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Louisiana: Video on Demand and Pay per View Services Are Exempt

  • Jan 2, 2015 | Gail Cole

 Taxable or not?

The Louisiana 5th Court of Appeals has ruled that Video on Demand (VOD) and Pay per View (PPV) services provided by Cox Communications in Jefferson Parish are not subject to local sales tax. This ruling relieves Cox of a sales tax assessment of close to $700,000 (including interest) for the audit period January 1, 2005 through December 31, 2009.

In Jefferson Parish, Louisiana, local sales tax is imposed on the sale, lease and rental of tangible personal property and on the “sales of services.” In order for VOD and PPV programming to be exempt from local sales tax, it must be defined as something other than taxable tangible personal property or services.

Not tangible personal property

According to Cox Communications, VOD and PPV are exempt services and not taxable tangible personal property because:

  • “[C]ustomers do not receive a license or any rights to the VOD and PPV programming, except the right to view for a limited period of time.”
  • “[T]ransmitting data electronically does not transform it into computer software.”
  • “VOD and PPV programming are transmitted in the same manner as other digital cable services sold by Cox, which are not computer software or otherwise taxable.”

The Assistant Vice President of Tax for Cox testified that Cox does not pay sales tax on VOD and PPV programming in any of the 800 jurisdictions where it conducts business, including many areas in Louisiana. Furthermore, he said that “the Louisiana Department of Revenue has never assessed sales tax on Cox’s VOD and PPV programming.”

Taking into consideration this and other arguments, the Court of Appeals determined that VOD and PPV are not taxable tangible personal property.

Exempt regular cable services

Under Louisiana law, “sales and use taxes imposed by the state or by any political subdivision thereof shall not apply to necessary fees incurred in connection with the installation and service of cable television. Such exemption shall not apply to purchases made by any cable television system, but shall only apply to funds collected from the subscriber for regular service, installation and repairs.”

The Court of Appeals found that the “VOD and PPV programming are offered to all customers as part of Cox’s regular cable services” and are therefore exempt as regular cable services. Read the full opinion for additional information.

The taxation of digital goods and services, such as the VOD and PPV programming in the above example, is very much in dispute throughout the United States. Automated sales tax service as a software (SaaS) helps businesses remain sales tax compliant in the face of evolving tax laws. Learn more.

photo credit: marcoderksen via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.