Pennsylvania Implements 6% Sales Tax On Subscription Services and Digital Downloads
Pennsylvania is the first state to extend a six percent sales tax to subscriptions services such as Hulu and Netflix, and digital downloads.
The tax is often regarded as the Netflix tax, but the fee applies to streaming and downloads of apps, music and e-books. The exemption to this tax are digital versions of the Bible, magazines and newspapers.
Pennsylvania’s state legislature is one of many locations’ government has started to include a local tax on digital services. Chicago officials implemented a nine-percent cloud tax. In Minnesota, a digital tax was also implemented. Netflix even fought in Kentucky over its telecommunications tax – a way some states have been trying to garner money from digital services without the implementation of a sales tax.
The Pennsylvania sales tax is applied when customers use a billing address in a state or city with a valid sales tax. If Pennsylvania residents want to avoid the sales tax, they need to have a billing address outside the state.
The problem of taxing consumers for Internet buying of services and goods has been extremely difficult. For years, Amazon had been able to avoid charging sales tax for their services. Today, Amazon collects sales tax from 28 states.
The MarketPlace Fairness Act has long been talked about and is still being considered to this day.
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