On August 4, 2011, the Nebraska Department of Revenue recently issued a ruling explaining sales and use tax applicability to digital media.
Nebraska sales and use tax applies to sales of digital audio works, digital audio-visual works, digital books, and digital codes relating to such products to end users who receive a right to permanent use of the product, as well as purchasers who receive less than a right of permanent use. The purchaser must receive the product electronically and download the item to a computer hard drive or electronic storage device.
The ruling clarifies that sales and use tax also applies to sales of digital goods to end users where the right of use is conditioned upon continued payments.
In addition the ruling clarifies the taxability of digital code. The sale of a digital code is taxable even though the purchaser may exercise the digital code to take delivery of the digital product at a later date. However, the definition of “digital code” does not include a stored monetary value that is deducted from the total as it is used by the purchaser, a redeemable card, a gift card or a gift certificate.
A copy of the ruling can be found here: Revenue Ruling 01-11-13.