Digital Economy

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On September 3, 2021, the United States District Court for the District of Nevada held that streaming video providers were not subject to Nevada localities’ franchise fees. The city of Reno filed a class action lawsuit against two streaming video providers, claiming that they were required to register as video service providers (i.e., obtain a…

On September 10, 2021, the California Department of Tax and Fee Administration (the CDTFA) proposed amendments to the CDTFA’s regulations governing drop shipments, in an effort to clarify that marketplace sales are not drop shipments. In October 2019, the California Marketplace Facilitator Act became effective, making marketplace facilitators the seller and retailer for sales facilitated…

On September 2, 2021, the Colorado Department of Revenue issued private letter ruling PLR 21-005 concluding that subscription fees for an online learning platform are subject to sales tax. The taxpayer operates an online learning platform offering on-demand digital courses comprised of streaming video lessons covering academic subjects and vocational license preparation courses. Each subscription…

The New York Department of Taxation and Finance recently published advisory opinion TSB-A-20(66)S regarding the taxability of photographs provided to purchasers either digitally or through a tangible medium for less than permanent use. The Department held that the electronic transfer of photographs is not taxable in New York because a digital photograph is not considered…

The Washington Department of Revenue recently released informal guidance regarding the taxability of online instructional classes. The guidance states that live classes where participants can interact in real-time with the presenter are not subject to sales tax; however, pre-recorded videos and classes are subject to sales tax. This distinction focuses on the live ability to…

On August 31, 2021, the Maryland Comptroller filed proposed regulations on the controversial digital advertising gross revenues tax (the DAT) with the Joint Committee on Administrative, Executive, and Legislative Review. Of primary interest to potential DAT taxpayers, and described in this Legal Alert, the regulations adopt a device-based apportionment fraction. The comment period for the…

Apple recently appealed an Ohio Commercial Activity Tax (CAT) assessment, alleging that the Department of Taxation improperly treated receipts from sales made through its app store as Apple’s receipts for purposes of determining its tax base under the CAT.  Ohio law allows agents to exclude gross receipts (other than commission) from the agent’s CAT base.…

Effective August 6, 2021, Illinois amended its unclaimed property law to include cryptocurrency. SB 338, Public Act 102-0288, was approved by the Governor and became law the same day. Under the unclaimed property law, “virtual currency” is presumed unclaimed after 5 years of no indication of interest by the apparent property owner. The new…

On August 10, 2021, the Hawaii Department of Taxation issued Tax Information Release No. 2021-06, clarifying the treatment and taxability of software sales under Hawaii’s general excise tax (GET). According to the Information Release, the sale of prewritten software is considered the sale of taxable tangible personal property regardless of whether the software is…

In Revenue Ruling 2021-001, the Alabama Department of Revenue ruled that IT services provided by a foreign company with no physical presence in Alabama are not subject to sales tax. The foreign company provided an information technology system remotely to an Alabama production plant. Although the company provided these services remotely, it would also…