Sales Tax on Digital Products


Description of Project

At its July 28, 2021 meeting, the Uniformity Committee considered a recommendation from the Standing Subcommittee to begin drafting the outline of a white paper on state sales taxation of digital products. The committee agreed that MTC staff would begin the process by drafting a detailed outline of the issues to be included in that white paper and conducting research and stakeholder interviews. At the August 2, 2022 meeting of the Uniformity Committee, the committee reviewed the proposed draft outline and agreed that a project work group should be formed to provide ongoing input and review of the white paper, as it is developed. Those interested in the project can follow the process on this web page and can also contact Helen Hecht, MTC Uniformity Counsel. 


This page contains information on the project including status reports, research and analysis, state information,
and links to Streamlined Sales Tax resources. See below.

MEETING INFORMATION

NOTE: We have scheduled a first meeting of the work group to cover background information and take public input. We are also still seeking state volunteers for the project. Future monthly meetings will then be scheduled.

Initial Meeting

Agenda
  1. Welcome and introductions
  2. Initial public comment
  3. Review of notes from the prior meeting - additions or changes - see here
  4. Review of changes to the detailed white paper outline
  5. Solicitation of public input 
  6. Discussion and next steps
  7. Adjourn
Dial-In /Log-In Information

Log in from your computer, tablet, or smartphone-
https://meet.goto.com/977145317
Dial in using your phone-
United States: +1 (646) 749-3122
Access Code: 977-145-317

Telephone participants will be muted if their line causes interference with the call; to un-mute your line, please press *6. 
If you experience any kind of difficulty participating in the meeting, please contact events@mtc.gov.

  

MEETING-RELATED INFORMATION

Written Comments

 


BACKGROUND INFORMATION

Project Proposal and Recommendation


Presentation by the State of Washington Department of Revenue to the Uniformity Committee at its April 2021 meeting recommending that the committee consider a project to modernize state sales and use tax systems to include digital products. ​
Recommendation by the Standing Subcommittee to the Uniformity Committee that the committee begin a project. 

Project Information

 

Resources

Research & Analysis

Article by Natalia Garrett and Grant Nülle, "Digital Goods and Services: How States Define, Tax, and Exempt These Items,"  Tax Analysts, Tax Notes State, May 18, 2020. 

Slides of Natalia Garrett - Digital Goods: How States Define, Tax and/or Exempt
Louisiana Research - Digital Products (2021) - State Chart and State Breakdown 

National Tax Association Paper (Hecht - 2014) - Sourcing of Digital Goods and Services for Sales Tax - The Evolution of a Federal Legislative Proposal 

Report to the MTC Uniformity Committee (Hamer - 2019) - Sourcing Digital Goods and Services

Avalara - State-by-state guide to the taxability of digital products - Gail Cole, Dec. 4, 2020

Presentation to the Arizona State Legislature - Ad Hoc Joint Committee on the Tax Treatment of Digital Goods and Services - Tax Treatment of Digital Goods and Services: Overview and Cross-State Comparison - 2017

Center on Budget Policy and Priorities (Mazerov - 2012) - States Should Embrace 21st Century Economy by Extending Sales Taxes to Digital Goods and Services

New York City Independent Budget Office - Fiscal Brief (2015) - To Tax or Not To Tax the New Economy: Digital Goods and Sales Tax in New York

SSTP: Out of the Great Swamp, But Whither? A Plea to Rationalize the State Sales Tax - Charles E. McLure (2002)

"Sales Taxation of Electronic Commerce: What John Due Knew All Along," Charles E. McLure and Walter A. Hellerstein, Proceedings Annual Conf. on Taxation of the Nat'l Tax Assoc., Vol 93 (2000), pp 216-222. 

"Digital Taxation Around the World," Daniel Bunn, Elke Asen, Cristina and Enache, Tax Foundation (2020). 

"The Current State of Sales Tax on Digital Products," Joyce Beebe, Ph.D., Rice University's Baker Institute for Public Policy, Aug. 7, 2019. 

Presentation on the Taxation of Digital Products - SEATA - 2020 - Steven Kranz, Douglas, Lindholm, Nancy Prosser

"A Global Perspective on U.S. State Sales Tax Systems as a Revenue Source: Inefficient, Ineffective, and Obsolete." by Karl Frieden and Douglas Lindholm, Council On State Taxation, November, 2021

 

Selected State Tax Agency Information - Tax Imposition Related to Digital Products Generally  

Written Comments Submitted

Note that the project is soliciting both oral and written comments from states and stakeholders in the development of the detailed outline of a white paper on the subject. Written comments can be submitted to Helen Hecht, Uniformity Counsel, at hhecht@mtc.gov. 

 

Streamlined Sales Tax Information


 

Related Federal Information