The Alabama Revenue Department wants its piece of the Netflix pie, reported TimesDaily.com Sunday. Once upon a time, when Blockbuster was still a thing, customers paid a rental tax with each movie they borrowed. As movie rentals die out and are replaced with streaming video services like Netflix, Alabama stands to lose some hefty revenue – an estimated $5 to $10 million.To close this revenue hole, the revenue department is proposing a 4% state tax for “on demand” movies, TV shows, and other streaming audio and video. Deputy Revenue Commissioner Joe Garrett said the tax would not be a new tax, but it would clarify the existing tax code – and help Alabama from losing a wad of cash. Opponents of the proposal think the revenue department is overstepping its bounds, and want the proposal to go before the Alabama Legislature. Should this happen, the change could be effective as early as October 1.Alabama is not alone. The taxation of streaming video is a sticky subject, and other states have attempted to tackle it, said Forbes in a March 2014 article. There are many factors involved including a state’s existing laws, whether streaming video is tangible, personal property, whether digital content is defined and taxable, etc.Insider Take:While Alabama may be in the spotlight right now, this is an issue that every state will face at some point, and each is likely to handle it differently. It seems the primary issue here is that states see a revenue-generating opportunity, and companies like Netflix are the low-hanging fruit. For consumers, the tax would not be significant. Let’s take Netflix, for example. If a consumer is paying $8.99 for the streaming video service, a 4% tax equates to $0.36 per month. We don’t see this as a deal breaker on the consumer side.Subscription companies that provide streaming video and audio services, however, will be much more severely impacted. Data collection from their customers will need to be detailed. While collecting a zip code is a simple task, customers may not be truthful or they may live in more than one jurisdiction, and how do you handle people who travel? Does it matter which state they used Netflix in? Subscription services like Netflix will also have to update their systems to reflect the most recent tax laws in each state. This could involve a fair amount of work for the companies’ legal teams and IT staff, but it looks unavoidable.This issue will go beyond streaming music and video, though. At some point, the state and federal governments will figure out ways to tax all subscription businesses in one way or another. We’ll keep you posted on these issues as they unfold.