Is downloading a video from a website, whether paid or free, subject to New York sales tax?

Plain-English summary

Google Inc. asked the Department to confirm the sales-tax treatment of videos its website lets customers download from various content providers — some free, some paid. Customers choose between downloading a video for connected viewing (requiring an internet connection each time to enable digital-rights-management copy protection, though the customer still controls play, pause, rewind, and fast-forward) or downloading it for fully offline viewing with no ongoing connection required. No special software is needed to watch.

The Department's answer draws a clean line based on New York's existing film-industry guidance: an outright sale of a film in tangible form (like a DVD or tape) is generally taxable, but sales tax is not imposed on the sale or license of a film delivered electronically or digitally, whether the delivery happens inside or outside New York. The opinion extends the same logic used for other digital media: electronically delivered music and photographs are intangible property, not taxable software, and electronically delivered video is treated the same way — a sale of intangible property, not subject to sales or use tax under §§ 1105(a) or 1110(a).

The Department also ruled out two other possible tax hooks:

• Prewritten software. Only actual software delivered electronically is taxable as tangible personal property; a video file isn't software, so this category doesn't apply.
• Taxable information or entertainment services (§ 1105(c)(1)/(9)). Those provisions target content furnished via telephony/telegraphy (like 900-number services) — an Internet video download to a customer's own device doesn't fit that framework.

The Department flagged one important limiting fact: the customer in this case retains real control over viewing (choosing when/how often to watch, with pause/rewind/fast-forward), even during the connected-viewing option's DRM-verification step. If the facts about that ongoing internet connection were meaningfully different — for example, if it looked more like a continuous, provider-controlled entertainment feed rather than a downloaded file the customer controls — the outcome might change.

What this means for you

Digital content and streaming platforms

Selling video (or similar digital media like music or photos) via electronic download, rather than on a physical disc, generally keeps you outside New York's sales tax net — the same content sold on a DVD would be taxable, but the download isn't. This is a meaningful cost/pricing consideration for digital storefronts serving New York customers.

Companies designing DRM or connected-viewing features

Watch how much control the customer actually retains during any required internet connection. Genuine customer control over playback (pause, rewind, choosing when to watch) supported treating this as a downloaded file rather than a taxable ongoing service — a more provider-controlled, continuous delivery model could tip the analysis toward a taxable service instead.

Accountants and tax professionals

This opinion is a useful anchor citation for any digital-goods question: it confirms New York treats electronically delivered video the same as electronically delivered music and photographs (all intangible property, untaxed), while the same content on physical media remains taxable tangible personal property. It predates the now-common "digital goods" statutory categories some other states have since enacted — check for any more specific New York guidance issued after 2008 before relying on this alone for a modern platform.

Common questions

Q: Is a video I download from a website taxable in New York?
A: Under the facts of this ruling, no — an electronically downloaded video is intangible property, not taxable prewritten software or a taxable information/entertainment service.

Q: Would the same video be taxable if sold on a DVD?
A: Yes — physical-media sales of a film are generally taxable tangible personal property; only the electronic-delivery version escapes tax here.

Q: Does requiring an internet connection to watch a downloaded video (for DRM purposes) change the answer?
A: Not under these facts, because the customer still controls playback (choosing when/how often to watch, with pause/rewind/fast-forward). The Department noted that materially different facts about that connection requirement could change the conclusion.

Q: Does this ruling apply to any digital video sale?
A: This is a fact-specific Advisory Opinion binding only on Google Inc. It's a strong indicator of how the Department reasons about electronic media generally, but it doesn't bind the Department as to other taxpayers or materially different delivery models (e.g., continuous streaming without a downloaded file).

