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Client Alert

California Legislation Introduced to Ban Local Taxation of Streaming Video
Authors: Michael J. Cataldo

2/7/2017

On January 31, 2017, California Assembly Bill 252 was introduced by Assembly Member Sebastian Ridley-Thomas to prohibit California cities and counties from subjecting streaming video to tax.

As we have previously reported, more than 40 California cities are currently considering the adoption of an administrative ruling that would subject streaming video services such as those offered by Netflix and Hulu to Utility User Tax. On January 31, 2017, Assembly Bill (AB) 252 was introduced by Assembly Member Ridley-Thomas that would put a stop to any such endeavor for the next six years.

AB 252 provides that “[a] city, city and county, or county, including a chartered city, city and county, or county, shall not impose any tax on video streaming services, including, but not limited to, any tax on the sale or use of video streaming services or utility user taxes.” The proposed legislation defines “streaming video” as “the provision of on-demand video content sent in compressed form over the Internet and displayed by the viewer in real time for a fee on a subscription basis.” Thereunder, the Legislature “finds and declares that the promotion of uniformity in access throughout the state to video streaming services is a matter of statewide concern and, therefore, is not a municipal affair as that term is used in Section 5 of Article XI of the California Constitution.”1 The prohibition on such taxation under the bill would be repealed by its terms on January 1, 2023.

We will continue to follow any developments on the status of AB 252 and the cities’ efforts to tax streaming video. Please contact the author or any of the other attorneys listed below if you have any questions or would like discuss.

This material is not intended to constitute a complete analysis of all tax considerations. Internal Revenue Service regulations generally provide that, for the purpose of avoiding United States federal tax penalties, a taxpayer may rely only on formal written opinions meeting specific regulatory requirements. This material does not meet those requirements. Accordingly, this material was not intended or written to be used, and a taxpayer cannot use it, for the purpose of avoiding United States federal or other tax penalties or of promoting, marketing or recommending to another party any tax-related matters.

Download: California Legislation Introduced to Ban Local Taxation of Streaming Video


  1. Article XI, Section 5 of the California Constitution permits charter cities to “make and enforce all ordinances and regulations in respect to municipal affairs subject only to restrictions and limitations provided in their several charters and in respect to other matters they shall be subject to general laws.” The California Supreme Court has stated that “the constitutional concept of municipal affairs is not a fixed or static quantity ... [but one that] changes with the changing conditions upon which it is to operate...” State Building and Construction Trades Council of California v. City of Vista, 54 Cal.4th 547, 557 (2012). What was once a matter of local concern can later become a matter of statewide concern, controlled by the general laws of the state. Bishop v. City of San Jose, 1 Cal.3d 56, 61 (1969).
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