A state tax appeals hearing officer has said New York cannot charge sales and use taxes on payments to motion picture distribution companies for licenses to exhibit films in digital format.

The equipment used to download and display movies digitally is fundamentally different than the time-honored projection by reels of 35 millimeter celluloid film and, as such, does not fit in with the long-standing taxation scheme involving 35mm projectors, hearing officer Dennis Galliher ruled from Troy.