On June 11, 2014, the Louisiana 24th Judicial District Court held in Normand v. Cox Communications Louisiana, LLC that video-on-demand and pay-per-view programming were not subject to Jefferson Parish sales tax because they were not tangible personal property, but non-taxable services.

Prior to this case, the taxability of pay-per-view and video-on-demand programming within the local jurisdictions of Louisiana was uncertain.  While the State has taken the position that this programming is not subject to sales tax, Jefferson Parish has imposed local sales tax on these transactions.

Louisiana Revised Statutes § 47:301(16)(a) defines tangible personal property to “mean[] and include[] personal property which may be seen, weighed, measured, felt or touched or is in any other manner perceptible to the senses.  Louisiana Administrative Code title 61, § I.4301 includes as tangible personal property “digital or electronic products such as … ‘on demand’ audio and video downloads.”

In Revenue Information Bulletin No. 10-015, the Louisiana Department of Revenue ruled that pay-per-view and video-on-demand movies were tangible personal property subject to Louisiana sales and use tax because they were perceptible to the senses and because, while the customers do not take title to the programs, they have control over paying fees to watch the programs.  However, following pushback from the Louisiana business community, Louisiana Revenue Information Bulletin No. 10-028 temporarily suspended and No. 11-009 permanently repealed the implementation of No. 10-015 with regard to “Pay-Per-View and Video-on-Demand movies purchased for viewing by customers of cable television and satellite television providers.”   The Louisiana Department of Revenue now takes the position that Pay-Per-View and Video-on-Demand programming is not subject to Louisiana sales and use tax.

Though the Jefferson Parish Code of Ordinances incorporates Louisiana’s definition of “tangible personal property,” Jefferson Parish disregarded the State’s position and instead pushed for the taxation of pay-per-view and video-on-demand programming as the lease of tangible personal property.  Jefferson Parish Code of Ordinances § 35-17.  Other parishes appear to be following Jefferson Parish’s lead to impose tax even though the state has said such services are exempt – and the lack of uniformity in approach to the local tax base will continue to cause problems for taxpayers.

The judge did not provide reasons for his decision, and it is unlikely that written reasons will be published unless one of the parties requests them.  It is anticipated that the case will be appealed by the parish.

Normand v. Cox Commc’ns La., L.L.C., Jefferson Parish 24th Judicial District Court, Case No. 706-766 (2014).

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