Were internet-protocol television and streaming-video services taxable in Nebraska?

Plain-English summary

Internet-protocol television and streaming-video services sold to an end user were taxable as digital audio-visual works. Tax applied when the work was delivered or transferred to a server or other electronic device in Nebraska.

Temporary access was taxed the same as a permanent right to use the content.

What counted as a digital audio-visual work

The GIL incorporated Revenue Ruling 01-11-3's definition: a series of images that, shown in succession, creates an impression of motion. Videos, news and other television programs, and live events were included.

Resale treatment

A person operating under an FCC certificate with the right or license to rebroadcast the work to the general public by television or other means was not the end user. That purchaser could acquire the digital work for resale.

Common questions

Q: Did tax apply only to downloaded videos kept permanently?

A: No. A temporary right of use was also taxable.

Q: Did internet delivery make television service exempt?

A: No. The GIL treated internet-protocol television and streaming video as taxable digital audio-visual works.

Q: What location triggered Nebraska tax under the GIL?

A: Delivery or transfer to a server or other electronic device in Nebraska.

Q: Could a rebroadcaster purchase for resale?

A: Yes, when it held the described FCC authority and right or license to rebroadcast to the general public.

Citations and references

• Nebraska Revenue Ruling 01-11-3 — definition and taxation of digital audio-visual works
• Nebraska GIL 1-16-1 — internet-protocol television and streaming-video services

Source

• Landing page: https://revenue.nebraska.gov/about/legal-information/general-information-letters-gils
• Original PDF: https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/legal/gil/GIL01-16-01_Internet_TV.pdf

Original ruling text

GIL 1-16-1 Sales and Use Tax: Streaming Television
This guidance document is advisory in nature but is binding on the Nebraska Department of Revenue
(Department) until amended. A guidance document does not include internal procedural documents that only
affect the internal operations of the Department and does not impose additional requirements or penalties on
regulated parties or include confidential information or rules and regulations made in accordance with the
Administrative Procedure Act. If you believe that this guidance document imposes additional requirements or
penalties on regulated parties, you may request a review of the document.
This guidance document may change with updated information or added examples. The Department recommends
you do not print this document. Instead, sign up for the subscription service at revenue.nebraska.gov to get
updates on your topics of interest.
May 11, 2016
Dear XXXX:
This correspondence is in response to your April 18, 2016 inquiry regarding the taxation of Internet protocol
television and video service. Based on the information contained in your letter we are providing this General
Information Letter (GIL).
GILs address general questions; provide analysis of issues; and direct taxpayers to the Nebraska statutes,
Nebraska Department of Revenue (Department) regulations, revenue rulings, or other sources of information to
help answer a question. A GIL is a statement of current Department policy, and taxpayers may rely on the
Department to follow the principles or procedures described in a GIL until it is rescinded or superseded. You may
also find current regulations, revenue rulings, information guides, taxpayer rulings, and other GILs at
revenue.nebraska.gov that may be helpful to you.
As provided in Revenue Ruling 01-11-3, sales of products defined as “digital audio-visual works” are subject to
tax when sold to the end user. Digital audio-visual works is defined as a series of images which, when shown in
succession, impart an impression of motion. Included within the definition are videos, news and other television
programs, and live events. Therefore, sales of both Internet protocol television and streaming video services are
subject to tax as the sale of digital audio-visual works. Such sales are subject to tax when delivered or transferred
to servers or other electronic devices in Nebraska.
The sale of digital audio-visual works is taxable whether the purchaser receives a permanent or temporary right of
use. Persons operating under a certificate from the FCC with the right or license to rebroadcast the digital
audiovisual work to the general public by television or other means are not considered an “end user” and may
purchase the item for resale.
For the Tax Commissioner
Sincerely,

Ellen Thompson
Tax Specialist
Policy Section