Louisiana Issues Bulletin Clarifying Suspension of Policies Related to Digital Products

The Louisiana Department of Revenue (“Department”) has issued Revenue Information Bulletin No. 11-005 (“11-005”) to answer frequently asked questions regarding access fees charged for use of a website or canned software and to address tax on pay-per-view and on-demand programs.

The Department issued 11-005 in response to questions generated by a November announcement that the Department was suspending two of its revenue rulings. Suspended Revenue Ruling No. 10-001 provided that tax was due on access fees or subscription fees paid for the use of a website or software. In addition, Suspended Revenue Information Bulletin No. 10-015 provided that Louisiana sales tax was due on fees paid to cable or satellite television services for pay-per-view and/or on-demand programs.

The Department is forming a working group of Department employees and industry and taxpayer representatives to assist the Department in developing policy regarding the taxation of certain digital transactions, including access fees for online software and pay-per-view fees. June 30, 2011 is the target day for the group’s findings and recommendations.

In the meantime, sales or use tax is due on amounts paid for the sale or use of downloaded digital products, including books, music, and games that are transferred to customers. In addition, Louisiana sales or use tax is due when customers purchase movies or other programs for permanent download. However, Louisiana sales or use tax is not due on fees for the use of a website or software and charges for pay-per-view or on-demand programs.