Below is a chart delineating the sales taxability of a variety of digital goods as of January 1, 2019:
| Digital Good | Subject to Sales Tax? | Rationale |
|---|---|---|
| Applications | Yes | These sales are taxable digital goods. D.C. Code § 47-2001(d-1). |
| Software – Canned | Yes | These sales are taxable as data processing services. D.C. Mun. Regs. §9-474.4. |
| Software – Prepackaged | Yes | These sales are taxable as data processing services. D.C. Mun. Regs. §9-474.4. |
| Software – Customized | Yes | These sales are taxable as data processing services. D.C. Mun. Regs. §9-474.4. |
| Digital News and Digital Periodicals | Yes | These sales are taxable as “the furnishing of general or specialized news or current information” and as “news clipping service” under D.C. Code §47-2001(n)(1)(N)(ii). |
| Digital Books | Yes | These sales are taxable digital goods. D.C. Code § 47-2001(d-1). |
| Digital Audio Books | Yes | These sales are taxable digital goods. D.C. Code § 47-2001(d-1). |
| Digital Music Downloads and Streaming | Yes | These sales are taxable digital goods. D.C. Code § 47-2001(d-1). |
| Digital Video Downloads | Yes | These sales are taxable digital goods. D.C. Code § 47-2001(d-1). |
| Streaming Video Services | Yes | These sales are taxable digital goods. D.C. Code § 47-2001(d-1). |
Please note that the new legislation did not affect the taxation of software in the District. Under D.C. Mun. Regs. 9 §474.4, the sale, rental, or maintenance of computer software continues to be subject to sales tax in the District whether the software is canned, prepackaged, or customized. Taxable computer software and software services include system software, application software, computer programming, software modification, or software updating. The new legislation does not affect D.C. Mun. Regs. 9 §474.4.
This Notice supersedes prior OTR Notice 2017-06.
Questions should be directed to the Office of the General Counsel at (202) 442-6500.
Click here to read South Dakota v. Wayfair, Inc.