Missouri Doesn’t Tax Sales of Streaming Video Content
- Jan 13, 2014 | Gail Cole
When I was young, my family and I watched movies on television. Together we giggled over Peter Sellers as The Pink Panther and were thrilled by the adventures of James Bond. We sang along to The Sound of Music and were amused by the escapades of Herbie the Love Bug. Trips to the movie theater were rare; we took what television programmers gave us.
Until the day the VCR arrived. After the agony of the initial installation, home movie-watching was never quite the same again.
Now, of course, VCRs are obsolete and DVDs seem destined to a similar fate. Blockbuster Video Rental Stores are officially closed, the last doors locking this past weekend. It’s getting harder and harder to find locally owned video/DVD rental stores. Instead of renting videos and DVDs, more and more people now stream content over the internet.
Should streamed movies be subject to sales tax? Not in Missouri Department of Revenue.
Missouri law imposes a sales tax on “all sellers for the privilege of engaging in the business of selling tangible personal property or rendering taxable service at retail.” It also imposes a use tax “for the privilege of storing, using or consuming within this state any article of tangible personal property.” Last year, a Missouri lawmaker suggested imposing a 1% sales and use tax on violent video games, but the motion hasn't caught on.
Not a sale of tangible personal property
However, as explained by the letter ruling, “Under current regulations, the sale of the original program delivered over the internet is not the sale of tangible personal property. Therefore, the sale of digital content for use with the original program that is delivered over the internet is not subject to sales tax.”
Letter rulings are instrumental but they should not be used to guide tax policy. The Missouri Department of Revenue reminds that letter rulings are binding only with respect to the Applicant, and only for three years from the date of the letter. Statutory changes may impact a ruling, rendering it obsolete.
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