
Pennsylvania Is the Latest State to Tax Streaming Services - 6stringmerc
http://www.billboard.com/biz/articles/7469636/pennsylvania-is-the-latest-state-to-tax-streaming-services
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alexbock
How do they plan to collect this tax? Virtually no-one pays the "use tax" for
online purchases of physical goods from out of state unless the merchant is
forced to collect sales tax. My understanding is that states can only compel
companies to collect taxes up front when they have a physical presence in the
state of the consumer. Amazon has warehouses everywhere, but I wouldn't expect
Netflix, Hulu, etc. to have a physical presence outside of their home states
(well, Netflix might have DVD distribution centers, but that's not something
you would expect from streaming companies in the general case). If this is
going to be self-reported like the current use tax, it won't accomplish very
much unless they plan to step up enforcement of use-tax non-payment.

edit: Looking at the notice published by the state, it appears they're just
going to lump streaming services in with the general use tax.

> Starting August 1, 2016, the sales and use tax specifically extends to items
> delivered to a customer electronically or digitally or by streaming

Does anyone know if Netflix has a physical presence in Pennsylvania and will
actually be collecting sales tax when billing?

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jeffmould
My understanding is that Netflix, Hulu, Amazon, etc... will be responsible for
charging, collecting, and reporting the tax. So if you live in PA, you will
now pay a 6% tax on your monthly Netflix subscription.

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paulddraper
And what if Netflix fails to change, collect, or report?

Does PA get to drag Netflix into court in a state they've never been to?

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unfletch
I live in PA and I'm an Apple Music subscriber. Looking at my receipts,
Apple's been charging me 6% tax all along. I wonder why, if this change to the
tax code just went into effect on 8/1.

[http://imgur.com/FvPdJHR](http://imgur.com/FvPdJHR)

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6stringmerc
That is a really interesting question I think. Hedging for the presumed
inevitable? Article mentions that other states had already been assessing such
a fee.

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allwein
What I'm curious about, is that every article I've read about this change in
Pennsylvania includes the following details: "Magazines, newspapers, and
digital version of the Bible are exempt from the new Pennsylvania tax."

This is correct about magazines and newspapers by subscription, and is also
true about physical subscriptions as well. However, there is nothing in the
new bill (or existing tax laws) about bibles or digital bibles being tax free.
In fact, existing physical bibles and other printed religious material is
already taxed.

So I find it amusing that this article and others keep publicizing this non-
fact.

Here's the full act if anyone is interested
[http://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck....](http://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.cfm?txtType=PDF&sessYr=2015&sessInd=0&billBody=H&billTyp=B&billNbr=1198&pn=3731)
(PDF)

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6stringmerc
Honestly this was the first article I'd come across even mentioning the
taxation concept of streaming. Makes me kind of feel like a chump for not
knowing about it prior. Got to start somewhere I guess.

If it was my cash going to politicians, I'd make dang sure they understood my
position favors a significant portion of the "streaming audio service" revenue
was earmarked and full-faith pledged to in-state music education programs.

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fosco
what happened to net neutrality, I know I didn't sleep well last night but I
didnt know this was yet legal?

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michael_h
This is unrelated to net neutrality.

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metaphorm
the conventional definition of net neutrality is with respect to internet
service providers favoring certain traffic over others.

you're correct that taxation of internet streaming content by the government
is not what is conventionally meant by net neutrality.

however, I do think that taxation is highly relevant for issues of economic
fairness. is Pennsylvania subjecting streaming services to a different level
of taxation is their non-streaming competitors? that would be economically
unfair in a similar way that non-neutral network access would be unfair.

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unfletch
> "Is Pennsylvania subjecting streaming services to a different level of
> taxation is their non-streaming competitors?"

The first sentence of the article (emphasis mine): "Pennsylvania has joined
several states in enacting a tax on digital streaming _and download
services_."

Unless you can think of a competitor that offers neither streams nor
downloads, no, they're not.

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metaphorm
the relevant competitors would be cable television, subscription satellite TV
services, and various forms of offline media distributing the same content
(DVDs at Walmart for example).

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unfletch
I'm not sure how offline competition relates to the "net neutrality" topic in
this thread, but any offline competitor necessarily has a physical presence in
the state, so it would have been subject to tax for from the beginning.

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metaphorm
so not DVDs at Walmart then. what about satellite or cable TV?

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HuggableSquare
DVDs at Walmart would be covered by sales tax, as would satellite and cable
TV, unless it's a basic subscription.

From Pa. Code § 9.2. Sales and use tax changes:

(2) Pay television. Pay television except for ‘‘minimum pay television’’ is
taxable. This includes anything charged to a customer for a service other than
minimum pay television service. For example, if a cable television customer
purchases basic service and in addition purchases a ‘‘pay’’ channel, tax is
owed on the price charged for the ‘‘pay’’ channel. Installation and repair
service for pay television with the exception of minimum pay television also
is subject to tax.

