Many of these services have crossed over into competition with traditional cable providers, but are not subject to the same level of taxation. However, states are facing a challenge when it comes to online streaming and video games. Traditional in-home cable services have been subject to several layers of these taxes in many states. Indirect tax is a broad group of taxes that includes sales tax, gross receipts taxes, utility taxes, excises taxes, and much more. How To Define Online Video and Video Game Streaming Services For Indirect Tax Purposes States do not want to miss out on this revenue, and they are scrambling to understand how they can increase the tax receipts from these services. A 2020 report released by Deloitte referenced 2018 as the tipping point when more US consumers had video streaming services than traditional cable services.
As the industries of online video streaming (movies, television shows, viral videos) and online gaming continue to grow, so has the state complexity in taxing these services.
