2020 Compliance Workshop - Digital Goods: How States Define, Tax and/or Exempt

Oct 22, 2026

2020 Compliance Workshop presentation prepared for the Federation of Tax Administrators examines how states define, tax and/or exempt digital goods and services. It documents disclaimers emphasizing non-legal, observation-only analysis, rapid legal change, and the need to verify conclusions with updated authorities and consult professionals. The workshop summarizes state-level media headlines on proposed “Netflix tax” and streaming taxation disputes, then analyzes digital goods through Netflix service versus product framing and related case reasoning.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages275

Reading Time11 h 33 min

AccessFree to download

Disclaimers

Headlines: Digital Taxation and “Netflix Tax” Developments

To Tax or Not to Tax?

Digital Goods Framework: Netflix as a Service

Custody and control; subscription model; streaming vs download

Case reference on service classification

Digital Goods Framework: Netflix as Product

Digital Goods Tax Logic: Tangible-medium comparability

2020 Compliance Workshop Digital Goods: How States Define, Tax and/or Exempt Prepared for Federation of Tax Administrators Workshop By: Natalia A. Garrett, Esq. Deputy Assistant Director, Arizona Department of Revenue Disclaimers 1. The information and findings contained in this presentation are from the academic or observation-only perspective, and do not constitute legal advice or official guidance from the Arizona Department of Revenue or any other agency. 2. The laws are rapidly changing or undergoing revisions and clarifications by courts and regulatory agencies. a) All legal conclusions must be verified by referencing to appropriate and updated sources of law and guidance applicable at the time of any specific transaction. b) Consultation with a legal or accounting professional is strongly recommended before any reallife implementation of a decision to collect or not any applicable tax in all applicable jurisdictions (to include both state and local taxes). 3. This PowerPoint collects observations regarding Taxability of Digital Goods and Services in each state, including a summary-table from Walter Hellerstein, State Taxation, 2019 Cumulative Supp. It is intended to start a discussion, not deliver ready solutions. Headlines • “DOR Says Digital Taxation Bill Will Cost Arizona Millions”(Mar. 2019, AZ) • “Netflix, ADP and GoDaddy are Battling Arizona DOR”(Apr. 2019, AZ) • “California: how to best tax streaming services”(Mar. 2018, CA) • “Did you get an email about Spotify subscriptions increasing for Connecticut residents? That’s not the only service you’ll be paying more for starting Oct. 1”(Sep. 2019, CT) • “Now Georgia Is Pursuing a “Netflix Tax” to Cash in on Digital Streaming. Is It Time to Worry?”(Jan . 2019, GA)“Netflix exempted from Proposed Georgia Downloads Tax”(Feb. 25, 2019) • “Wait, they can tax Netflix?”(Aug. 2017, KS) Headlines • “'Netflix Tax' Proposed In Massachusetts”(Aug. 2019, MA) • “Netflix Sent to State Court to Fight Missouri Cities on Fees”(Aug. 2019, MO) • “Will New York Adopt a Netflix Tax?”(May 2019, NY) • “North Carolina Clarifies Sales Tax on Digital Goods”(Aug. 2019) • “Could North Dakotans one day pay a ‘Netflix Tax’?”(May 2019, ND) • “R.I. eyes expanding sales tax to downloads, streaming services”(Nov. 2017, RI) • “The Utah State Legislature is considering taxing your Netflix”(Nov. 2017, UT) To Tax or Not to Tax? [https://fee.org/articles/now-georgia-is-pursuing-a-netflix-tax-to](https://fee.org/articles/now-georgia-is-pursuing-a-netflix-tax-to)cash-in-on-digital-streaming-is-it-time-to-worry/ [https://www.azmirror.com/2019/03/19/department-of](https://www.azmirror.com/2019/03/19/department-of)revenue-says-digital-taxation-bill-will-cost-arizonamillions/ Digital Goods: Netflix is a Service [https://tax.idaho.gov/pubs/rulesdoc_4jRyl4hQR9TnS.pdf](https://tax.idaho.gov/pubs/rulesdoc_4jRyl4hQR9TnS.pdf) Digital Goods: Netflix Makes A Statement It Provides a Service 1. Netflix “retains custody and control of its content and the entire Streaming process” 2. Subscribers pay a monthly subscription fee regardless of viewing any content • Subscribers acquire the right to view video content, access to the library, use of Netflix software allowing to search, and the benefit of unique interface… 3. The content is not downloadable but is streamed in real time . 4. Streaming is not software . 5. “When a tax agency recently tried to expand a tax statute by fiat arguing that streaming is or resembles the sale of tangible personal property, that effort failed. A Louisiana District Court last month held that transaction like video on demand and pay per view do not involve the sale or rental of tangible personal property but rather constitute the provisions of nontaxable service.” Jefferson Parish v. Cox Comm., No. 706-766 (Jefferson Parish 24th Dist., June 11, 2014). [https://tax.idaho.gov/pubs/rulesdoc_4jRyl4hQR9TnS.pdf](https://tax.ida

FAQs

What is the purpose of the presentation on digital goods taxation?

It provides observations about how different states treat the taxability of digital goods and services and is intended to start discussion rather than deliver ready solutions.

Does the presentation provide legal advice or official guidance?

No. It explicitly states the information is from an academic or observation-only perspective and does not constitute legal advice or official guidance.

How does the presentation distinguish digital goods when analyzing Netflix?

It discusses two characterizations: Netflix as a service (subscription access to streamed content) and Netflix as a product, along with the principle of assessing taxability based on whether it would be taxable if sold in a tangible medium.

Oct 22, 2026

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