In some ways, state statutes are crystal clear about which goods or services require the collection of sales and use tax. However, when it comes to Software-as-a-Service (SaaS), cloud computing and electronically downloaded software, the laws become a bit more confusing. When does your company need to collect sales tax on these types of transactions?
To further complicate the issue, the recent Wayfairdecision will affect traditional multi-state sellers (including those that generate revenue from SaaS and software) – not just online sellers. By making nexus easier to establish, companies will need to consider the taxability rules of SaaS in each state in which they have nexus even more closely.
Today is the second in a series that covers how various states across the country define SaaS, cloud computing and electronically downloaded software. Read our first post to find out how California, Utah and Washington handle them, and keep reading for three states in the Southwest: Colorado, New Mexico and Texas!
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