February 2, 2017

Prohibited Tax Collection Extends to Video Streaming Services — Comments Requested on Bill Proposal

A new bill recently introduced would preclude cities and counties, until January 1, 2023, from imposing a tax on video streaming services such as Netflix and Hulu.  CSAC is requesting comments on Assembly Bill 252 (Ridley-Thomas) and how it may impact counties.

CSAC has long advocated for protecting local taxation authority to ensure adequate program and service funding.  At this time, CSAC is not aware of counties that currently levy a tax on video streaming services but there are several cities that do so through their utility user tax authority. AB 252 would clearly state these services are not taxable, at least until January 1, 2023. As a result, critical revenue for local governments could be impacted.

Taxation of online products and even service access has sparked much debate on both the federal and state levels. Most recently, on the federal level, a new law was passed which permanently excludes state and local governments from taxing Internet access.  In a similar vein, on the state level, the California Supreme Court recently upheld  a 2015 appellate court decision that software transferred pursuant to a technology transfer agreement are not subject to the sales and use tax.                 

Please contact Dorothy Johnson Holzem or Tracy Sullivan with any comments on how Assembly Bill 252 may affect your county.