Sales Tax on Cloud Computing

The SALT Shaker

In recently issued guidance, Pennsylvania indicated that accessing software on remote servers, also known as “cloud computing,” is subject to sales tax. This new interpretation of the sales tax law is only applied to users located in Pennsylvania however, it is part of a trend by state governments to tax more transactions in the Internet Age.

Generally sales tax is applied to the sales of tangible personal property. In Pennsylvania computer software is considered tangible personal property and therefore, subject to sales and use tax.  This new guidance has concluded that accessing the remote software is also taxable because the user is exercising a license to use the remote software within Pennsylvania.

Please contact the KatzAbosch SALT Group if you have any questions regarding state sales and use tax in the Internet Age.

The SALT Shaker is prepared by Andy Bareham, Chair of the KatzAbosch SALT Group

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