U.S. moves closer to imposing federal download tax

December 7, 2010


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Shopping BasketWe could all be paying more for our downloads from next year if the US government’s proposed tax on digital goods is passed. The House of Representatives is set to debate a bill proposing the introduction of a federal tax on downloaded good and services, including music, videos and apps, in early 2011.

The bill calls for “A consistent framework for taxation is needed that will not impede electronic commerce and the sale of digital goods and digital services, by preventing multiple taxation, and providing greater certainty and simplicity.”

Currently each state in the US can level its own taxes on downloads and online sales, however these taxes are not consistently imposed and can lead to multiple taxes being imposed on consumers depending on their location and the location of the retailer. Some 23 states impose taxes on digital goods and services

Purchases made on Amazon, which is registered in New York, are subject to the state’s sales tax as well as the purchaser’s state’s sale tax. The Digital Goods and Services Tax Fairness bill, will standardise tax rates across all U.S. states.

Controversy has courted previous attempts to impose digital taxes, in 2008 Amazon sued the state of New York when the retailer was asked by the state to collect taxes. Amazon lost the case and was required to collect tax on sales.

There is no word yet on the amount of the new tax will cost online consumers or whether it will apply to international users.


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Ajit Jain

Ajit Jain is marketing and sales head at Octal Info Solution, a leading iPhone app development company and offering platform to hire Android app developers for your own app development project. He is available to connect on Google Plus, Twitter, Facebook, and LinkedIn.


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