News Article

Wisconsin Set To Tax Digital Downloads

Posted by Corbie Dillard

With the popularity of digital downloads at an all-time high, it should come as no surprise that governments are beginning to look at ways to tax them.

The State of Wisconsin just recently signed a bill into law that allows for a 5% tax on all digital downloads spanning music, books, ring tones, and even video games. The state expects to rack up nearly 7 million dollars yearly from the tax once the law goes into effect on October 1st of this year.

Other states are also looking into taxing digital downloads including North Carolina and New York, so it would seem likely that other states would soon follow. It seems gamers had better get ready to pay a little more for their digital download gaming fix if this is any indication of things to come.

We'll keep you up to date in the event other states decide to begin taxing digital downloads in the future.

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User Comments (80)



MrPinguy said:

i hope that doesn't raise the cost of VC and Wiiware even if it's just for fellow North Americans



Sharecrow said:

It would be difficult for a state to monitor, but whatever. If they pass it, I'll just have to stockpile the games I want (that have been released) before downloading becomes taxable



timp29 said:

I'd never thought about how you would tax a business... its more complicated than I thought. Either way, in the middle of a financial crisis, you can bet your bottom dollar that this extra revenue raising will take off like a wildfire.



Chunky_Droid said:

The easiest way to get around this is change your region settings, done! I had my Wii set to some state in Canada that was already taxing, so I changed it to Texas I think and now all is well



timp29 said:

@Tides: As far as I can see, all they can do is increase the cost of the wii points. So buy your points cards interstate. Can they specifically tell where you are when you buy your points online? They'll probably ask you to enter your state somewhere in the wii settings, so just put anything but wisconsin lol.

Edit: Damn you chunky droid! beat me.



Shinnok said:

I rarely make purchases on the VC these days, so this doesn't really affect me.



Adam said:

Sharecrow, you don't technically "buy" games on VC/WW; you buy the "points." Stockpile on points like Tides of Chaos is doing and you can then use them post-September to get new games tax free, too.

Ah, the state is so silly to think we won't find our tiny little loopholes.

EDIT: Oops, didn't see Chunky Droid's post. I figured taxing was linked to the state on the credit card for online transactions. That's useful to know!



Sharecrow said:

I know - normally only get points to get games, though. I'd get more if I were to actually do that. Buying a point isn't a download, though. I'm already paying 8.25% sales taxes on points. I guess this stuff would be on top of that? Anyway, I'm gonna wait and see. Like I said, this would be hard for any state to really enforce.



Egg_miester said:

what i don't get is how do they tax it, do they wait intel you buy point cards and tax more, or is it only if you use a credit card its not like they can tax points when you are using them



Gabbo said:

Although I love having a tax free internet as much as the next man, this sort of thing is really inevitable everywhere for one really good reason: Tax uniformity between B&M sellers and online sellers.

It's bad for the local economy (everywhere) for the government to reward online transactions while creating a tax disincentive for local retailers to keep their doors open. As more and more business is done online, local governments will have to tax it to protect their local businesses.

It sucks for services like Wiiware which have no physical counterpart, but the reason behind it is to keep services like Steam and Amazon from having an artificially created unfair advantage.



Ricardo91 said:

First North Carolina, now Wisconsin! It's only gonna be a matter of time before these taxes reach Ohio!

This is really gonna suck for music, as I'm gonna have to pay tax for every buck I spend on a song!



Sharecrow said:

@Gabbo - Online vendors still have to charge and remit tax if they have a place of business in the same state as the consumer technically (regardless of whether the order is processed or shipped from that location). Different states have different definitions of what qualifies as a place of business, but the rules are there and those ones do get enforced. I pay taxes on Amazon sales too for this reason.

Come to think of it, why do I live in this state again???



The_Fox said:

Honestly, its going to come to more states and more countries, even that haven't already adopted a similar message. Taxation usually takes time to set in, especially on something intangible.



Starwolf_UK said:

I predict: The price you see won't change but the bill will. That will stop people selecting themselves as being from a different state to pay less for points and the like.

As far as Wii Points in Japan go. It is ¥1000 for 1000. However. Only like ¥962 goes to Nintendo. The other ¥48 is tax.

The same applies to Europe related transactions. IIRC* UK points are still £6.99 for 1000, £12.99 for 2000 (yeah 1p more ) insprite of the fact tax is cureently 2.5% less (everyone does it as well making the whole 2.5% less VAT thing a complete waste)...

*-Anyone like to check?



Stuffgamer1 said:

I'm almost positive that in the case of Wii points, this tax would be on the cost of the points when buying them with a credit card. Which would remove the main advantage of using a credit card over buying a points card.

