Cloud Computing: Revenue Departments' Cloudy Minds Lead to Inappropriate Assessments—Part 3

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

In providing cloud computing, Application Service Providers use their own hardware, operating systems and software to provide services that customers can access over the internet. Typically referred to as Software as a Service (SaaS), these transactions have been treated as taxable by many state revenue departments, based on the customer obtaining constructive possession of prewritten software, deemed to be tangible personal property. In this final installment, authors Arthur Rosen, Leah Robinson and Hayes Holderness, of McDermott Will & Emery LLP continue to highlight the inconsistencies posed by this taxing model but note also the different approach taken by New Jersey and Idaho.