Peering Through the Clouds of State Taxation: Software as a Service (“SaaS”) Does Not Quite Fit Existing State Tax Regimes

The Bloomberg BNA Tax Management Weekly State Tax Report filters through current state developments and analyzes those critical to multistate tax planning.

The economic advantages and efficiencies of cloud computing challenge the use of conventional sales and use tax rules, and in taxing access to remote software, many states continue to view cloud computing services as a license or delivery of prewritten software. In this article, Scott Smith reviews the state tax considerations related to these computing services and argues that the problem lies with how states define transactions that provide software as a service.