Virginia – Sales of Television and Movie Content Not Taxable


SALT Report 2186 – The Virginia Tax Commissioner issued a ruling regarding the application of sales tax to television and movie content sold online. In this case, the Taxpayer provides a service that allows its customers to search for, select, and view television and movie content through its website.

The Taxpayer requested guidance regarding the communications sales and use tax as he believes that the service he offers should not be subject to the communications tax because it is not a communications service. The Taxpayer maintains that it simply provides a “digital product that is delivered electronically” to its customers, which is statutorily excluded from the communications tax.

In its response, the Commissioner referred to Virginia Code §58.1-648(A) which imposes a 5% communications sales and use tax on the customers of communications services providers; and Virginia Code §58.1-648(C) which states, that the communications services on which the communications tax is levied does not include “digital products delivered electronically, such as software, downloaded music, ring tones and reading materials.”

Based on the information provided and the language of the two regulations, the Commissioner determined that the Taxpayer’s sales of online content are “digital products downloaded electronically” and not sales of a communications service. Therefore, the sales at issue are not subject to the communications sales tax.  Accordingly, the Taxpayer was awarded a refund of the communications sales tax it had previously paid to the Department.

For Further Information

Virginia Department of Taxation – Ruling of Commissioner P.D. 13-17