United States

Alabama: Proposed Regulatory Amendment Would Extend Sales Tax to Digital Transmissions

Mar 09, 2015
From KPMG TaxWatch

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Under Alabama law, rental tax is levied on persons engaged in the business of leasing or renting tangible personal property. Recently, the Alabama Department of Revenue proposed to amend Rule 810-6-5-.09, governing the lease and rental of tangible personal property. The amended rule provides that digital transmissions, including on-demand movies and television programs, streaming video, streaming audio, and similar programs, are considered tangible personal property subject to the rental tax. Digital transmissions would be taxable regardless of whether they are provided by subscription or on demand. The rental tax would be imposed on gross receipts derived from charges for digital transmissions used in Alabama. Use of digital transmission would be deemed to occur in Alabama if the customer’s service address is in Alabama. Per the Department’s economic impact statement, the intent of the proposal is to recover a portion of the Alabama tax base that has dwindled due to the closure of many brick and mortar video rental stores. Comments on the rule are due April 8, 2015. Please stay tuned to TWIST for updates on the proposed rule.

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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.