We continue our blog series with a contrast of a couple of southeastern states – North Carolina and South Carolina – specifically their treatment of technology items for sales tax purposes.

Software as a Service (SaaS) in North Carolina vs. SaaS in South Carolina

Software as a Service (SaaS) is subject to sales tax in several jurisdictions across the country. Approximately half of states do tax the SaaS revenue stream. As you’ll see below, both states differ regarding their treatment of sales tax.

Cloud Computing Services are not subject to sales and use tax in North Carolina. The North Carolina Department of Revenue has also noted in a sales and use tax bulletin that charges to access computers by way of a remote terminal device are not taxable.

South Carolina taxes charges to access a database or online information service. This includes legal research services, credit reporting, research services, and charges to access an individual website. Charges for computer software delivered by an application service provider are also subject to sales and use tax. The South Carolina Department of Revenue considers an application service provider to be sufficiently similar to database access transmissions, which were ruled taxable in a sales and use tax revenue ruling by the state. SaaS is taxable in South Carolina.

Software in North Carolina vs. Software in South Carolina
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