Wisconsin Digital Goods Publication Updated
- Sales Tax News
- May 11, 2012 | Susan McLain
The digital good definition is “…any product that…is transferred electronically to the purchaser, other than prewritten computer software. ‘Transferred electronically’ means accessed or obtained by the purchaser by means other than tangible storage media.”
A digital good can be a version of a product that was previously available as a tangible personal property but is now transferred electronically. The publication clarifies that the term “transferred electronically” is specific to digital goods, where the term “delivered electronically” is specific to prewritten computer software.
Examples of digital goods:
- “…transmission of sound, images, or any combination thereof, such as a live radio or television broadcast…
- “…previously recorded sounds or images such as music, movies, video or electronic games…
- “…a newsletter, magazine, newspaper, or report that is transferred electronically to the purchaser.”
“Additional digital goods” were added to the publication to include:
- Greeting cards;
- Finished artwork;
- Video or electronic games; and
- Newspapers or other news or information products.
Taxability of Digital Goods
According to Section 77.52(1)(d), Wis. Stats., “A tax is imposed on all retailers at the rate of 5 percent of the sales price from the sale, lease, license, or rental of specified digital goods and additional digital goods at retail for the right to use the specified digital goods or additional digital goods on a permanent or less than permanent basis and regardless of whether the purchaser is required to make the continued payments for such right.”
Items Not Subject To the Digital Goods Tax
Wisconsin Publication 240 identifies the following goods as not taxable:
- Sheet music;
- Blank legal forms;
- Viewing a live educational seminar via webcast;
- Participating in a business seminar via webinar;
- Access to a website that allows the user to search a database that returns personal information about a person;
- Performing a data processing service with the results of the service transferred electronically to the purchaser;
- Web hosting services.
Information about bundled transactions was added to the bulletin. “A ‘bundled transaction’ is the retail sale of two or more products, not including real property and services to real property, if the products are distinct and identifiable and sold for one nonitemized price.”
A list of exemptions is also provided. More details on what comprises a digital good and how to identify a product or service as a digital good is provided in the publication. The information provided here is a rough overview of Publication 240. To read all the details, visit www.revenue.wi.gov/pubs/pb240.pdf to view the Publication.