Taxation of Cloud Computing Varies Among States

Grazed from BNA. Author: Editorial Staff.

States continue to take a checkerboard approach in determining whether sales tax applies to cloud computing, according to a panel of experts at New York University’s 31st Institute on State and Local Taxation, and only recently have buyers, more so than sellers, expressed an interest in the tax consequences of cloud computing issues.

Setting the Stage

From a technological perspective, cloud computing typically falls into three categories: (1) access to software, (2) access to platforms, and (3) access to infrastructure. Yet, according to Arthur R. Rosen, a partner at McDermott Will & Emory LLP in New York, many states will tax such access as either:…

• A sale or license of software,
• An information or data processing service, or
• A digital product or enumerated digital service.

One result is that “with [cloud computing] products it’s more likely than normal that the vendor won’t collect the right amount of tax,” said James W. Wetzler, director of the Mulitstate Tax Group for Deloitte Tax LLP in New York. The panelists identified the various approaches that some states have adopted for determining whether to exempt or tax certain types of cloud computing transactions…

Read more from the source @ http://www.bna.com/taxation-cloud-computing-n17179871292/