iTax

Just in time for tax season, news that 15 states are already trying to tax downloads from iTunes and other digital media providers. Other states will surely follow suit, taking existing tax law and twisting it to cover the new delivery model.

Kentucky, for one, reasons that purchased music is personal property and, as such, is taxable. Toss in the added wrinkle that has many states treating Net service as a quasi-utility, with associated fees and taxes, and the tax bite from states could be difficult to escape.