[November 21, 2009] Committee to take up confusing world of digital product taxation Tweet CHEYENNE, Nov 21, 2009 (Wyoming Tribune-Eagle - McClatchy-Tribune Information Services via COMTEX) -- A legislative committee will delve into taxing digital products when the Legislature meets this winter, but whether that could mean more taxes for consumers is debatable. "We are trying to maintain the status quo of what we've been taxing all along," said Dan Noble, administrator of the state Excise Tax Division. The Excise Tax Division collects all sales, use, lodging, cigarette and estate tax owed the state and its political subdivisions. The Wyoming Legislature's Joint Revenue Interim Committee voted Thursday to sponsor a bill that attempts to define what is taxable within the fast-changing digital marketplace delivered through the Internet and other electronic multi-state communications systems. "The department wants to keep it pretty well neutral," said David Picard, who lobbies for Dish Network, a satellite television provider. "But I can guarantee you the current bill will put sales taxes on products that the state is currently not taxing. "The losers are going to be the Wyoming customers, while the winners are going to be the out-of-state providers," Picard told lawmakers. The legislation the committee will be considering is intended to update the way Wyoming taxes such things as music, video and software. Noble said with the structure of the proposed legislation, whether a product is taxed is determined by consumers having possession and control. For example, TurboTax software can be sold to you in a box, Noble said. You have possession and control where and how you use it. That is taxable. You can go online and download the TurboTax software onto your computer and control when you use it. He said that would be taxable. But you also can point your Web browser at the TurboTax site, put your numbers into it and get it to provide your tax forms. That would not be taxable. But it can become even more confusing. If you have subscriptions to cable or satellite television, that would not be taxable. You can't possess and control the times the programs are shown. But if you have a subscription to services such as downloadable music or ringtones, and you can play a tune anytime you want within a period such as 24-hours, that would be taxable. That's because the proposed bill tries to allow for "less-than-permanent use." If you download a film and can play it over and over on your computer, that is taxable. If it is streamed to your computer for one-time viewing, that is not taxable. Walter Eggers of the law firm Holland and Hart lobbies on behalf of Bresnan Communications, a cable TV provider. He said, "The difficulty comes in when you included permanent use and less-than-permanent use." Picard agreed. "I think we would be comfortable going to permanent use only." Wyoming participates in the Streamlined Sales Tax Project, which aims to find solutions to the complexity of state sales tax systems in a multi-state digital marketplace. The 23 member states are trying to find ways for cooperative tax collection. That is especially challenging in light of a 1992 U.S. Supreme Court decision saying a Web-only retailer can only be required to collect sales tax from residents of states where the retailer maintains a physical presence. Revenue Committee co-Chairman Rep. Rodney "Pete" Anderson, R-Pine Bluffs, has been representing Wyoming in that organization. "It gets pretty intense sometimes," he said, because of the complexity of the issues, the multiple interests and the lack of any real authority. If a member does not comply, there's currently no method to sanction that member, for example, he said. Plus, it takes about two years to get anything done with all the legislatures on different schedules. While the Streamlined Sales Tax Project may lead to a good system, Picard said right now it illustrates how Wyoming entrepreneurs can be put at a disadvantage. Wyoming is a member, but Colorado is not. A Pine Bluffs entrepreneur selling online would have to pass on the tax since the state is part of the project. A Wellington, Colo., business owner would not have to charge a state tax on the same product. Despite all the facets that need to be explored, Anderson recommended that the committee vote to sponsor the bill so that they could "keep it alive" and continue discussing it during the session. The committee voted yes, with Sen. Marty Martin, D-Superior; Rep. Amy Edmonds, R-Cheyenne; and Rep. Sue Wallis, R-Recluse, voting no. To see more of Wyoming Tribune-Eagle, or to subscribe to the newspaper, go to http://www.wyomingnews.com/. 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