Citations and references

• Tax Law § 1101(b)(4)(i), (5), (6) (retail sale; sale/license definitions; tangible personal property and prewritten software)
• Tax Law § 1105(a) (imposition of sales tax on retail sales)
• Tax Law § 1105(c)(1) (furnishing of information services)
• Tax Law § 1105(c)(9) (entertainment/information services via telephony/telegraphy)
• Tax Law § 1110(a) (use tax)
• Publication 28, A Guide To Sales Tax for the Film Industry (5/05)
• Universal Music Group, Adv Op Comm T&F, Apr. 18, 2001, TSB-A-01(15)S
• Martin R. Timm, Adv Op Comm T&F, Sept. 27, 2005, TSB-A-05(34)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2008.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a08_22s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-08(22)S
Sales Tax
May 2, 2008

Office of Tax Policy Analysis
Taxpayer Guidance Division

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S060322A

On March 22, 2006, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Google Inc., 1600 Amphitheatre Parkway, Building #47, Mountain
View, California 94043. Petitioner, Google Inc., furnished additional information with respect to
the Petition on May 5, 2006, and March 5, 2007.
The issue raised by Petitioner is whether the sale of a video delivered electronically over
the Internet is subject to sales and use tax.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner provides various services over the Internet, including providing access to
videos from a variety of content providers delivered over the Internet. The content provider for
the video will either establish a fee for the video or the video may be provided free. Customers
using this service must have access to the Internet but do not need any special or additional
software. Customers go to Petitioner’s Web site and use one of the following methods to select a
video:
•

Download Video to PC, Connected: A customer may choose a video to be
downloaded to a computer (PC) or other device to be viewed while connected to the
Internet. In this case, the content provider requires the customer to be connected to
the Internet to watch the downloaded video to enable digital rights management
(DRM) which is a method the content owner uses to protect the contents of the video
from being pirated. When a customer purchases a video, the customer pays the fee at
Petitioner’s checkout service and may then download the video to a computer or other
device. Each time the customer watches the video, he or she must connect to the
Internet where Petitioner verifies the customer’s identity and enables the customer to
watch the video. Although the customer remains connected to the Internet while
viewing the downloaded video, the customer still has the ability to choose when and
how many times to view the video, and the customer has options available such as
fast forwarding, rewinding, and pausing the video. Generally, for a customer to view
a free video, the computer does not need to be connected to the Internet, but there are
some exceptions.

•

Download Video to PC, Disconnected: A customer may choose a video to be
downloaded to a computer (PC) or other device to be viewed offline. When the
customer purchases a video, the customer pays the fee at Petitioner’s checkout service

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Sales Tax
May 2, 2008

and may then download the video to his or her computer or other device. The
customer may then watch the video at any time without being connected to the
Internet.
Applicable law and regulations
Section 1101(b) of the Tax Law provides, in part:
When used in this article for the purposes of the taxes imposed by subdivisions
(a), (b), (c) and (d) of section eleven hundred five and by section eleven hundred ten, the
following terms shall mean:
*

*

*

(4) Retail sale. (i) A sale of tangible personal property to any person for any
purpose, other than (A) for resale as such or as a physical component part of tangible
personal property, . . .
*

*

*

(5) Sale, selling or purchase. Any transfer of title or possession or both, exchange
or barter, rental, lease or license to use or consume (including, with respect to computer
software, merely the right to reproduce), conditional or otherwise, in any manner or by
any means whatsoever for a consideration, or any agreement therefor, including the
rendering of any service, taxable under this article, for a consideration or any agreement
therefor.
(6) Tangible personal property. Corporeal personal property of any nature.
However, except for purposes of the tax imposed by subdivision (b) of section eleven
hundred five, such term shall not include gas, electricity, refrigeration and steam. Such
term shall also include pre-written computer software, whether sold as part of a package,
as a separate component, or otherwise, and regardless of the medium by means of which
such software is conveyed to a purchaser. . . .
Section 1105 of the Tax Law provides, in part:
Imposition of sales tax. On and after June first, nineteen hundred seventy-one,
there is hereby imposed and there shall be paid a tax . . . upon:
(a) The receipts from every retail sale of tangible personal property, except as
otherwise provided in this article.

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Sales Tax
May 2, 2008

*

*

*

(c) The receipts from every sale, except for resale, of the following services:
(1) The furnishing of information by printed, mimeographed or multigraphed
matter or by duplicating written or printed matter in any other manner, including the
services of collecting, compiling or analyzing information of any kind or nature and
furnishing reports thereof to other persons, but excluding the furnishing of information
which is personal or individual in nature and which is not or may not be substantially
incorporated in reports furnished to other persons. . . .
*

