Itunes Tax Essay

338 Words2 Pages
Are You Paying the iTunes tax? On top of the 25 states that charge a sales tax on digital goods or services, more states are starting to charge taxes on iTunes. These digital goods or services may consist of cell phone apps, music, videos, e-books, ringtones, and even streaming television shows. Many states are starting to find ways to tax these digital goods by enacting sales tax laws that specifically target these products. Because so many consumers are choosing digital downloading over physical purchases, the value on sales tax revenue is decreasing in most states. In 2012, e-book sales rose 44% while digital music sales rose 9.1%. The increase in digital sales and the decrease in sales tax revenue is becoming a bigger problem causing more states to consider the use of this tax. Applying this tax varies by state. For example, some states tax downloaded music and videos, but does not tax when consumers stream. Another reason more states are considering this tax is because of the “Marketplace Fairness Act” that federal lawmakers are considering. Online retailers are only required to collect taxes in states where they have a physical location, but this act would allow the 45 states to require retailers to collect taxes on purchases made by their residents as well. Also, online retailers generating revenue of at least $1 million outside of their physical location could also collect sales tax. The downside to enforcing this legislation is that different states may try to tax the purchase at the same time. For example, a resident of Minnesota may make a digital purchase while traveling to Washington and may be taxed twice. Another negative aspect is that digital goods are not tangible property so some critics think it should not be taxed in the same manner as physical goods. Overall, this is has been an issue going on for a couple of years, but states

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