Colorado Amends Administrative Rule to Clarify Taxation of Digital Goods

The Colorado Department of Revenue has adopted changes to an administrative rule to clarify the state’s treatment of digital goods as generally constituting tangible personal property that is subject to sales tax. The amended rule states that the method of delivery does not impact the taxability of a sale of tangible personal property and lists several examples, including the following:

• If a purchaser buys a movie via the internet and downloads the movie, sales tax is due on the purchase price of the movie.
• If a purchaser buys a movie via the internet and accesses it online but does not save a copy to their computer, sales tax is due on the purchase price of the movie.
• If a purchaser pays a monthly subscription fee which allows them to stream movies and television shows from a library of available titles, sales tax is due on the monthly fee.

(Amended Rule 39-26-102(15) Tangible Personal Property, Colorado Department of Revenue, December 1, 2020)