Comments on: Fix the Tax Code Friday: Taxing iTunes and Digital Music

By: British Qualifications2 » Blog Archive » Tax Law and Puppets…? Stop the iPod Tax.

Tue, 29 Jul 2008 23:53:23 +0000

[...] more about iPods and taxes… from a Canadian perspective… also from a puppet. Funky format to be sure. But really [...]

By: Tax Law and Puppets…? Stop the iPod Tax.

Tax Law and Puppets…? Stop the iPod Tax. — Tue, 29 Jul 2008 22:19:04 +0000

[...] more about iPods and taxes… from a Canadian perspective… also from a puppet. Funky format to be sure. But really [...]

By: Use Tax on iTunes? It Doesn’t Make Sense.

Use Tax on iTunes? It Doesn’t Make Sense. — Mon, 14 Jul 2008 18:08:21 +0000

[...] Tax Geek asked me whether I pay Use Tax on my iTunes purchases (you can answer him, too, by voting in our poll in the sidebar). I do not. I started to reply in [...]

By: Kelly

Kelly — Sun, 13 Jul 2008 14:07:38 +0000

Another Tax Geek,
See my separate post as a reply.

By: Bruce

Bruce — Sat, 12 Jul 2008 13:53:27 +0000

This of course has been long debated and the debate continues in the halls of state legistlatures and the U.S. Congress. I suspect that someday the debate will end with the sales/use tax being assessed as it appears is happening in some states. In California, where I practice, there are provisions in the sales and use tax code that exempt products delivered via electronic means from sales and use tax as they are not considered “tangible personal property”. I have clients in the creative arts (photography, graphic design) who never actually produce a physical version of their end product, but deliver it via email or FTP. One problem that is often overlooked, however, is that should you provide a copy on a CD or DVD, you now have “tangible personal property” and the full purchase price is subject to sales or use tax.

So, using the same logic (and I haven’t actually tested this with the State Board of Equalization), it seems that music downloaded from iTunes falls under the exemption for goods delivered electronically.

As to your question about whether or not it should be taxed – I’d have to agree with Another Tax Geek and say that the exemption California allows could stand some scrutiny, at least in the name of fairness among consumers.

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Sat, 12 Jul 2008 09:27:34 +0000

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Sat, 12 Jul 2008 09:25:06 +0000

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By: Another Tax Geek, CPA

Another Tax Geek, CPA — Sat, 12 Jul 2008 03:22:27 +0000

I don’t see why they shouldn’t be taxed. If you bought them in a store, it would subject to sales tax. I’m amazed at how people think that something isn’t subject to sales tax just because they buy it online.

But, Apple collects sales tax for my state.

I assume that as a tax attorney, you do in fact pay use tax on the purchases.

By: Sharon

Sharon — Fri, 11 Jul 2008 16:24:38 +0000

I could have written this article! I stopped buying music from iTunes when they started slapping 9.75% TN sales tax on my purchase. Used to be the shipping/handling charge on internet purchases worked out to the same as, or less than sales tax, and made buying online a good option. Not so anymore, alas.

By: Jane Cowles

Jane Cowles — Fri, 11 Jul 2008 13:20:52 +0000

I am a fan of itunes as well. they are convenient, save money and are environmentally friendly. with itunes, you avoid the extra cost of packaging, printing and wrapping.
I do not feel that itunes should be taxed. when you think about it itunes are more like a service than a product.
As a policy matter, itunes should not be taxed. itunes use less products and create less waste (plastic wrappers). this is good for the environment.