The Department of Revenue responds to Republican charges that they are trying to raise new tax dollars on digital downloads.
A spokesperson for the Department says the analysis by Nashville attorney [1] Waller Lansden has several errors.
Specifically, the line "Under current law digitally delivered goods are not taxable unless delivered in a tangible form."
At issue is the technical corrections bill the Department is currently putting together.
Tennessee Republicans say it would create new taxes on digital downloads.
However Sara Jo Houghland of the Department of Revenue says the bill will only clarifies the definitions of digital material.
She says you are already paying state sales tax on your downloads (just look at your iPOD bill).
Here is the department's explanation of digital taxing:
"It is important to note that sales tax is already collected on sales of digital equivalents of books, music and movies. The department's proposed technical correction bill will not affect the way these items are currently taxed.
The proposed language updates Tennessee's sales tax law by specifically defining digital equivalents of books, movies and music. As digital sales continue to increase, the need for clear language that defines what is taxable and what is exempt is needed for accurate sales tax collection.
Digital equivalents are currently taxed as prewritten computer software, effective Jan. 1, 2008. Previous confusion about the current taxability of digital equivalents highlighted the need to modernized Tennessee's sales tax definitions to more accurately reflect the present day reality of digital music, books and movies. The department's goal is to create understandable, effective tax policy by adopting uniform definitions that are easy to understand and explicitly define what is taxable and what is exempt."
[2]