The Ad-Hoc Committee on the Tax Treatment of Digital Goods and Services met for the second time last week to discuss the need for clear and concrete legislation outlining requirements and definitions for digital goods and services, as well as the taxation of those items.

The first meeting in July featured an overview of the current standing of tax legislation in regards to digital goods and services, and compared the tax treatment of these items in Arizona with other states. The Arizona Department of Revenue (ADOR) also presented to help define some of these terms.

Last week’s meeting included presentations from ADOR, Arizona Tax Research Association (ATRA) and the League of Arizona Cities and Towns. ADOR recommends the Legislature classify digital goods from a business standpoint within the scope of sales tax and encouraged the elimination of any old or unused TPT exemptions that clutter the statutes that ultimately lead to taxpayer confusion. ATRA mirrored the need for distinct legislation, emphasizing that under the current statutory definition, the state has no true authority to tax digital goods and services.

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