Pa. begins collecting sales tax on downloaded software

Philadelphia Inquirer, The, January, 2006 by Bob Fernandez

With a court case going unchallenged, Pennsylvania has begun collecting the 6 percent state sales tax on downloaded software.

A key exception is songs grabbed from the Internet for iPods and personal computers, Steve Kniley, Revenue Department spokesman, said this week.

The new policy amounts to a tax hike and is expected to generate revenue of $55 million to $60 million a year for Pennsylvania from businesses and individuals.

Companies update large software packages electronically, and these updates will be taxed under the new policy. Consumers also will pay the sales tax when they download software such as tax packages or virus-protection programs.

The new policy on taxing downloads was not something the Revenue Department "asked for," and the...