Yesterday, Minnesota released an updated fact sheet on the taxation of digital products.
For background, Minnesota is a full member of the Streamlined Sales and Use Tax Agreement (SSUTA). This means that Minnesota has adopted SSUTA’s definitions for “specified digital products.” Like any full-member SSUTA state, Minnesota may ‘turn on’ or ‘turn off’ tax on specified digital products, however, it is to do so in accordance with the SSUTA definitions. For example, under SSUTA, a “digital audio work” is a work that “results from the fixation of a series of musical, spoken, or other sounds, including ringtones.” Thus, if a state is a full member of SSUTA, and it has decided to, say, treat digital audio works as a taxable sale (e.g., your download of music from iTunes) that means that not only songs but audiobooks and ringtones would be included in that bucket of goods subject to tax. To carve out an exception for, say, ringtones, when all other digital audio works are taxable would fall contrary to its adherence to the SSUTA definitions (or, “buckets”).