The West Virginia State Tax Department released new guidance, TSD-445, that clarified that streaming services are subject to sales and use tax in the state. The Department’s guidance distinguishes streaming services from digital products, which are specifically exempted under the law. The Department explains that streaming services are subject to a 6% state sales and use tax, in addition to up to 1% in municipal sales and use tax if applicable, because West Virginia taxes all services unless a specific exception or exemption applies.
Under the Department’s interpretation, because “[t]here is no sales tax exemption regarding the provision of streaming services in West Virginia,” the services are subject to sales and use tax. The Department defines a “streaming service provider” to include “a supplier of entertainment (music, movies, video games, etc.) or other content delivered electronically, usually by an internet, satellite or cable connection to the subscriber’s computer, television, mobile device, or any other device suitable for accessing such content.” Streaming service providers without a physical presence in West Virginia will be subject to the tax if they meet West Virginia’s economic nexus thresholds of at least $100,000 of gross receipts or 200 or more transactions per year. Because the guidance defines a streaming service provider broadly, many businesses delivering content to subscribers electronically may be impacted by the Department’s recent guidance.