Tom Humphrey reports this morning on the memo heard round the state.  In the “technical corrections” bill put forth by the Bredesen administration, a Nashville law firm wrote:

The Bill contains sweeping legislation that would subject downloaded sales of digital media, including music videos, motion pictures, news and entertainment programs, music, ringtones, electronic books, etc. to the retail sales tax. Under current law digitally delivered goods are not taxable unless delivered in a tangible form. 

But Reagan Farr pulled out some itunes receipts for the reporters and said that taxes are already paid on itunes.  From Humphrey:

NASHVILLE – Revenue Commissioner Reagan Farr said Thursday that a draft proposal on taxing downloads of digital products is not a tax increase, despite contentions to the contrary by a Republican party spokesman and a Nashville law firm.

“In our opinion, this is a true technical correction,” said Farr. “It is a clarification and a simplification, but it gets you to the exact same tax outcome.”

So we see that a tax is already in place for itunes and music downloads.  But what about ringtones? Newscasts?  But what about changing the legal classification of digital goods to tangible goods?  Are there are numerous ramifications per tax code once you change such classification, e.g. tangible personal property taxes for small businesses, etc.  Will we have to classify such tangible digital goods as business assets?

I’ve fired off an e-mail this morning to the Nashville Law Firm who first issued the memo.  Nothing personal against Mr. Farr, but I know from the Cigarette Surveillance Program he initiated, that he’s a little too hungry for more of your hard earned dollar.  As my favorite Reagan said, that’s Ronald Reagan, trust but verify.

Forgive me for digging further on the guv’ment boys, but I’m not so sure that this “technical correction” doesn’t open up the taxable Pandora’s box for all things digital.