Washington Administrative Code › Title 458 - Revenue, Department of › Chapter 458-20 - Excise tax rules › Section 458-20-15503 - Digital products

Current through Register Vol. 24-14, July 15, 2024
This rule provides a structured approach for determining tax
				liability for digital products and digital codes. For purposes of this rule, a
				digital product includes digital goods or digital automated services, which are
				described in detail below. The sale or use of digital products and digital
				codes is generally subject to retail sales or use tax unless purchased for
				resale or some other exemption applies.
This rule is organized into six parts. Each part addresses a
				question or topic relevant to the determination of whether a person is selling
				or purchasing a digital product or digital code and, if so, what are the tax
				consequences that follow from such activity. In this respect this rule is
				intended to function similar to the decision tree provided in ETA
				9003.2010.
1. Part 1: Are the products
			 or services transferred electronically? If yes, go to Part 2.
2. Part 2: Does the product or service meet
			 the general definitions of digital product or digital code? If yes, go to Part
			 3.
3. Part 3: Are there applicable
			 exclusions from the general definitions of the digital product or digital code?
			 If no, go to Part 4.
4. Part 4: Are
			 the sales of the digital product or digital code sourced to Washington? If yes,
			 go to Part 5.
5. Part 5: Are there
			 applicable retail sales or use tax exemptions for the purchase or use of the
			 digital product or digital code? If no, the transaction is likely taxable in
			 Washington.
6. Part 6:
			 Miscellaneous provisions.
Examples included in this rule identify a number of facts and
				then state a general conclusion; they should be used only as a general guide.
				The tax consequences of all situations must be determined after a review of all
				the facts and circumstances. Additionally, each fact pattern in each example is
				self contained (e.g., "stands on its own") unless otherwise indicated by
				reference to another example. Examples concluding that sales tax applies to the
				transaction assume that no exclusions or exemptions apply, and the sale is
				sourced to Washington.
Part
			 1.
Are the Products or Services Transferred
			 Electronically?
(101)
Introduction.
Products or services must be transferred
			 electronically in order to be digital products. If a product is transferred by
			 means of a tangible storage media (e.g., compact disc, magnetic tape, hard
			 drive, etc.), it is not a digital product. Digital codes need not be
			 transferred electronically in order to be digital codes, but may be obtained by
			 any means, including tangible storage media.
(102)
Transferred
			 electronically.
Means the purchaser obtains the product by means other
			 than tangible storage media. Generally, this means the product is transferred
			 using the public internet, a private network, or some combination. However, it
			 is not necessary that the product be delivered to the purchaser. As long as the
			 purchaser may access the product, it will be considered to have been
			 electronically transferred to the purchaser. For example, whether a digital
			 movie is downloaded by the user or streamed by the user, it is considered to be
			 "transferred electronically." Alternatively, the same movie purchased on
			 tangible media (e.g., DVD, etc.) is the purchase of tangible personal property
			 and is not considered to be either the sale of a digital product or transferred
			 electronically.