Colorado Court of Appeals rules Netflix subject to sales tax

Colorado Court of Appeals recently ruled that Netflix subscriptions are subject to state sales tax, even though you can’t hold a streaming service in your hands. The court’s decision overturned a district court ruling and determined that Netflix subscriptions are considered tangible personal property under Colorado’s sales tax law.

The ruling delved into discussions about the meaning of the word “corporeal” and cited examples from as far back as the 1930s to support the decision. While Netflix argued that tangible personal property only includes physical objects that can be seen and touched, the Department of Revenue argued for a broader interpretation that includes things perceptible to the senses.

The Court of Appeals ultimately sided with the Department of Revenue, stating that modern advancements in technology have transformed how goods are delivered but have not changed the nature of the product itself. This ruling may have implications for other digital goods sold in Colorado, as it establishes a precedent for including intangible items in sales tax regulations.

The case has been sent back to the lower court for further review, but the ruling sets a new standard for how streaming services are taxed in Colorado. This decision reflects the evolving landscape of digital commerce and serves as a reminder of the importance of adapting tax laws to keep pace with technological advancements.

So, if you enjoy streaming your favorite shows on Netflix, be prepared to include state sales tax in your subscription costs moving forward. Stay informed about important legal developments like this by signing up for The Lookout newsletter, where we keep you updated on news and events from across Colorado.