Cloud Computing and Other Sales Tax Issues

The growing popularity of cloud computing business models has caught the attention of state tax administrators. Without a standard regime in place for determining the tax treatment of cloud computing transactions across the various states, vendors and buyers of software as a service (SAAS), platform as a service (PAAS), and other cloud computing offerings must navigate a daunting patchwork of conflicting and ambiguous state laws and administrative pronouncements. In this session, the speakers will:

• Review the approaches that states employ to impose sales or use tax on cloud computing arrangements
• Compare the varied rationale states use to determine the taxability of cloud computing offerings as services or tangible personal property
• Examine methodologies for treating bundled transactions, including determining the “true object” of a cloud computing transaction that involves multiple services
• Discuss the sourcing rules used to source sales of interstate cloud computing services to a particular state
• Identify best practices for drafting sales agreements associated with cloud computing services