In the past couple of years, Amazon has been fighting hard to avoid having to collect sales taxes in states that it does not have a physical presence in. The company has even advised its employees to ask for permission before entering states hostile to it in the Internet tax fight.
Should e-books be taxed? When you buy e-books from Amazon, chances are you do not pay taxes on your purchases. Apparently, The Department of Taxation and Finance in New York believes e-books should not be taxed anyway:
Petitioner’s e-books are not tangible and do not include any prewritten computer software. Accordingly, they do not constitute tangible personal property.
Here is how TSB-M defines the characteristics of e-books:
- do not include additional goods and services
- revisions are for the limited purpose of correcting errors
- provided as a single download
- advertised or marketed as an e-book
- have software limitations
Since e-books are not physical products and most of us have already paid taxes on the software or tools that are required to read them, taxing e-books does not seem fair. While it is encouraging to see this approach being taken in NY, we are not confident it will be the case in other states.