Sales Tax on Digital Products
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.
This page contains information on the project including status reports, research and analysis, state information,
and links to Streamlined Sales Tax resources.
Those interested in the project can follow the process on this web page and can also contact Helen Hecht, MTC Uniformity Counsel.
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.
Meeting Notice and Agenda
Tuesday, March 28, 2023 – 2:00 p.m. Eastern
I. Welcome and Introductions
II. Initial public comment
III. Digital products in the marketplace – Discussion with Avalara representatives Scott Peterson, David Lingerfelt, and Toby Barger
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Notes, Drafts, and Other Information
- Review of Changes to the Detailed White Paper Outline – March 3, 2023
- Review of Notes from February 2, 2003 Meeting
- MTC staff activities since Jan. 5, 2023 meeting (PowerPoint)
- White Paper Outline as of February 2, 2023 (Word Version)
- Notes from Jan. 5, 2023 meeting
- White Paper Outline for the January 5, 2023 Meeting (Word Version)
- Notes from Meeting of December 27, 2022
- White Paper Outline for the December 8, 2022 Meeting
- Notes from the December 8, 2022
- White Paper Outline as of October 17, 2022 (Word Version)
- Notes from Meeting of September 22, 2022
- Draft Detailed Outline of White Paper – September 1, 2022 (Word Version)
- Draft of Detailed Outline of White Paper – August 2, 2022
- Status Report to the Uniformity Committee – August 2022
- Status Report to Uniformity Committee – April 2022
- Status Report to Uniformity Committee – November 2021
- Letter from Eversheds Sutherland – Jan. 3, 2023
- Letter from Eversheds Sutherland – Sept. 21, 2022 to the Work Group at its initial meeting.
- Comments of the ABA – Issues to Address Regarding the Taxation of Digital Products – Nov. 2, 2021
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.
- Washington Presentation 2021 (PowerPoint Slides)
- Washington Presentation on Sales Taxes on Digital Products 2021 (Video)
Recommendation by the Standing Subcommittee to the Uniformity Committee that the committee begin a project.
- Final Recommendation – Project on Sales Taxation of Digital Products – as Approved June 17, 2021
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
- New Jersey Digital Economy Study – 2023
- Report to the Mississippi Legislature on Taxation of Software Products and Services – 2022
Selected State Tax Agency Information – Tax Imposition Related to Digital Products Generally
- Arizona – PLR 21-003 – Data on an Electronic Spreadsheet is Tangible Personal Property and H. 2204 on Virtual Currency and NFTs
- Arkansas – Candy, Soft Drinks, and Digital Products
- California – Graphic Design, Printing, and Publishing (with info on when digital items are taxed)
- Colorado – Definition of “tangible personal property” inclusive of digital goods
- Connecticut – Sales and Use Taxes on Digital Goods and Canned or Prewritten Software
- District of Columbia – Digital Goods Sales Taxability Chart
- Florida – Communications Services Tax
- Idaho – Idaho Sales & Use Tax Administrative Rules
- Indiana – Application of Sales Tax to the Sale, Lease, or Use of Computer Hardware, Computer Software, and Digital Goods
- Iowa – Taxation of Specified Digital Products, Software, and Related Services and Notice of Intended Action
- Kentucky – Imposition of Sales Tax
- Louisiana – Definition of Tangible Personal Property
- Maine – Instructional Bulletin No. 56 – Telecommunications
- Maryland – Business Tax Tip #29 Sales of Digital Products and Digital Codes
- Minnesota – Computer Software and Digital Products
- Missouri – Letter Ruling – Digital Copies of Medical Records Sent Electronically are not subject to Sales Tax
- Nebraska – Revenue Ruling – Retail Sales of Digital Media
- New Jersey – Specified Digital Products & New Jersey Sales Tax and TAM on Convertible Virtual Currency
- North Carolina – Certain Digital Property
- Ohio – Sales and Use Tax – Digital Products
- Pennsylvania – Tax on Digital Products
- Tennessee – SUT-65 – Specified Digital Products
- Washington – Digital Entertainment and Digital Products and Interim Statement on NFTs
- Wisconsin – General Information on Digital Goods
Streamlined Sales Tax Information
- Streamlined Sales and Use Tax Agreement – May 20, 2021
- Streamlined Rules and Procedures for States – October 5, 2021
- Streamlined Taxability Matrix – Access to Streamlined State Responses to What Taxes are Imposed on Specified Digital Goods
Related Federal Information
- Digital Goods and Services Tax Fairness Act – 2019 (S 765)