Tuesday, November 29, 2011
Companies providing cloud computing services should consider the following interrelated subjects:
- the nature of the service provided (including its taxonomy) and the service's taxability;
- the sourcing by state and local jurisdiction for the particular service offered and the related question of whether a taxable sale of that service has occurred;
- the potential tax collection obligations as a result of nexus;
- and the exemption from use tax for providers' purchases or leases of equipment and software used to provide the service.
We discuss these subjects below in the context of each type of cloud computing service and try to provide some sunshine to help clear up this cloudy area of state and local tax.
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