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S.F. No. 35 - Applying Sales Tax to Digital Products (As Proposed to be Amended by the A-1 Amendment)
Author: Senator Ann H. Rest
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
Date: January 16, 2013


This bill is intended to add certain digital products to the sales tax base. 

Section 1 adds to the definition of “sale and purchase” the furnishing of digital goods for consideration, or the granting for consideration of the right to use digital goods on a temporary or permanent basis.  Specified actions by the purchaser are listed for purposes of determining when a digital good is purchased.   

Section 2 adds digital goods to the definition of “tangible personal property.” (This section is being reviewed for purposes of conforming with the definitions in the Streamlined Sales and Use Agreement.)

Section 3 specifies that telecommunications services do not include digital goods.

Section 4 defines “digital goods” and specifically excludes certain services and items from the definition. 

Section 5 defines “digital code.”  Items obtained through a digital code are subject to sales tax if all of the digital products obtained through the use of the code have the same tax treatment.

Section 6 defines “specified digital products” to include digital audiovisual works, digital audio works, and digital books that are delivered electronically. 

This bill is effective for sales and purchases made after June 30, 2013.


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