The Mysterious ITunes One Percent Tax

A few days ago I bought two games for my iPhone. EA had a 99¢ sale. I couldn’t resist.

Today the receipt came via email (which Gmail thought was spam and not really from Apple). Added to my $1.98 purchase was 2¢ for tax.

The tax rate works out to 1%. Connecticut’s sales tax is 6%.

Apple has a physical presence in-state. There are a few Apple Stores. That normally means they must charge state sales tax.

There’s no explanation on the receipt beyond “tax.” Something is weird.

I entered “iTunes tax” into Google. A few other people have asked the same question I’m asking, but with no good answer. Some were in states with no sales tax!

From the search results it’s also obvious lots of states would like to tax iTunes purchases, but as far as I see don’t.

A search on the iTunes support page also produced no info.

The funny thing is I wouldn’t have bothered looking had the tax not been as small as it is! What tax is 1%?

Now this 2¢ charge will drive me crazy!

9 Responses to “The Mysterious ITunes One Percent Tax”

  1. DorisC says:

    Maybe you should bring this to the attention of Mr Blumenthal….if they are indeed charging tax to CT residents….I am sure he would like to collect it for his constitutes!

  2. Felix says:

    I think there is a 1% tax on “data processing services”

    • Geoff Fox says:

      Is this a state tax? I can’t find it (which proves nothing). If it is a state tax why is there no sales tax which should obviously be collected?

  3. Lou Lange says:

    This would be a good question for DRS, geoff – as well as the AG’s office.

  4. Jim says:

    I believe Felix is correct.

  5. Lee says:

    Managed to find this:
    http://www.ivdgl.org/pages/c-taxhaha/connecticut.html

    “Connecticut has a sales tax on any service that the state deems as “computer and data processing”, for e.g. it could be a magazine subscription your client got off the Internet or their groceries, it’s all the same to them.”

  6. gary says:

    I’ve heard of this before w/ itunes, but I’m pretty sure I never got hit w/ this when buying mp3 files on Amazon.

  7. dave says:

    Geoff-

    You are #1 #2 on Google and Bing for the search ct itunes 1% tax

    I saw this answer http://forums.macrumors.com/archive/index.php/t-682216.html on the net:

    “I’ve never been able to figure out a straight answer regarding the the iTunes tax situation. From what I’ve been able to piece together, they don’t charge regular sales tax per se. Some states implemented “download” taxes. For some states these equal sales taxes, but it seems for most it’s a lesser amount. In CT it’s 1% (our sales tax is 6%). In effect it’s basically an iTunes tax because in order to charge it the good must be sold as a download and the offerer has to have a point of presence in the state.”

    -dave

  8. Jaison says:

    Geoff,

    The previous posts are correct, as an owner of a computer retail shop, CT taxes computer related services at 1%. Cool, huh?

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