PSN and anybody else who uses dollar amounts, on the other hand, can charge tax for the purchases themselves, meaning buying a card then downloading becomes a double tax! Somebody needs to sort that mess out. This method assumes that buying PSN wallet funds with a credit card isn't taxed, which a friend in New York recently told me is how it works there. We aren't sure if the cards are still taxed there or not, but I expect they are.



Gabbo said:

Right. But they don't have to charge tax to everyone else out of state.

So if you live in Wisconsin and are trying to decide on whether to buy an item in a local store or from an online store out of state and it's cheaper online because there's no sales tax, then that's an artificial disincentive to Wisconsin consumers discouraging them from doing business locally. For obvious reasons, that is not in Wisconsins' best interest.



7th_lutz said:


Wisconsin already has an online tax for online sales tax for online stores located in Wisconsin. It includes online stores that sales item online, but doesn't have shop off line.

You are currently saving money if your not buying games from online game stores in Wisconsin.

I've been saving money by buying games from online stores not located in Wisconsin.



7th_lutz said:

As a Wisconsin resident, I heard about this tax last week. It was one of many taxes Wisconsin is planing to do or increase.

It is one of the ways to decrease the huge debt Wisconsin has. Since Jim Doyle Took office as Governor, Wisconsin's debt has been increasing at good pace. People are now projecting my state will have 5 billion dollar debt.



Objection said:

Tax on downloads? I strongly disapprove. Does that mean anything? Not really, but I think we're taxed enough. (No pun intended.)



blackknight77 said:

We don't have a sales tax in Delaware except on video rentals. I hope Delaware does not decide to do it, but I won't get my hopes up too high



Sharecrow said:

I live in Texas actually...

Edit: Although we have sales tax (which is a little high), we don't have state income tax. So we get penalized for spending money, but not on earning it. I'd rather not be penalized at all, but it's not too bad...



Nintendork said:

Well, crap. While taxing downloads is a good way to get rid of debt, THIS FRICKN' SUCKS!!!!



Nintendork said:

Well, crap. While taxing downloads is a good way to get rid of debt, THIS FRICKN' SUCKS!!!!



Gabbo said:

@7th lutz
Agreed. That's why I said it is in Wisconsin's best interest to tax all online sales. Just as it is in every state's interest to do so eventually.

As a side note there used to be a federal law prohibiting taxation on online sales, but that was when internet sales were relatively small. These days, it really doesn't make economic or fiscal sense to leave any online sales tax free.



StarDust4Ever said:

In shreveport, La sales tax is 8.6% (8.25% state tax; the rest is city tax) - I have been paying that tax on Wii points purchases since I first started downloading for the system sometime in 2007. That's $20.72 and $32.58 for 2000 and 3000 points, same tax rate I would pay at my local WalMart. Ironically, if I were to order them off Amazon with free super saver shipping, the 2000 point cards would be $19.99 a piece, total with no tax. But it's simply more convenient to order them through the console and not have to wait for package or drive to the store, even though would technically have been cheaper.



Chunky_Droid said:

@StarDust: I found if you tell your Wii you live somewhere else it doesn't tax you. Since I don't live in America I also stopped buying points through the Wii since you have to tell it your billing address and I don't live over there . Ebay I found has the cheapest Wii Points.



Kaeobais said:

Wait, are they taxing the downloads themselves or the purchasing of the points?



Stuffgamer1 said:

@Sharecrow: My dad's been wishing that taxing method would come to Maryland for years! I didn't realize there were any states that DID use it...

@Shadx: Like I said above, it would have to be taxing the purchace of points, since there's really no good way to tax the points themselves.



Mike1 said:

What else is new, our government is always looking for a way to grab free money. Just like how the state of Connecticut has expanded the retarded bottle bill to include water bottles now. Either way, when you want to play, you have to pay.



Josh5890 said:

Well, I just south of Wisconsin (Illinois), and our state government is really screwed up right now and we have no money at all to give so they just might try this avenue.



The_Fox said:

@post 37
Ah, another Illinois native! Illinois currently has been eyeing this for some time now. I think they're probably going to jump on the bandwagon as well, although to say legislation moves slowly here is an understatement...



y2josh said:

@35. TwistedVivid

Should be 25 cents, 5 cents on every dollar. Meaning 50 cents for a n64 game. I hope they don't double tax the wii point's card buyers.



Viral said:

I hope this isn't a sign to come for overseas users...we already pay a ton of tax for corporate bailouts in the UK....



