Wisconsin – Taxability of Cloud Computing Components

1/30/2013

SALT Report 2095 – On January 25, 2013 the Wisconsin Department of Revenue updated their guidance regarding computer hardware, software, and services to provide information regarding the taxability of the following cloud computing components.

Software as a Service (SaaS) – In this situation the service provider hosts its software application over the Internet

  • Charges to access prewritten computer software located on the vendor’s server, if the customer does not have access to, or control over, the vendor’s server, are not taxable.
  • Charges for prewritten computer software that is downloaded to the customer’s equipment, or equipment that the customer has access to, and control over, in Wisconsin are taxable.
  • Charges for prewritten computer software that will be downloaded to the customer’s equipment, or equipment the customer has access to, and control over, outside of Wisconsin, for subsequent use in Wisconsin, are taxable.

Infrastructure as a Service (IaaS) – In this situation the service provider owns, maintains, operates, and houses all equipment, including hardware, servers, and any network components. The provider’s equipment is used to support its customer’s operations and the customer must use the Internet to access the equipment.

  • Charges for storage on another person’s server that the customer does not have control over, or physical access to, are not taxable.
  • Charges for the use of equipment, servers, or other hardware that the customer has control over and physical access to are taxable.

Platform as a Service (PaaS) – This service contains elements of both IaaS and SaaS.

  • The tax treatment for this service will depend on the factors mentioned above.

For Further Information

Wisconsin Department of Revenue – Sales and Use Tax Treatment of Computer Hardware, Software, Services