This blog post is in collaboration with Avalara.

In the fast-paced world of the streaming industry, businesses constantly strive to remain competitive and adaptable to change. This dynamic market brings internal and external challenges that demand careful attention and strategic planning. Among the challenges that businesses in the streaming industry face, managing communications tax efficiently and effectively ranks high on the list.

70% of Best-in-Class respondents have tax and billing automation engrained in their technology stack.

This article summarizes the evolving landscape of communications tax, the hurdles streaming businesses encounter, and the strategies they adopt to revamp their tax management processes for sustained success.

Communications tax: A growing complexity for streaming

The potential for digital content providers is undeniable: With so many opportunities for new bundles and innovative offerings–not to mention widespread consumer adoption–it’s easy to understand the growth of this market. Yet for all the provider benefits of digital content, and streaming content in particular, there are risks and possible downsides, too. 

The negative impacts are not insignificant for state, local, and federal governments. With streaming content gaining so much steam in such a short period, taxing jurisdictions and regulatory agencies have watched a once-large pie of revenue sources shrink slice by slice. This is partly because many consumers aren’t just adopting digital content options as an add-on service. They increasingly use it to replace traditional telecom services like cable TV, whose revenue jurisdictions have long depended upon. Combined with decreased revenue from conventional and wireless phone services, many states and localities have faced severe shortfalls.

If it can be streamed, there’s a good chance communications tax might be applicable. To make it even more complicated, each state interprets the taxability of digital content individually. And the complexities don’t end there.

Navigating tax management hurdles

The tax compliance landscape in the communications industry has been in constant flux over the past few years, making it difficult to track the endless changes. Avalara is pleased to offer The State of Communications Tax compliance report from Aberdeen, which combines market trends and actionable insights from across the industry.

Download the report from Avalara and Aberdeen Research here.

The challenges streaming businesses face in managing communications taxes are multifold. Among the hurdles are determining which products are subject to tax, staying up-to-date with regulatory changes, inefficient tax calculation and reporting processes, and a lack of internal expertise. But there are improvements your business can make to help with the automation and accuracy of tax and compliance.

Leveraging the power of SaaS and automation

With effective tax management, SaaS and automation emerge as critical factors. Best-in-Class businesses prioritize automation across key tax management processes, enhancing data handling speed and accuracy. This includes automating tax rate calculations, billing and invoicing tools, registration and taxability evaluations, and audit controls, effectively minimizing the risks associated with manual errors and enabling businesses to scale and adapt to market changes rapidly.

Solutions like Avalara provide a unique advantage by functioning as a seamless extension of the business, bridging potential resource gaps. This centralized approach empowers streaming businesses to consolidate tax-related data, enhance automation, and ensure greater tax accuracy for streaming products.

The power of a unified platform

Don’t underestimate the importance of a finely tuned tax engine and billing platform. Pay special attention to billing systems and ensure they’re prepared to handle the details of communications taxes according to individual jurisdictional statutes. Thankfully the partnership and product integration between Avalara and Recurly supports communication taxes with the Avalara for Communications solution. Businesses can streamline their operations and minimize errors by housing critical tax-related processes and data in a unified platform, like Avalara, and integrating it into a platform like Recurly. 

FuboTV logo

Everything is done through Recurly, so it was critical to find a partner that could integrate with Recurly. Avalara knows the locations where we generate revenue and files the returns for us.

Larry Wills, Senior Vice President and ControllerFuboTV

This integrated approach enables tax professionals to work efficiently, access necessary information promptly, and effectively mitigate tax and audit challenges.


This study sought to shed light on the communication tax challenges businesses encounter and the strategies they employ to overcome these hurdles. The findings reveal that Best-in-Class businesses prioritize automation, leverage cloud-based solutions, and adopt a single tax management platform.

Always be alert to the possibilities of communications taxes for your streaming business,  whether with current products or as you continue to innovate. Taking the time upfront to understand and prepare for potential liabilities can pay back in spades when your company moves forward with the confidence of compliance–rather than with the risk of costly audits, penalties, and possible back taxes.

Download the report from Avalara and Aberdeen Research.

Avalara Disclaimer: Tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this article is for informational purposes only and does not provide legal or tax advice.