Viral said:

For the record, I'm from the great state of Iowa. And if you live in Illinois, I will be coming there in May...muhahaha.



Hilanderous said:

Don't you pay city and state taxes already? I'm from Chicago and when I buy a game on the virtual console using my credit card a 10% Chicago city tax is added to my purchase.



citizen_zane said:

I live in Tennessee, and for some reason, every retailer charges tax on Wii Points cards, except for Game Stop.



MickEiA said:

Does anybody know if lucasarts games coming to VC i loved rogue squadron to a lesser extent shadows of the empire



Starwolf_UK said:

I hope this isn't a sign to come for overseas users...we already pay a ton of tax for corporate bailouts in the UK....
It isn't a sign of what is to come since it already happened. We already pay tax on the downloads if you look at the purchase history the transaction brea...

Hang on a minute, my previous comment; comment #18 goes over this.

@StarDust. Can't you just set your Wii to be from some other state and avoid the tax. It does seem counter intuitive to tax the total since Japan and Europe are the total including tax.

Though, I guess its easier for Japan where tax is the same accross the whole country but Europe is an odd one since tax is (slightly) different for each nation. Of course America has state-dependant sales tax.



Golgo said:

That sucks guys, but unless you live in the UK you really don't know the meaning of tax.



Lotice-Paladin said:

@ Starwolf_UK: I haven't seen a points card worth £12.99 yet. Where'd you buy yours? I normally see them at £14.99 at GAME, £14.67 in Gamestation and (used to) see them at £13.99 at Woolies.

Also that's true about already paying for tax when you purchase a card. If you could excude it it still wouldn't reduce the price alot more. Maybe like £12.45 or something.

@ Golgo: That's true. Everything is taxed here. Why did we even get the tax reduced anyway? We'll only pay it back when the economy picks up, like instead of the usual 17.5% it'll be 20%!

Anyway I know how you all feel. You can't evade it once it's online unfortunately.

In Manchester they wanted us to pay congestion charge but we got a vote whether we should or not, luckily for us most voted against it. It wasn't just about the charge, it was about the tax you pay depending on where you drove within the city.



Mayhem said:

@Josh, Fox, DDR - and I'll be putting the "ill" and "annoy" into Illinois in July myself. Back visiting a close friend and then heading off to SDCC.

As for digital download tax, I have a feeling the price would go up to accommodate the revenue the seller is now losing...



XCWarrior said:

If this happens, before it goes into effect I'm spending all my Wii Points and never using DLC again.




SmaMan said:

Well in Texas, I pay $21.65 for 2000 points tax included. I believe that just the normal sales tax for the whole nation, right?

What's sweet about Texas is that we don't have a state income tax! Unfortunately, they just jack up all the other taxes to make up for it.



The_Fox said:

@post 46:
I don't think Lucasarts will ever embrace the VC. They've been cold to the idea so far, which is a shame.

Edit: Yes! Illinois pulls into the lead with more VCR members living and/or visiting here!



dk_xcalibur said:

Maybe I'm the only one but I have no problem paying taxes on this. If I went to the store and bought a Wii points card then I would be hit with a sales tax so I have no problem with getting taxed by my state for downloading points.

@post 51: Calm down, you're not going to get taxed on points you already own. No need to rush out and spend them this second just because future points will be taxed.



Hilanderous said:

@ Post 55: Illinois, WOOOOOO!!!!!

@Post 56: I do get taxed for downloading straight from the shop channel. I have to pay my city's tax, even though it is just a download and I'm not using a Wii points card. In Chicago (where I'm from), there is a 10% tax on entertainment goods because they are seen as unnecessary. That tax already applies to digital downloads for the Wii.



Starwolf_UK said:

@ Starwolf_UK: I haven't seen a points card worth £12.99 yet.
I meant buying them through the Wii shop. It allows you to buy 1000, 2000 or 3000 points. I messed up the figure. I was meant to say £13.99 for 2000 points (but since 1000 points costs £6.99, 6.99*2=13.98=being overcharged by a penny!)

Sorry for any confusion.



Blk_Mage_Ctype said:

Ugh! Taxes on Downloads?!

I'll tell ya... Uncle Sam reaches into out pockets and rings our wallets dry! And what do we get in return? Free National Healthcare? New Bridges? Repaired Streets? Perhaps a better funded Public School System?

Nope... In truth, none of that money will ever make it's was back to us.
It just fills the pockets of greedy politicians to fund their meaningless wars that they fight in the persuit of greater wealth, alsong with our Social Security...



