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Pennsylvania Is the Latest State to Tax Streaming Services

35 points by 6stringmerc 10y ago

fosco 10y ago
what happened to net neutrality, I know I didn't sleep well last night but I didnt know this was yet legal?
- michael_h 10y ago
  This is unrelated to net neutrality.
  - metaphorm 10y ago
    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.
    - unfletch 10y ago
      > "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.
      - metaphorm 10y ago
        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).
        unfletch 10y ago
        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.
        metaphorm 10y ago
        so not DVDs at Walmart then. what about satellite or cable TV?
        HuggableSquare 10y ago
        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.
alexbock 10y ago
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?
- jasonjei 10y ago
  Is there a federal lawsuit or question at play here? IANAL, but interstate commerce comes to mind. What punitive measures or recourse does a state have on an out of state vendor like Netflix?
  - alexbock 10y ago
    In Quill Corp. v. North Dakota, the Supreme Court very unambiguously ruled that a state cannot force out-of-state companies that have no physical presence in that state to collect sales tax. If Netflix has agreed to collect sales tax in Pennsylvania, I think they're either doing it voluntarily for political reasons or because they have some physical presence in Pennsylvania for some reason.
    - cwzwarich 10y ago
      Surely there must be some Netflix equipment in a datacenter in Pennsylvania.
6stringmerc 10y ago
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.
unfletch 10y ago
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
- 6stringmerc 10y ago
  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.
allwein 10y ago
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.cfm?txtType=PDF&sessYr=2015&sessInd=0&billBody=H&billTyp=B&billNbr=1198&pn=3731 http://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.... (PDF)

35 points by 6stringmerc 10y ago

fosco 10y ago

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

michael_h 10y ago
This is unrelated to net neutrality.
- metaphorm 10y ago
  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.
  - unfletch 10y ago
    > "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.
    - metaphorm 10y ago
      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).
      - unfletch 10y ago
        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.
        metaphorm 10y ago
        so not DVDs at Walmart then. what about satellite or cable TV?
        HuggableSquare 10y ago
        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.

alexbock 10y ago

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?

jasonjei 10y ago
Is there a federal lawsuit or question at play here? IANAL, but interstate commerce comes to mind. What punitive measures or recourse does a state have on an out of state vendor like Netflix?
- alexbock 10y ago
  In Quill Corp. v. North Dakota, the Supreme Court very unambiguously ruled that a state cannot force out-of-state companies that have no physical presence in that state to collect sales tax. If Netflix has agreed to collect sales tax in Pennsylvania, I think they're either doing it voluntarily for political reasons or because they have some physical presence in Pennsylvania for some reason.
  - cwzwarich 10y ago
    Surely there must be some Netflix equipment in a datacenter in Pennsylvania.

6stringmerc 10y ago

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.

unfletch 10y ago

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

6stringmerc 10y ago
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.

allwein 10y ago

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.cfm?txtType=PDF&sessYr=2015&sessInd=0&billBody=H&billTyp=B&billNbr=1198&pn=3731 http://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.... (PDF)