Senate clarifies sales-tax treatment of streamed digital goods; bill moves forward

Senate Bill 162, aimed at clarifying the sales-tax treatment of streamed and downloaded digital goods, was adopted on Feb. 10 after sponsors said the change closes an outdated distinction that created a compliance loophole for some streaming platforms.

Senator Wilson, sponsor of the substitute, said the change "eliminates this confusion by clarifying that digital video, audio books, and gaming are subject to sales and use taxes regardless of whether they are streamed or downloaded." He said most sellers already collect the tax but a small number of streaming platforms have not, and that the Tax Commission and affected companies supported clarifying language.

Senators asked technical questions about revenue allocation and potential one-time costs in the fiscal note. Senator Winterton asked whether online purchases are allocated by ZIP code for local revenue purposes; Senator Wilson said he believed the current process would not change and that he would confirm allocation details with the Tax Commission.

The clerk recorded the third-reading vote as: "First substitute Senate Bill 162, having received 25 yay votes, 2 nay votes, 2 being absent, shall be read a third time." The bill will be transmitted to the House for consideration.

Next steps: Sponsor to confirm revenue allocation mechanics (state vs. local) with the Tax Commission and report back to colleagues.