U.S. Digital Goods and Services Bill Passes House Committee
- Sales Tax News
- Jul 2, 2012 | Will Frei
The U.S. House Judiciary Committee approved the Digital Goods and Services Tax Fairness Act of 2011 (HR 1860), a bill that regulates state and local authority to tax digital goods and services.
Contents of The Bill
The bill's stated purpose is "[t]o promote neutrality, simplicity, and fairness in the taxation of digital goods and services." To that end, it prohibits states and local jurisdictions from imposing ". . . multiple or discriminatory taxes on or with respect to the sale or use of digital goods or digital services."
A Multiple Tax refers to a tax imposed on digital goods or services that does not "give credit" to previously paid taxes. Multiple taxes, therefore, charge more than one tax on the same good or service.
Discriminatory Tax refers to a tax imposed differently on digital goods and services than on tangible personal property or similar non-electronic services. This includes taxing digital goods and services:
- at a higher rate;
- by incorporating a broader tax base;
- under terms ". . . disadvantageous to those applied in taxing the sale . . .;"
- or with respect to ". . . any separately stated amount . . . related to electronically delivering or transferring . . ." a good or service.
Prohibiting discriminatory taxes essentially mandates that states tax digital goods and services the same way they tax tangible personal property and non-electronic services.
Early reactions to the Digital Goods and Services Tax Fairness Act.