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Sales and Use Tax - Digital Products

Sales and Use Tax - Digital Products

January 1, 2014.  Making specified digital products taxable levels the playing field with physical goods that are currently taxed (printed books, CDs and DVDs, whether rented or owned).
These are not included in the definition of “digital products” and are not taxable.
These will not be subject to sales tax.
Yes, prewritten computer software is taxable, whether purchased in CD form or received electronically via download or otherwise.
Unless the price of each component is separately stated (whether taxable or exempt), the entire charge is taxable.  For example, for $60 a consumer receives the right to download books and movies and receive free shipping on purchases of tangible personal property.  Unless the amount charged for the right to free shipping is separately stated, the entire $60 is subject to sales tax.

Items, including but not limited to, audiovisual products (such as movies), audio products (such as songs), and books delivered electronically. Tax applies to both temporary and permanent transfer (i.e., need not purchase the product for ownership). Examples are Netflix, HULU, I-Tunes, e-books for Kindle and other electronic readers.

Yes, even if separately stated on the bill such charges are taxable.

Yes, sales of tangible books are subject to sales tax, even if sold by the college.  R.C. 5739.02(B)(9) does not exempt the college from making sales of textbooks, if those sales occur more than six times in a calendar year.  Additionally, the use of an access code to view and/or download an electronic book is also taxable as the sale of a digital book, which is broadly defined as a work that is generally recognized in the ordinary and usual sense as a book.

Yes, the digital book is not necessarily part of the price of the course fee and is a distinct and identifiable taxable item.  Sales of the electronic books are subject to sales tax, even if sold by the college.  Generally, R.C. 5739.02(B)(9) would not exempt the sales of textbooks by the college in either format.

Additional Resources

Additional Resources