The Basics

Digital Goods and Services Tax Fairness Act

S. 765 and H.R. 1725

 

  • The digital economy is booming.

      

  • The current laws governing the digital economy are based on bricks and mortar.

 

  • Today, up to three states can seek to collect taxes from a consumer on a digital good.

 

  • That’s not right and needs to be fixed now.

 

  • The Digital Good and Services Tax Fairness Act sets the framework allowing the states where the consumer lives to, if they so choose, tax the sale of a digital good.

 

Background

 

  • Digital goods and services can include, e-books, movies, music and much more.

 

  • When a consumer buys a digital good today, three states may claim the right to tax the consumer:

 

  1. The state where the consumer physically presses the purchase button;

  2. The location of the server that provides the sale of the good or service; and

  3. The state the consumer resides.

 

  • The industry is projected to generate $188.9 billion in revenue through mobile apps by 2020 and to protect consumers, the notion that three states are able to tax the consumer on one purchase must be addressed.

 

  • The legislation clearly identifies which state has the right to decide to tax or not tax digital commerce.

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