SSHB8 2709 206
HOUSE SUMMARY OF SENATE AMENDMENTS
HB 8 2024 Third Extraordinary Session Brass
TAX/SALES & USE: Levies sales and use taxes on certain digital products and services
(Items #8 and 13)
Synopsis of Senate Amendments
1.Adds the following tax exemptions to proposed law:
a. An exemption from state and local sales and use tax for digital products,
prewritten computer software access services, and information services
purchased and used by FDIC-insured financial institutions for specific
purposes provided in proposed law.
b. An exemption from state and local sales and use tax for digital products
used by licensed healthcare facilities and providers for storing or
transmitting healthcare information or for the diagnosis or treatment of
medical conditions.
c. Subject to certain conditions provided in proposed law, an exemption
from state and local sales and use tax for digital products purchased by
insurance companies.
2.Removes from proposed law provisions that duplicate or conflict with
provisions of HB No. 10 of this 2024 3rd E.S.
3.Provides that in any instance in which a provision of proposed law conflicts
with a provision of proposed law in HB No. 10 of this 2024 3rd E.S., the
provision of HB No. 10, if enacted, shall prevail and be given effect.
4.Deletes proposed law making its effectiveness contingent upon the effectiveness
of HB No. 1 of this 2024 3rd E.S.
5.Provides that proposed law shall become effective upon signature of the
governor or lapse of time for gubernatorial action.
Digest of Bill as Finally Passed by Senate
Present law imposes a state sales and use tax upon the sale, use, lease, or rental of tangible
personal property, and upon the sale of certain services, which tax is composed of the
following levies in the following amounts:
R.S. 47:302.......2.00%
R.S. 47:321.......1.00%
R.S. 47:321.1.......0.45%
R.S. 47:331.......0.97%
R.S. 51:1286.......0.03%
Present law provides for general conformity of sales and use tax bases (the sets of goods and
services subject to tax) of local taxing authorities with the state's sales and use tax base; but
authorizes local taxing authorities, individually, to adopt certain sales and use tax exemptions
for particular goods and services, allowing for dissimilarity between local bases and the
state's base.
Proposed law imposes sales and use tax on certain digital products and digital services as
defined and provided for in proposed law.
Page 1 of 4 SSHB8 2709 206
Proposed law provides that "digital product" means digital audiovisual works, digital audio
works, digital books, digital codes, digital applications and games, digital periodicals and
discussion forums, all as defined in proposed law, and any other otherwise-taxable tangible
personal property transferred electronically, whether digitally delivered, streamed, or
accessed and whether purchased singly, by subscription, or in any other manner, including
maintenance, updates, and support.
Proposed law stipulates that "digital product" shall not include any of the following:
(1)Any intangible such as a patent, stock, bond, goodwill, trademark, franchise, or
copyright.
(2)Telecommunications services and ancillary services as defined in present law and
proposed law.
(3)Internet access service charges.
(4)The representation of a work product resulting from a professional service, as
described in present law, in an electronic form, such as an electronic copy of an
engineering report prepared by an engineer that primarily involves the application of
human effort, and the human effort originated after the customer requested the
service.
(5)A product having electrical, digital, magnetic, wireless, optical, electromagnetic, or
similar capabilities where the purchaser holds a copyright or other intellectual
property interest in the product, in whole or part, if the purchaser uses the product
solely for commercial purposes, including advertising or other marketing activities.
(6)Cable television services, direct-to-home satellite services, video programming
services, or satellite digital audio radio services
Proposed law provides that for purposes of sales and use tax administration, the Dept. of
Revenue shall not consider a person's ownership of, or rights in, digital products residing on
servers located in this state in determining whether the person has substantial nexus with this
state. Provides that for purposes of proposed law, "substantial nexus" means the requisite
connection that a person has with a state to allow the state to subject the person to the state's
taxing authority, consistent with the commerce clause of the U.S. Constitution.
Proposed law encompasses provisions addressing bundled transactions. Stipulates that in
the case of the sale of a digital code that provides a purchaser with the right to obtain more
than one digital product, and which may also include the right to obtain other products or
services, and all of the products and services, digital or otherwise, to be obtained through the
use of the code do not have the same sales and use tax treatment, both of the following shall
apply:
(1)The transaction shall be deemed to be the sale of the products and services to be
obtained through the use of the code.
