In 2010, an undisclosed provider of business conferencing and desktop access tools inquired with the Utah State Tax Commission asking if its cloud-based business collaboration and online meeting SaaS offerings were subject to sales tax. The product requires end users to download a thin client application to access the cloud-based services. In February 2012 the state ruled that web services that charge a fee constitute a sale of a service, and are therefore subject to sales tax. It seems to imply that simply accessing the SaaS application is enough to subject it to a tax liability. "This could really be a harbinger for cloud computing taxation," says Miller. "Many states may look to Utah's ruling as a template of how to tax cloud services into the future."
The Utah ruling is different from how other states have approached taxing cloud services because it includes services that charge users a fee for accessing a software. Other states have had a narrower definition that hinges more on the actual transfer of software from the provider to the user. Kansas, for example, in a series of rulings from the past few years, has noted that when a SaaS application of some sort is downloaded to access the application, then it can be taxed because there is a transfer of software.
PCWorld
