DC Advises on Taxing Sales of Digital Goods

The District of Columbia breaks down “digital goods” into product types using a chart and indicates whether sales tax applies to the sale of those “digital goods” . The IRS Notice also explains the recent emergency bill that added digital goods to the list of taxable items, effective January 1, 2019.

Digital Goods Tax Chart

The chart lists digital products are subject to sales tax:

– Applications

– Canned software

– Prepackaged software

– Digital news and periodicals

– Digital books

– Digital audio books

– Digital music downloads and streaming

– Digital video downloads

– Streaming video services

The chart includes the statute or regulation under which the product is taxed.

Digital Goods Includes Streaming Services

The emergency statute defines digital goods in categories:

– Digital audiovisual works

– Digital audio works

– Digital books

– Digital code

– Digital applications and games

Streaming services are digital goods subject to sales tax. Sales of video streaming services are no longer subject to video gross receipts tax

OTR Notice 2019-01, District of Columbia Office of Tax and Revenue, January 2, 2019, ¶200-775

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