In the July 2011 edition of PA Tax Law News, we introduced our readers to the basics on sales and use taxation of digital goods and services in Pennsylvania. In this edition, we delve deeper into this relatively uncharted territory, and consider Pennsylvania Sales and Use Tax implications with respect to the evolving world of online digital marketplaces.

The concept of an “online digital marketplace” is not new. For years consumers have purchased software from Amazon, Apple’s iTunes, Google’s Android Market and other similar services whereby consumers receive their purchases by direct download. In Pennsylvania, virtually all purchases of software from these marketplaces are subject to the sales and use tax, regardless of the method of delivery.