State Tax Initiative to Define Digital Products Hits Obstacle

The chairman of an initiative crafting a uniform definition for “digital products” for state tax purposes expressed doubts Thursday that the final product would include a carve-out for business-to-business transactions—a key objective for commercial users.

Ray Langenberg, special counsel for tax litigation with the Texas Comptroller of Public Accounts, said he has been unable to craft a concise and workable definition that would give states flexibility to carve out taxes for commercial uses of digital products. The primary obstacle, he said, is that no definition could reliably instruct vendors, who won’t be able to understand the nature ...