates have violated the state’s AV law by failing to prevent access by users using virtual private networks to avoid geolocation. The new VPN language in SB 73 could similarly expand enforcement of Utah’s age verification law, which went into effect in January 2023.
If Cox signs SB 73 into law, the bill's VPN provisions will take effect May 6. The new tax provisions will take effect Oct. 1.