NCSL Supports Passage of the Federal Digital Goods & Services Tax Fairness Act

Committee                  Executive Committee Task Force on State and Local Taxation

Policy                           NCSL Supports Passage of the Federal Digital Goods & Services Tax Fairness Act
 
Whereas:  Digital goods and services are online purchases that are downloaded directly by, or services that are provided electronically to, consumers that can transcend numerous state and local boundaries across the United States;
 
Whereas: The exponential growth of digital commerce has continued to facilitate the country’s economic recovery. In 2012, consumers downloaded over 36 billion apps and that number is expected to eclipse the 90 billion mark by the end of 2015. The revenue from digital commerce was approximately $18 billion in 2012 and is expected to grow to $46 billion by 2016;
 
Whereas:  State policymakers recognize that the continued deployment of broadband infrastructure and adoption of broadband services is vital to economic growth and participation in the global economy;
 
Whereas:  Digital goods and services are a major driver of the rapidly growing 21st Century digital economy and as such, fair and rational tax policies are needed that will not impede the continued growth of this segment of the economy;
 
Whereas:  Due to the complex nature of the way digital commerce is transacted, current state and local tax laws governing the taxation of sales transac­tions are outdated and ill equipped to address many of the issues that surface in taxing today’s “borderless” digital economy;
 
Whereas: As state and local governments continue to seek to modernize their tax base to include various forms of digital commerce, doing so without establishing a national framework could potentially subject consumers to multiple states claiming the right to tax the same transaction or subject such transactions to discriminatory taxation at rates higher than the rates imposed on the in-state sales of similar goods or services; 
 
Whereas: Establishing a national framework would clearly identify which state and local jurisdiction can tax a digital transaction, providing much needed certainty to consumers, providers required to collect such taxes and state and local governments seeking to tax such goods and services in a fair, uniform and rational manner;
 
Whereas: Establishing a national framework as set forth in the Digital Goods and Services Tax Fairness Act preserves state sovereignty as the decision to tax digital commerce or not remains solely with the states;
 
Whereas: the Mobile Telecommunications Sourcing Act (P.L. 106-252) established uniformity in sourcing mobile telecommunications services for state and local tax purposes using similar concepts to those contained in the Digital Goods and Services Tax Fairness Act;
 
Whereas: NCSL has worked with other state and local organizations as well as members of the Download Fairness Coalition to develop the principles contained in the legislation and is poised to assist states as needed in complying with the federal legislation;
 
Therefore Be It Resolved: The National Conference of State Legislatures Executive Committee Task Force on State & Local Taxation urges Congress to pass the Digital Goods and Services Tax Fairness Act, in conjunction with or after consideration of the Marketplace Fairness Act, to establish a national framework providing certainty and uniformity for state and local governments in the taxation of digital goods and services, while protecting consumers from multiple and discriminatory taxation and supporting the continued growth of the digital economy.
 
Adopted May 31, 2013

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