An Introduction To Sales And Use Taxation Of Digital Goods And Services In Pennsylvania


Digital goods and services have become a major player in the modern marketplace. Today’s businesses rely to an increasing degree on goods and services delivered “through the air” by vendors that often will have no traditional markers of presence in a jurisdiction. In most states, the revenue codes on the books do not consider the tax implications of a sale of a “digital good or service.”

A “digital good or service” is an amorphous concept not easily defined. The concept revolves around a transaction between a buyer and seller, and typically will include a transfer, or transfers, of digital information – bits and bytes - electronically. A transaction involving a digital “good” generally will consist of a transfer by electronic means of computer software from seller to buyer. This form of digital transaction is perhaps the most well-known, as consumers and businesses have likely purchased software, and software updates, from a seller, but received the purchased software electronically via a download.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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