By Jenae R / February 5th, 2019
I was linked to a Reddit post today which brought to my attention that PlayStation may be illegally charging sales tax and has been since September 2017. Now the post is about Steam charging digital taxes recently in Colorado, but it also applies to the PlayStation Network Store and I personally only have experience purchasing from them, not Steam. In that post, it claims these game companies are not allowed to charge Colorado citizens with sales tax for items that are not tangible. And by law, a digital game electronically delivered to you is not considered tangible. A few years ago, in Colorado, companies weren’t allowed to charge sales tax online. But as far as I knew, the law then changed and I figured that was why companies like Amazon and PlayStation eventually started charging me sales tax.
Although, when I say Amazon started charging me sales tax, it was only for physical goods I purchased and had shipped to me. Anytime I purchase a digital code off of Amazon, for PlayStation Store cash or Nintendo eShop cash, I was not charged any sales tax. Similarly, when I purchased digital games and DLC from the eShop for my Nintendo Switch last year (after these tax laws are supposed to have taken effect), I once again was not charged sales tax for them. I went looking into this and found some kind of letter from the Colorado Department of Revenue, for businesses to use, that states they are not allowed to charge sales tax for goods that are not tangible. I also found another site going into some details about the E-commerce sales tax law. This one doesn’t say anything about digital software not being taxable. But the fact that it only states tangible items should be taxed, makes it seem implied companies cannot charge sales tax for intangible items.
After finding this out I went and contacted PlayStation support and they insisted that it was now the law as of September 2017 and that is why they charge tax. They claim that the money I believe they owe me (all of the digital sales tax they’ve charged me since then) isn’t actually owed to me. I’m no lawyer but it’s really difficult to find a clear cut law description or some current dated explanation of the law online from a reputable government source. It’s an obscure law and the American government has many laws, all of which differ in each state. So I could be wrong, perhaps PlayStation hasn’t charged me anything I didn’t owe. But after the searching I did, I couldn’t find something refuting the idea that PlayStation has illegally charged me tax for digital goods once it supposedly became legal to do so. PlayStation support only linked me to their own page about how and why they tax, not an actual description of my state’s law. Ultimately, I find it really strange that two other companies don’t charge me for digital goods and only PlayStation has been doing this. Do any of you reading this know something about it? What are your thoughts on this?