Expert Insight: Classification of Cloud Computing Services

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“Cloud computing” is a broad term, encompassing several types of goods, services and various combinations of the two. The expansiveness of the activities has made the term's incorporation into the sales and use tax system exceedingly difficult. As Steve Oldroyd notes below, cloud computing “is simply generic terminology that is not specific enough under the current sales and use tax rules to determine the taxability of the product [or] service being sold.” Indeed, distinctions between the various cloud computing offerings are necessary before state revenue departments can provide a straightforward method of sales and use taxation.