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

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,...

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.