New York – Hosted Software and Related Services (Advisory Opinion)

SALT Report 3154 – New York released an advisory opinion addressing the taxability of “hosted software and related services.  Lumps sum charges for software access are taxable and reasonable separately stated related services could be exempt.

In summary, the advisory opinion concludes:

“Petitioner’s sale of software licenses and related services included within the lump sum price to its customers in New York State are subject to sales and use taxes. Petitioner’s sale of additional services outside the lump sum charge for software and services may not be subject to applicable sales and use taxes.”

This advisory opinion addresses many of the unique questions revolving around remote access software and throws in a discussion of the taxability of sales made by 501(c)(3) organizations.  The seller’s servers are located outside of New York, the software is entirely web-based, the customers do not install any software on their computers and the software is accessed by login information only.  The information stored can be accessed and retrieved as reports by the customer when needed.

For Further Information:

New York TSB-A-13(37)S October 17, 2013