(2)The sales and use tax shall apply to the entire selling price of the code, except as
otherwise provided in proposed law.
Proposed law establishes the following exemptions from state and local sales and use taxes:
(1)A sales and use tax exemption for computer software or prewritten computer
software access services, information services, and digital products when all of the
following conditions are met:
(a)The service or product is purchased or licensed exclusively for commercial
purposes.
Page 2 of 4 SSHB8 2709 206
(b)The service or product is used by the business directly in the production of
goods or services for sale to its customers.
(c)The goods or services produced and sold by the business are subject to sales
and use tax or to the insurance premium tax.
(2)A use tax exemption for digital products that are created solely for the business needs
of the person who created the digital products and are not the type of digital products
that are offered for sale.
(3)A sales and use tax exemption for digital products, prewritten computer software
access services, and information services purchased and used by FDIC-insured
financial institutions for specific purposes provided in proposed law.
(4)An exemption from state and local sales and use tax for digital products used by
licensed healthcare facilities and providers for storing or transmitting healthcare
information or for the diagnosis or treatment of medical conditions.
Proposed law provides that with respect to digital products, "sale" means the first act within
this state by which the taxpayer, as a consumer, views, accesses, downloads, possesses,
stores, opens, manipulates, or otherwise uses or enjoys the product.
Proposed law provides that with respect to digital services, "sale" means the first act within
this state by which the taxpayer, as a consumer, uses, enjoys, or otherwise receives the
benefit of the service.
Proposed law stipulates that the term "sale at retail", for purposes of present law and
proposed law, does not include either of the following:
(1)Consuming any digital product in producing for sale a new product or taxable
service, where the digital product becomes an ingredient or component of the new
product or taxable service.
(2)Making any digital product available free of charge for the use or enjoyment of
others.
Proposed law adds references to digital products alongside existing references to tangible
personal property in the definitions of the following defined terms pertaining to sales and use
tax provided in present law: "cost price", "dealer", "gross sales", "lease or rental",
"purchaser", "sale", "retail sale" and "sale at retail", "sales price", "storage", "use", and "use
tax".
Proposed law adds references to digital products alongside existing references to tangible
personal property in present law providing for certain sales tax exemptions, thereby causing
the exemptions to apply to digital products as well as to tangible personal property.
Proposed law adds references to digital products alongside existing references to tangible
personal property in miscellaneous provisions of present law relative to sales and use tax
administration.
Proposed law repeals from present law relative to sales and use taxes the defined term
"computer software" and its corresponding definition.
Proposed law repeals from present law sales tax exclusions (provisions excluding certain
items from the taxable base) for custom computer software and for newspapers.
Proposed law applies to taxable periods beginning on or after Jan. 1, 2025.
Effective upon signature of governor or lapse of time for gubernatorial action.
Page 3 of 4 SSHB8 2709 206
(Amends R.S. 47:301(3)(a), (4)(intro. para.), (a)–(e), and (h), (5), (7)(a), (9), (10)(a)(i), (12),
(13)(a), (15), (18)(a)(i) and (d)(i), (19), and (29)(x)(intro. para.) and (ix), 302(A), (B), (K)(1)
and (2), (U), and (V)(1)(intro. para.), (a), and (b)(intro. para.), 303(A)(2) and (3)(a) and (G),
303.1(A) and (B)(1)(intro. para.) and (c) and (2)(b), 304(B), 305(E), 305.10(A) and (C)–(E),
305.14(A)(1)(a) and (5), 305.38, 305.53(A), 306.5(A)(1) and (2)(c), 307(A)–(C), 309(A)(1),
309.1(B)(1) and (2)(b) and (D), 310(A), 312, 314, 315(A) and (B)(1), 315.3(A), 315.5(A),
(B)(3), and (C)(1)(c), 321(A) and (B), 321.1(A) and (B), 331(A) and (B), 337.3(A), and
340.1(A)(3) and (5) and R.S. 51:1286(B); Adds R.S. 47:301(10)(c)(ii)(cc) and (jj),
(18)(a)(v), (32), (33), and (34), 301.3, and 305.5; Repeals R.S. 47:301(16)(h) and (p) and
(23))
Page 4 of 4