- Utah's SB162 aims to close a sales tax loophole for streaming services.
- Sen. Chris Wilson says outdated distinctions between streaming and downloading video allow some platforms to avoid taxes.
SALT LAKE CITY — Utah lawmakers are advancing a bill to close a sales tax loophole that has allowed some video streaming services to avoid paying taxes on certain video rentals.
SB162 is meant to clarify that all online purchases are subject to sales tax, regardless of whether they are streamed or downloaded. Sen. Chris Wilson, the bill sponsor, said caselaw from the early days of the internet differentiated between the two types of video, but said those distinctions are outdated in the modern age of high-speed internet.
Wilson, R-Logan, said a "small number" of online platforms have been able to avoid paying sales taxes on certain products thanks to this distinction.
"This will close a loophole," he told the House Revenue and Taxation Committee on Wednesday. "This bill will eliminate the confusion by clarifying that digital audio works, digital audio-visual works, digital books and gaming services are subject to sales and use taxes, regardless of whether they are streamed or downloadable."
The difference between how downloaded and streamed content is taxed goes back to before streaming services and high-speed internet were ubiquitous. Wilson said early streaming services could only load a portion of videos before pausing to buffer, compared to video downloads, which transfer the entire product before a consumer hits play.
"While this distinction made sense in the days of RedBox and slower-speed internet, the distinction is less relevant in the landscape of modern technology," Wilson said. "Whether a product is streamed or downloaded, it can be played or watched similarly."
Steve Young, a tax attorney, spoke in support of the bill, saying it will "go a long way toward creating predictability and uniformity" for the streaming video industry.
SB162 passed the Senate earlier this month and cleared the House committee easily, setting up one final vote before it heads to the governor's desk. The legislative session ends March 6.
