Indiana – Taxability of Online Databases and Workflow Add-On’s

SALT Report 1271 – The Indiana Department of Revenue ruled that a taxpayer’s sale of access to online databases and data upgrades were not subject to Indiana sales and use tax because they are sales of services and not digital products.

Indiana’s laws on the taxability of electronically transferred products are in conformity with the Streamlined Sales and Use Tax Agreement which states that, “a member state shall not include any product transferred electronically in its definition of tangible personal property.” Further, the same section of the SSUTA, notes that “ancillary services”, “computer software”, and “telecommunication services” are excluded from the term products transferred electronically.

Therefore, the Department ruled that access to the Taxpayer’s online database, which includes upgraded data packages, is a service offered by the Taxpayer and not a sale of tangible personal property or electronically transferred material.

However, the sale of workflow package add-on tools for end-users is taxable.

For Further Information:

Indiana Department of Revenue – Revenue Ruling No. 2011-05 ST