Netflix and Sales Tax!

Will sales tax cause the cost of your streaming services to go up?

March 2024

Historically, your digital products have been mostly safe from the world of sales tax.  Give someone a physical picture and it’s taxable. But, give them a digital picture and it’s not.  Provide someone with a physical copy of a movie and its taxable, rent the movie through a streaming service like Netflix, and it’s not.

Well, when was the last time you were handed a DVD or a CD?  The government has been losing out on all that revenue and it looks like in some states they may be catching on.  In Hampton Roads, Virginia the government is looking to pass a digital goods sales tax.  The reality is – if it passes there, it likely won’t be long until all counties and eventually all states, follow the same tactic.

While this could be a huge revenue source for the government, it would also be a huge expense for individuals and businesses in an economy where everyone is already struggling.  We saw the impact of implementing economic nexus through the Wayfair decision.  Making digital products taxable will only exacerbate that. 

Say goodbye to Netflix and chill and say hello to Netflix and sales tax!

If you need help researching if your state taxes any digital products, reach out and we can help!