NC Legislature considers tax on digital downloads

January 28, 2009

In an search for new sources of revenue to make up for state budget shortfalls, the North Carolina Legislature is debating levying sales tax on digital versions of products such as books, music and ringtones, purchased online. The tax would only apply to items that would be taxed if purchase in physical form in the state, such as a Music CD or a book. It would also only be directly collected by businesses with a physical presence in the state, though the state may go beyond stores, and attempt to enforce with companies that have offices, or data centers, rather than retail stores.

Anyone selling these types of products to customers in North Carolina will need to keep an eye on this legislation, especially the qualifications for a physical presence. Most eCommerce applications should be able to handle this change, but configurations will likely need to be reviewed.

Read more in the [Raleigh] News & Observer article "If you can download it, state might tax it."