The state taxes digital entertainment subscription fees. These subscriptions allow a user to download digital products such as movie streaming, videos, television programming, music, e-books, mobile apps, games, digital newspapers, etc. It does not matter if the user pays for permanent or less-than permanent (i.e., 24-hour period) use rights.
These digital entertainment providers are subject to collect and send retail sales tax, and pay business and occupation (B&O) tax (under the Retailing classification) if
- the providers have a physical presence in Washington and
- the providers have subscribers located in this state
Company A is located outside of Washington but has a physical presence in Washington. Company A offers an online subscription for digital entertainment. This includes streamed access to hundreds of thousands of hours of:
- current season TV programming
- premium original content
- full seasons of hit series
- a limited commercials option
Company A’s subscription sales represent the sale of digital goods (i.e., digital audiovisual works). Company A must collect and send retail sales, and pay retailing B&O taxes on their subscription income received from Washington customers.
Digital goods are sounds, images, data, facts, or information, or any combination transferred electronically. This includes digital audiovisual works.
- Digital audiovisual works are a series of related images which, when shown in succession, impart an impression of motion, together with accompanying sounds, if any.