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Legislation has been introduced in both the House and Senate to prevent discriminatory and duplicative taxes on digital goods and services, including online downloads of music, literature, movies, mobile apps, and cloud computing services. Modeled after legislation pending in the last Congress, "The Digital Goods and Services Tax Fairness Act" would bring some certainty to an overlapping array of state tax rules and regulations.
These bills were introduced in the House by Reps. Lamar Smith (R-Tex.) and Steve Cohen (D-Tenn.), and in the Senate by Sens. John Thune (R-S.D.) and Ron Wyden (D-Ore.).
This legislation would restrict collection of sales taxes on digital goods and services to the jurisdiction of the buyer's tax address. It also would bar a state from imposing multiple or discriminatory taxes on the sale or use of digital goods or services.
For example, I live in Maryland, but I fly to Illinois, where I download a digital product from a service residing in California. Which of these three states has a claim to any applicable sales tax? Each of these taxing jurisdictions could conceivably assert a tax claim. The Digital Goods and Services Tax Fairness Act provides that only my tax home, Maryland, is permitted to assert state taxes on the transaction. Consistent with legislation introduced in the last Congress, both in the House and in the Senate, these updated bills do not authorize or prohibit the application of sales tax on the purchase of goods; both just provide that only the state of the buyer's tax address has the authority to tax the sale.
TechAmerica, powered by CompTIA, supports this legislation, as it did in the last Congress. Tax provisions that add more certainty decrease tax compliance costs and should be encouraged.