On July 3, 2025, the Colorado Court of Appeals held that sales of streaming video service subscriptions are subject to sales tax because they are sales of tangible personal property. Colorado imposes sales tax on retail sales and purchases of “tangible personal property,” which is defined as “corporeal personal property.” In 2021, the Department of Revenue promulgated an administrative rule that “provide[d] clarification” on the term’s definition and added examples indicating sales tax is due on the purchases of downloaded and streamed movies, as well as monthly streaming video service subscriptions. The legislature subsequently amended the sales tax statute to “clarify” that digital goods (e.g., video, music, or electronic books) are taxable as tangible personal property, regardless of the “method of delivery.” A streaming video service provider paid sales tax across these periods and requested refunds. It argued that: (1) the rule conflicted with the underlying sales tax statute; and (2) both the rule and statute violated the Colorado Taxpayer’s Bill of Rights, which prohibits the implementation of new taxes or tax policy changes without voter approval.
The appellate court agreed with the Department of Revenue that for an item to be corporeal, it “can be perceived by any of the senses – not exclusively the sense of touch.” (Emphasis added.) Additionally, the court found that the term “incorporeal property” addresses “abstract rights that have no real existence perceptible to the senses, even if the possession of such rights can be represented in a physical form,” such as book accounts, stocks, bonds, mortgages, notes, and other evidences of debt. As a streaming video subscription provides images and sounds that physically exist and are perceived by the user, the court found it to be corporeal tangible personal property and thus subject to sales tax.