United States

South Carolina finds streaming media subject to sales and use tax

Streaming video content and music are similar to cable and satellite


On July 6, 2016, the South Carolina Department of Revenue (DOR) published Revenue Ruling #16-5, determining that charges for the streaming of television programs, movies, music and other similar media are subject to sales and use tax.

The DOR explains in the ruling that the method of delivery of media content first evolved from cable and satellite television to an on-demand and pay-per-view access model and then further evolved to other methods of delivery such as on-demand streaming through the internet. Streaming media customers can now access content live and recorded through their televisions, streaming media players, cellular phones, tablets and other devices for a per-access or subscription fee.

In analyzing whether on-demand streaming is subject to the sales and use tax, the DOR looked to the definition of ‘tangible personal property’ that explicitly includes communications. Communications are generally subject to the South Carolina sales and use tax on charges for the ‘ways or means’ for the transmission of voice or messages. The DOR has historically interpreted ways or means to include charges for the access to, or use of, a communication system, whether those charges were on a per access or per transmission basis.  

Further, the South Carolina regulations provide examples of taxable communication services including cable television services and satellite program and transmission services. The DOR has previously taxed similar communication services such as telephone service, paging service, fax transmission services, television radio and other music programming services, voice mail messaging services, database access transmission services, legal research services and credit reporting services.

In reviewing the taxability of streaming media, the DOR looked to an industry definition of ‘streaming’ defined as a technique for transferring data over the internet in a continuous flow to a customer’s computer. Based on the DOR’s historical approach to taxing communications, and considering the definition of streaming, the DOR concluded that the streaming transmission of television programs, movies and music over the internet is no different from cable and satellite transmission of television programs, movies, music or other similar content. Therefore, charges of streaming media are charges for communication services subject to the sales and use tax, regardless of whether the charges are based on a per-access basis or a subscription.

In February, the DOR released the ruling in draft format for public comment. Noteworthy, neither South Carolina statutes nor regulations specifically address the taxability of streaming media. Taxpayers should remember that a revenue ruling represents the DOR’s position until superseded or modified by statute, regulation or a court decision. With the DOR’s position interpreting existing law to find streaming media taxable like other communication services, it will be interesting to see whether the legislature chooses to carve out those services from the tax. Providers of streaming media services in South Carolina should review the ruling and discuss any relevant changes with their tax advisor.


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