The_Fox said:

@post 59.
Tsk, Tsk, Tsk. I know that talking about taxes is political in itself, but lets not go too over the top. Remember, this is just a video game site and we don't want to start flame wars.



Nobarai said:

I live in Washington (Not D.C.), and they've been taxing downloads for a while. Not much of a surprise.



Metroid133 said:

I hope it doesn't head to South Dakota soon! I hope it doesn't go anywhere else actually.



Shinnok said:

@ Blk_Mage_Ctype
Thank God someone started talking about politics! Hey, I have an idea! Let's talk about the historic election of Barack Obama, or maybe how bad the economy has gotten and how it's all Bush's fault!

Wait, I thought of an even better plan! Let's complain about paying extra money for video games, and leave the politics to the people of CNN. After all, that's what they get paid for. Is that going to be okay for you?

..."meaningless wars", ugh.



Bensei said:

That won't work on the Wii for several reasons:

1.) Nintendo won't raise prices afterwards (although Nintendo could just reduce their profit to pay the taces)
2.) You can easily change regions or countries, so if not whole Europe and Australia or all the NoA countries ask for the same % of taxes, Gamers will just switch to Canada or Austria or whatever...



Viral said:

The European version of the VC won't allow you to change it to North American settings. And for the record, I once lived in Iowa, served in a meaningless war called Operation Iraqi Freedom, and honestly don't think it was worth my time over there...Politics are best left to people who can argue them. I think that the opinions about whether the war is right or wrong shouldn't be discussed in this forum though since it's really a gaming site.

Now, with that aside, can anyone recommend me some good games NOT made by Nintendo so I download something new?



Captain_Konami said:

Game recommendations, randomly off the top of my head:

Contra III
Wrecking Crew (recently downloaded, just as addictive as it was when I had the cart back in the day)

And I'm toying with getting back into Hudson's Adventure Island game, I seem to recall it was a solid and enjoyable platformer, good pure fun on a par with Super Mario Bros (nothing matches the original Sup MB, but Adventure Island is still good fun).



Shinnok said:

"Nothing matches the original Sup MB" huh? You know, you should rename yourself "Captain_Comedy", because that was a joke.



J_D said:

I agree with Tides of Chaos, as I too am a Wisconsinite. Or you could always use that twilight hack. (which I can't use because I updated my wii to 3.4 before I knew what the twilight hack was.)



Captain_Konami said:

Shinnok, I don't think you appreciate the depth of your mistaken amusement. Super Mario Bros is BOTH so much beyond the quality of gaming fun of its contemporaries of its particular day, AND still manages to be a high quality fun play even decades later, even with it's OLD gen technological limits........... I don't think many games even today, with all the hardware power behind them (and a mega sized video game industry backed with mucho moolah developing games these days), can claim to be as good (both for it's time and in general).

If they gave video games IQ points based on purity of concept for the purpose of it engaging the players and giving them quality controls and game difficulty balance, Super Mario Bros would be somewhere around 190 IQ.

But be amused if you the man says, "opinions vary".



Viral said:

I don't know Captain Konami, I never really got into F-Zero...racers aren't my type of thing. I already have Contra III and I'll look into Wrecking Crew.



Shinnok said:

Man oh man, you defend your title of "Captain_Comedy" so well! My sides are officially split! Please...encore, ENCORE!

Seriously though, it's just the nostalgia talking. That game was good for its time, and that's all. And I know you'll write a big response to the contrary, but I'm just going to say it. Super Mario Bros. 3 was made on the NES, and it looked, sounded, and played much better than all of its predecessors. Even Super Mario Bros. 2, which blew chunks, was superior.

But I can relate. I love Sonic '06 to death, but practically everbody else thinks of it as abysmal. This is probably because I adore Sonic titles, so I will overlook its many faults. In fact, it's one of my favorite Sonic games of all time. So, what drives a person to love crap? Nostalgia, and that's all.



MethodOne said:

I live in Wisconsin and I already get charged sales tax for ordering points through the Wii Shop Channel. 2000 points cost $21.00 here.



Captain_Konami said:

I'd prefer to call it "vision". But potato, potahto......

(I can do one word reply posts too if needed......I'm a versatile captain of comedy you see. )


@74. Viral: Yeah, not enjoying racers would pretty much doom F-Zero. F-Zero is all about the sense of speed and the subtleties of the courses (at least for me). I tried to recommend a range of game genres. And if you end up liking Wrecking Crew, you might check out the first couple Lolo games. More puzzling goodness.



MewtwoEx said:

haha they gotta be kidding us o all this stuff is virtual, why shoud we need to pay taxes?

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