§ 57-39.4-33.1 — (332) Specified digital products

North Dakota § 57-39.4-33.1

• Jurisdiction: North Dakota
• Title 57: Taxation
• Ch. 57-39.4: Streamlined Sales and Use Tax Agreement

Text

1. A member state shall not include "specified digital products", "digital audiovisual
works", "digital audio works", or "digital books" within its definition of "ancillary
services", "computer software", "telecommunication services", or "tangible personal
property". This restriction applies whether the "specified digital product" is sold to a
purchaser who is an end user or to a purchaser with less than the right of permanent

use granted by the seller, or use by the purchaser which is conditioned upon continued
payment from the purchaser. Until January 1, 2010, the exclusion of "specified digital
products" from the definition of "tangible personal property" does not affect the
classification of products transferred electronically that are not included within the
definition of "specified digital products" as being included in, or excluded from, the
definition of "tangible personal property".
2. For purposes of subsection 3 of section 57-39.4-28 and the taxability matrix, "digital
audiovisual works", "digital audio works", and "digital books" are separate definitions.
3. If a state imposes a sales or use tax on products transferred electronically separately
from its imposition of tax on "tangible personal property", the state will not be required
to use the terms "specified digital product", "digital audiovisual works", "digital audio
works", or "digital books", or enact an additional or separate sales or use tax on any
"specified digital product".
4. For purposes of the agreement:
a. A statute imposing a tax on "specified digital products", "digital audiovisual
works", "digital audio works", or "digital books" and, after January 1, 2010, a tax
on any other product transferred electronically must be construed as only
imposing the tax on a sale to a purchaser who is an end user unless the statute
specifically imposes and separately enumerates the tax on a sale to a purchaser
who is not an end user. For purposes of this section, an "end user" includes any
person other than a person who receives by contract a product transferred
electronically for further commercial broadcast, rebroadcast, transmission,
retransmission, licensing, relicensing, distribution, redistribution, or exhibition of
the product, in whole or in part, to another person or persons. A person who
purchases products transferred electronically, or the code for specified digital
products for the purpose of giving away such products or code shall not be
considered to have engaged in the distribution or redistribution of such products
or code and shall be treated as an end user.
b. A statute imposing a tax on "specified digital products", "digital audiovisual
works", "digital audio works", or "digital books" and, after January 1, 2010, on any
other product transferred electronically must be construed as only imposing tax
on a sale with the right of permanent use granted by the seller unless the statute
specifically imposes and separately enumerates the tax on a sale with the right of
less than permanent use granted by the seller. For purposes of this section
"permanent" means perpetual or for an indefinite or unspecified length of time. A
right of permanent use shall be presumed to have been granted unless the
agreement between the seller and the purchaser specifies or the circumstances
surrounding the transaction suggest or indicate that the right to use terminates on
the occurrence of a condition subsequent.
c. A statute imposing a tax on "specified digital products", "digital audiovisual
works", "digital audio works", or "digital books" and, after January 1, 2010, on any
other product transferred electronically shall be construed as only imposing tax
on a sale which is not conditioned upon continued payment from the purchaser
unless the statute specifically imposes and separately enumerates the tax on a
sale which is conditioned upon continued payment from the purchaser.
d. A member state which imposes a sales or use tax on the sale of a product
transferred electronically to a person other than the end user or on a sale with the
right of less than permanent use granted by the seller or which is conditioned
upon continued payment from the purchaser shall so indicate in its taxability
matrix in a format approved by the governing board.
5. Nothing in this section or the definition of "specified digital products" shall limit a state's
right to impose a sales or use tax or exempt from sales or use tax any products or
services that are outside the definition of "specified digital products".
6. A state may treat a subscription to products transferred electronically differently than a
nonsubscription purchase of such product. For purposes of this section, "subscription"
means an agreement with a seller that grants a consumer the right to obtain products

transferred electronically from within one or more product categories having the same
tax treatment, in a fixed quantity or for a fixed period of time, or both.
7. The tax treatment of a "digital code" shall be the same as the tax treatment of the
"specified digital product" or product transferred electronically to which the "digital
code" relates. The retail sale of the "digital code" shall be considered the transaction
for purposes of the agreement. For purposes of this section, "digital code" means a
code, which provides a purchaser with a right to obtain one or more such products
having the same tax treatment. A "digital code" may be obtained by any means,
including electronic mail or by tangible means regardless of its designation as "song
code", "video code", or "book code".
8. Notwithstanding the provisions of section 57-39.4-17, a member state may provide a
product-based exemption for specific items within the definition of "specified digital
products", provided the items which are not transferred electronically must also be
granted a product-based exemption by the member state.
9. For purposes of this section and section 57-39.4-33.2, the term "transferred
electronically" means obtained by the purchaser by means other than tangible storage
media.