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

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

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.