Missouri Rules Streaming Video Content Is Not Taxable

Kelley C. Miller for Reed Smith writes: The Missouri Department of Revenue ("Department") recently issued a Private Letter Ruling concluding that sales of digital video streaming service ("service") is not taxable. In the ruling, a Missouri taxpayer requested that the Department determine whether their service is subject to Missouri's sales and use tax. The service allows customers to either purchase or rent video content which is streamed via a variety of devices including television and computer. In order to access the service, a customer must have internet access. No other services or equipment are provided to customers.

Missouri imposes a sales tax on all retail sellers that sell tangible personal property or provide a taxable service in Missouri. In general, the sale of tangible personal property is taxable unless exempted by a specific statute. In contrast, a service is only taxable if a specific statute authorizes it. Under Missouri's current regulations, the sale of an original program delivered over the internet is not the sale of tangible personal property.

Applying this law to the taxpayer's facts, the Department concluded that renting or purchasing streaming videos over the internet is not the sale of tangible personal property. Instead, the Department concluded that the taxpayer was selling a service, one which is not among the enumerated taxable services. Accordingly, the Department found that sales or rentals of streaming video is not subject to sales or use tax.