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Interesting.

Guess they will have to change "you wouldn't steal a car" to "you wouldn't steal pulses of light and data packets that are sent through the internet, hit the screen of the subscriber's device for a split second in succession and then immediately disappear, because you can't, it is not a thing".

by fjallstrom on Fri Oct 6th, 2017 at 12:35:05 PM EST
[ Parent ]
Well, the city's tax is on the sale of tangible property. So the argument is about what is tangible. Electrons can shock you and photons can give your skin a burn. Does that count as tangible? Simpler to enact a tax on entertainment services delivered to the residents of the city. Then get in line to await court decisions. But don't hold your breath. SCOTUS now has a 5 R majority so 'No New Taxes' could be the law of the land.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Oct 6th, 2017 at 03:10:02 PM EST
[ Parent ]
Yes, this is an issue for litigation long over-due.

There is semantic interpretation of a property's properties to be resolved (hence, questionable diction in the pleading: "reflection" [?!]).

  1. physical identity of electrons (each and every instance) stored by data-type (pixel) declared, executed by "client-side" device (CPU application) which is personal property of the "end-user".

  2. accounting identity of the property transferred, or sold. Usage of "tangible" (contra "intangible") is GAAP-specific jargon for purposes of asset (read: produces income) qualification and NP valuation (eg. goodwill is intangible asset, contra patent/contract-related tangible assets).

Usage of tangible is also legal-specific jargon for purposes of assigning property ownership. In practice, assignments of "tangible attributes to personal property are broad and dichotomous.

The contract [EG. LICENSE] document (or the oral agreement) it-self  is not the intangible asset. The legal rights and duties of  the contract are the intangible asset.

What is a tangible service?. Given practicable ambiguity, one would have expected defendant to argue, transfer of property right is not executable; the asset is not sold, but licensed by the end-user (specified in service contract).

There is point-of-sale (POS) as applicable to collection of sales tax needing definition.

In the USA, unlike RoW VAT applications, transfer of a finished good typically defines POS in the so-called supply- and value-chains of production: the terminal. Profit ("value-added") attributable to transaction at any intermediate production point prior to final sale is indemnified, ie. prior transactions not subject to tax collection by the seller. Given each instance a buyer acquires the *good is measurable and finite (physical properties of transaction and terms of contract) ...

Are client-side pixels animated by server-side electrons finished goods subject to sales tax?

:: courts' judgments forthcoming
could have profound implications for definition and severability of personal property rights inherent in "user-defined" computing product. Apart from ubiquitous use of contracts of adhesion by ISP "platform" publishers, for example, AFIAK, USC draws property right distinctions between the electronic ("digital") product and "source code" (unique human person) on which the digital copy wholly relies for production of an electronic health record (EHRs). EHR producers are free to charge a fees for each and every copy of the EHR requested by the source-code "owner".


Diversity is the key to economic and political evolution.

by Cat on Tue Oct 10th, 2017 at 02:56:58 PM EST
[ Parent ]
"one would have expected defendant to argue" s/b plaintiff to argue ...". Netflix is plaintiff; City of Loveland is defendant ("respondent"). NB. The article does not supply Loveland brief.

p3-, 8 - 24 of plaintiff's brief identifies Loveland construction of audit and assessment of tax owed from Colorado statutes.

8. The Notice states that sales tax is due from Plaintiff on "sales/rental of tangible personal property" for which the sales tax was not charged to the customers or remitted to the City.

[emphasis added]

Plaintiff's argument @ 23-24 for indemnity relies on purportedly undefined terms, and semantic values, of "corporeal," "possession," and "use" EXCLUDING categorical definition  "all ... products and commodities" provided by citation to the language.

Doubtless because arguing that "service" exchanged for money ("consideration") is NOT a commodity --"something produced for commerce"-- ergo NOT a "tangible personal property" is more difficult to defend. The service produces a specific, "corporeal" product. < wipes tears >

DICTION, not emojis must adapt or die, ppl!

Diversity is the key to economic and political evolution.

by Cat on Tue Oct 10th, 2017 at 04:38:11 PM EST
[ Parent ]

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