News and Insights

Apple Defeats Assessment on Music Service in “Unique” Internet Tax Freedom Act Case

Tax Development Jul 03, 2024

Apple Defeats Assessment on Music Service in “Unique” Internet Tax Freedom Act Case

Apple, Inc. (“Apple”) successfully challenged a $676,130 tax assessment by the City of New Orleans on Apple Music streaming services by arguing the tax was discriminatory under the Internet Tax Freedom Act (ITFA). The case is Apple, Inc. v. Romy S. Samuel, Louisiana Board of Tax Appeals Decision No. L01283.

In its unopposed motion for summary judgment, Apple presented evidence of three key facts. First, Apple Music is an internet-based audio and music streaming service. Second, satellite radio provides for the streaming of audio and music using satellites. Third, the audio content and music streamed by Apple Music is similar to the audio content streamed by satellite radio providers like SiriusXM.

The Board noted that there was “no competent summary judgment evidence” showing that Apple Music subscribers have greater access to specific songs as opposed to the categories of song available to SiriusXM subscribers. “The only evidence before the Board [was] that Apple Music and SiriusXM [were] essentially the same service.” There was also no evidence that SiriusXM offered its services over the internet.

The ITFA prohibits discriminatory taxes on electronic commerce. A tax is discriminatory when it is imposed on a service offered via the internet but not on the same service offered through other means. Based on the “unique circumstances” of this case, the Board concluded that satellite music streaming services are not subject to the City’s sales tax because such taxes are preempted by the federal Telecommunications Act. Since exempt satellite music streaming services, i.e., SiriusXM and Apple Music are essentially the same service, any tax imposed on Apple Music is discriminatory under the ITFA.

The Board’s comments about the unique circumstances of this case and the lack of evidence presented by the City indicate this analysis may not be applicable in other cases. For example, Apple Music allows subscribers to select specific songs, while SiriusXM does not.

Matt Zagotti, Principal at Ryan, states: “The Department has stated that there will be legislative bills on digital goods that will be filed for the next session. Definitions of what constitutes a “digital good” is still to be debated/clarified, but passage of a digital goods bill may address this decision going forward. Until legislation clarifies digital goods, we anticipate continued litigation and uncertainty related to digital goods and cloud-based services at both the state and local levels in Louisiana.”

The case is a good reminder that tax practitioners should look for statutes and cases that transcend the tax code of their state and local jurisdictions. Even if Louisiana and City of New Orleans laws intended to tax all streaming music services, federal laws such as the Telecommunications Act and ITFA could severely limit the application of those taxes.

According to Dustin Davis, Principal and Telecommunications Leader at Ryan: “We continue to see state and local taxing jurisdictions aggressively pursue providers of digital services over the internet. In this unique case, two federal taxation preemptions worked together to ensure a taxpayer win. Taxpayers who provide services over the internet should be thinking about how these federal preemptions apply to them when faced with state and local audits.”

Ryan’s extensive state, local, and federal expertise helps ensure all applicable tax exemptions are found. Contact our experts today to find out how we can help your business.


Dustin Davis

Winston Post

Matt Zagotti

The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at