The digital goods industry is constantly expanding to the point where it advances faster than tax legislation. This often causes confusion on how to comply, which is why companies are turning to the specialists at Source Advisors for assistance with sales tax on digital goods.
Digital goods include everything from eLearning to video games. Sales tax compliance is particularly complex because the definitions and taxability of digital products varies by state. About half of the states in the US tax digital goods, albeit many struggle to codify the product types to follow a universal tax rule.
Digital goods are products sold, delivered, and transferred to consumers in a digital format. The most common types are audio files, like music and podcasts, digital books, video games, and digital movies and TV shows that are either downloaded or streamed.
However, since states do not prescribe a standard sales tax rule on digital goods, it can be cumbersome to navigate the multistate nuances without adequate resources or expertise.
With the right tax knowledge, sales tax on digital products doesn’t have to be a mystery. The experts at Source Advisors are well versed in how the tax regulations operate on a state-by-state basis.
Source Advisors specialists will conduct a nexus study to review your company’s activities and determine where physical and economic nexus is created.
A nexus analysis will determine your potential sales tax obligations by looking at the products you sell, where you sell them, for how long, and if an economic threshold has been reached.
Our experts will help you understand where you have sales tax obligations and the unique taxability requirements for digital goods.
Our team will help you become and remain sales tax compliant as your business continues to grow.
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