Will New York Budget Tax Virtual Goods?

In response to a gap in the state budget, New York Governor David Patterson has proposed a wide variety of remedies, including a so-called "iPod tax" imposing state and local taxes on "digitally delivered entertainment services."

GamePolitics.com suggests that it could affect downloadable content for video games on all the major consoles based on this passage "Close Digital Property Taxation Loophole. Imposes state and local sales tax on purchases of prewritten software, digital audio, audio-visual and text files, digital photographs, games, and other electronically delivered entertainment services to achieve tax parity. For example, with the passage of this bill, a book, song, album, or movie would be subject to sales tax no matter if it was bought at a brick and mortar store or downloaded online."

I'm not sure if that would include virtual goods or gifts or currencies, but it certainly sounds like a possibility. The budget still has to be approved by the legislature, so it may be a non-issue, but worth keeping an eye on.