Effective July 1, 2009 Mississippi sales tax will be due on the sale and use of "specified digital products" when sold or consumed in the state of Mississippi. House Bill 1461 has been sent to the Governor for signature. This bill defines "specified digital products" as electronically transferred digital audio-visual works, digital audio products, and digital books.
Under these definitions, the sale of music, ringtones, movies, and e-books are now taxed as other sales of tangible personal property. The law does provide for a 'resale' exemption so long as the purchaser provides the seller with a valid resale certificate.
For the most part, this tax may be more of a use tax issue since many of the companies that provide this type of service do not have nexus outside their home state. It will also mostly apply to individuals who tend to purchase most of these digital services.
It seems to me that this is a noble attempt by Mississippi to expand its tax base. I would also suspect that more states will adopt this methodology. Unless it is possible to establish between nexus between the the seller and the state of Mississippi so that the collection of tax can be consolidated, it may be tough to generate any significant revenue from this new law.
Your thoughts?
