Ga. Comp. R. & Regs. R. 560-12-2-.118 - Digital Products, Goods, and Codes
(1)
Purpose. This Rule sets forth the application of Georgia sales and
use tax concerning the sale or use of Specified Digital Products, Other Digital
Goods, and Digital Codes, as well as Internet Access Service.
(2)
Definitions. For purposes of
this Rule,
(a) "Digital Audio-Visual Works"
means any series of related images, together with accompanying sounds, if any
and which, when shown in succession, impart an impression of motion.
(b) "Digital Audio Works" means digitized
works that result from the fixation of a series of musical, spoken, or other
sounds. Such term includes digitized sound files that are downloaded onto a
device and that may be used to alert an End User with respect to a
communication.
(c) "Digital Book"
means works that are generally recognized in the ordinary and usual sense as
"books."
(d) "Digital Code" means a
key, activation, or enabling code that conveys a right to obtain one or more
Specified Digital Products or Other Digital Goods. Such term does not include a
code that represents a stored monetary value that is deducted from a total as
it is used by the purchaser or a redeemable card, gift card, or gift
certificate that entitles the holder to select Specified Digital Products or
Other Digital Goods of an indicated cash value.
(e) "End User" means any person other than a
person that receives by contract a product Transferred Electronically for
further commercial broadcast, rebroadcast, transmission, retransmission,
licensing, relicensing, distribution, redistribution, or exhibition of the
product, in whole or in part, to another person or persons.
(f) "Internet Access Service" has the same
meaning as such term is defined in
47 U.S.C. Section
151, note.
(g) "Other Digital Goods" means the following
items Transferred Electronically to an End User:
(1) Artwork;
(2) Magazines;
(3) Newspapers;
(4) Photographs;
(5) Periodicals;
(6) Video or audio greeting cards;
or
(7) Video games or electronic
entertainment.
(h)
"Prewritten Computer Software" means computer software, including prewritten
upgrades, which is not designed and developed by the author or other creator to
the specifications of a specific purchaser. The combining of two or more
Prewritten Computer Software programs or prewritten portions thereof does not
cause the combination to be other than Prewritten Computer Software. Prewritten
Computer Software includes software designed and developed by the author or
other creator to the specifications of a specific purchaser when it is sold to
a person other than the specific purchaser. Where a person modifies or enhances
computer software of which the person is not the author or creator, the
Department regards the person to be the author or creator only of such person's
modifications or enhancements. Prewritten Computer Software or a prewritten
portion thereof that is modified or enhanced to any degree, where such
modification or enhancement is designed and developed to the specifications of
a specific purchaser, remains Prewritten Computer Software; provided, however,
that where there is a reasonable, separately stated charge or an invoice or
other statement of the price given to the purchaser for such modification or
enhancement, such modification or enhancement does not constitute Prewritten
Computer Software.
(i) "Software as
a Service" means a method of software delivery and licensing in which software
is accessed online via a Subscription, rather than bought and installed on
individual computers.
(j)
"Specified Digital Products" means the following items Transferred
Electronically to an End User:
(1) Digital
Audio-Visual Works;
(2) Digital
Audio Works; or
(3) Digital
Books.
(k) "Subscription"
means an agreement with a seller that grants a consumer the right to obtain
products Transferred Electronically from within one or more product categories
having the same tax treatment, in a fixed quantity or for a fixed period of
time, or both.
(l) "Transferred
Electronically" means obtained, accessed, or available to be accessed by means
other than tangible storage media.
(3)
Imposition.
(a) Beginning January 1, 2024, a tax is
imposed pursuant to O.C.G.A. §
48-8-30 on the retail purchase or
retail sale of Specified Digital Products, Other Digital Goods, or Digital
Codes sold to an End User in this state, provided that such End User receives
or will receive the right of permanent use of such products, goods, or codes
and the transaction is not conditioned upon continued payment by the End User.
1. If the seller allows the End User to
download and retain the product, then the purchase has conferred the right of
permanent use to the End User. This applies even if the End User's right of
permanent use is contingent upon continued payment by the End User. Example:
The purchase of a digital newspaper Subscription permits an End User to both
permanently download the newspaper and also access the newspaper online, the
charge for the subscription is taxable.
2. If a transaction contains both
non-fungible tokens (NFT's) and taxable Specified Digital Products, Other
Digital Goods, or Digital Codes the entire transaction is taxable. Example: An
End User purchases digital graphic art that is minted with an NFT. The entire
sales price of the digital graphic art and the NFT is taxable.
(b) The tax levied under this
paragraph shall apply regardless of whether possession of the Specified Digital
Products, Other Digital Goods, or Digital Codes is maintained by the seller or
a third party. Example: A taxpayer purchases a Digital Book. The taxpayer can
only access the book via a seller's app or website or a third-party's app or
website. The Digital Book is taxable.
(c) Except as provided otherwise in Article 1
of Chapter 8 in Title 48 of the Official Code of Georgia, the tax imposed on
Specified Digital Products, Other Digital Goods, and Digital Codes is levied,
collected, remitted, and administered in the same manner and at the same rate
as is provided in said Article for the retail purchase, retail sale, rental,
storage, use, or consumption of tangible personal property.
(4)
Sourcing.
Purchases of Specified Digital Products, Other Digital Goods, and Digital Codes
are sourced in accordance with O.C.G.A. §
48-8-77.
(5)
Exemptions and exclusions.
Sales and use tax does not apply to:
(a)
Internet Access Service; or
(b) The
sale of Prewritten Computer Software Transferred Electronically to the
purchaser or delivered to the purchaser by means of load and leave; provided,
however, that the exemption granted by this paragraph does not include sales of
Specified Digital Products, Other Digital Goods, or Digital Codes;
(c) Software as a Service (SaaS);
(d) Subscriptions for which the End User does
not receive the right of permanent use of the Specified Digital Products, Other
Digital Goods, or Digital Codes or the End User's right of use of the Specified
Digital Products, Other Digital Goods, or Digital Codes is conditioned upon
continued payment by the End User. Example: An End User subscribes to a digital
service that provides access to Digital Books. The Subscription provides no
option to download the books, and access to the books ends when the
Subscription ends. The charge for the Subscription is not taxable.
(6)
Sales for resale.
A sale of any Specified Digital Product, Other Digital Good, or Digital Code is
a sale for resale if the Specified Digital Product, Other Digital Good, or
Digital Code is subsequently sold, licensed, leased, broadcast, transmitted, or
distributed, in whole or in part, as an integral, inseparable component part of
a service or another such product, good, or code by the purchaser of the
Specified Digital Product, Other Digital Good, or Digital Code to an ultimate
consumer. The purchaser of the Specified Digital Product, Other Digital Good,
or Digital Code for resale must maintain records that substantiate such resale
in a manner consistent with this subsection, as determined by the
commissioner.
(7)
Withdrawals
from inventory. A dealer who purchases Specified Digital Products, Other
Digital Goods, or Digital Codes under terms of resale without payment of sales
and use tax is liable for use tax on the cost price of such property if it is
withdrawn from inventory and used for a taxable purpose.
Notes
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