Pennsylvania (PA) imposes a sales and use (S&U) tax on the retail sale of tangible personal property and certain services. For S&U tax purposes, the sale, including a license to use, canned computer software is subject to tax, even if delivered electronically.
“Cloud computing” and “digital content” refer to a variety of software products and services that use a server infrastructure and are accessed and used by end users using computer devices. Those end users could be customers or employees. For example, an IT company Taxpayer installs software on servers that can be accessed by its customers. In order to access the software, the customers either pay a subscription fee to the IT company or pay the IT company on a per-use basis. A company could also purchase and install software on servers that can be accessed by its employees. The employees can access their office computers and can perform work-related tasks from remote locations, within and outside of PA. The employer company pays for the software and employees can access the software through the cloud free of charge. In both cases, the employees and customers may collectively be referred to as “end users” of the licenses to use the software.
Is cloud computing subject to PA’s S&U tax? [Read more…] about PA Sales and Use Tax: What are the sales and use tax consequences of accessing taxable canned software on remote servers, also known as “cloud computing”?