Colorado Appeals Court Declares Netflix Streaming Services Subject to Sales Tax as Tangible Property

• Colorado Appeals Court ruled Netflix streaming services are subject to sales tax as tangible personal property.
• This decision reverses a previous District Court ruling that Netflix subscriptions are not taxable.
• The case began in 2013 when Netflix sought a ruling that its services were not taxable, which the DOR declined.
• The DOR determined Netflix owed sales tax but agreed to delay collection until addressed by the General Assembly.
• After a 2021 amendment, Netflix paid sales tax for certain months and sought a refund, which was denied.
• Netflix appealed, arguing their services are not tangible personal property and cited conflicts with the DOR rule and statute.
• The District Court ruled for Netflix, stating the service is not tangible as it cannot be touched.
• The DOR appealed to the Appellate Court.
• The Appellate Court considered the history of sales tax law and its application to digital goods.
• Colorado’s original sales tax law from 1935 was referenced, noting tangible personal property includes corporeal items.
• In 2021, the DOR issued guidance that delivery method does not impact taxability, including digital goods.
• The General Assembly amended the law to include digital goods and affirm the DOR’s rule on taxability.

Source: salestaxinstitute.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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