*

*

(9)(i) The furnishing or provision of an entertainment service or of an
information service (but not an information service subject to tax under paragraph one of
this subdivision), which is furnished, provided , or delivered by means of telephony or
telegraphy or telephone or telegraph service (whether intrastate or interstate) of whatever
nature, such as entertainment or information services provided through 800 or 900
numbers or mass announcement services or interactive information network services.
Provided, however, that in no event (i) shall the furnishing or provision of an information
service be taxed under this paragraph unless it would otherwise be subject to taxation
under paragraph one of this subdivision if it were furnished by printed, mimeographed or
multigraphed matter or by duplicating written or printed matter in any other manner. . . .
Section 1110 of the Tax Law provides, in part:
Imposition of compensating use tax. (a) Except to the extent that property or
services have already been or will be subject to the sales tax under this article, there is
hereby imposed on every person a use tax for the use within this state on and after June
first, nineteen hundred seventy-one except as otherwise exempted under this article, (A)
of any tangible personal property purchased at retail, . . .
Publication 28 (5/05) A Guide To Sales Tax for the Film Industry, , at p. 11, provides, in
part:
Sale of a film
Unless otherwise exempt, sales and use taxes are imposed on the total selling
price of a film. The vendor selling the film is responsible for collecting sales tax based
on the rate of tax in effect in the taxing jurisdiction where the film or tape is delivered.
There is no New York sales and use tax imposed on the outright sale of a film when the

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Sales Tax
May 2, 2008

film is delivered out of state. A film is deemed to be delivered where the original
negative is delivered.
*

*

*

It should be noted, however, sales tax is not imposed on the outright sale of a film
or the granting of a license to exhibit or use the film to a distributor or broadcaster, when
the film is delivered electronically or digitally, whether such delivery takes place within
or without New York State.
Opinion
Petitioner provides various services through its Web site, including access to videos.
After a customer pays the requisite fee, if any, for a video, the customer downloads the video
from Petitioner’s Web site to a computer (PC) or other device. Customers do not need any
special or additional software to watch the video.
Generally, unless there is an exempt use, the sale of a film in tangible form is subject to
sales tax. However, sales tax is not imposed on the sale of a film to a distributor or broadcaster
when the film is delivered electronically or digitally, whether such delivery takes place within or
without New York State. See Publication 28, supra.
While receipts from the sale of prewritten software delivered electronically are subject to
sales tax pursuant to sections 1101(b)(6) and 1105(a) of the Tax Law, sales of music and
photographs delivered electronically are not considered to be sales of software. In the same way
that audio content (music) and visual content (photographs) delivered electronically are
intangible property not subject to sales tax, receipts from the sale of videos delivered to
customers electronically via the Internet and downloaded to the customer’s computer or other
device are receipts from the sale of intangibles and are not subject to sales or compensating use
tax under section 1105(a) or 1110(a)(A) of the Tax Law. (See Universal Music Group, Adv
Op Comm T&F, April 18, 2001, TSB-A-01(15)S; Martin R. Timm, Adv Op Comm T&F,
September 27, 2005, TSB-A-05(34)S)
Information and entertainment services delivered via telephony and telegraphy are
subject to sales tax pursuant to section 1105(c)(1) or 1105(c)(9) of the Tax Law. However, the
electronic download of a video file via the Internet to the customer’s computer or other device,
as described in this Opinion, does not constitute the provision of a taxable information service or
entertainment service within the meaning and intent of section 1105(c)(1) or 1105(c)(9) of the
Tax Law.
It should be noted that under the facts of this case a customer may be required to connect
to the Internet to watch a downloaded video, to enable digital rights management. Although the

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May 2, 2008

customer remains connected to the Internet while viewing the video, the video is downloaded to
a computer (PC) or other device and the customer still has the ability to choose when and how
often to view the video. The customer also has viewing options available, such as fast
forwarding, rewinding, and pausing the video. If the facts concerning the customer connection
to the Internet while watching a video were different, the conclusions in the Opinion might not
apply.

DATED: May 2, 2008

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Taxpayer Guidance Division

An Advisory Opinion is issued at the request of a person or entity. It is
limited to the facts set forth therein and is binding on the Department only
with respect to the person or entity to whom it is issued and only if the
person or entity fully and accurately describes all relevant facts. An
Advisory Opinion is based on the law, regulations, and Department
policies in effect as of the date the Opinion is issued or for the specific
time period at issue in the Opinion.