SALT Report 3882 – The Illinois Department of Revenue has released a letter ruling regarding the taxability of software provided as a service. They concluded that a provider of software as a service is acting as a serviceman. If the provider does not the transfer any tangible personal property to the customer, then the transaction generally would not be subject to Retailers’ Occupation Tax, Use Tax, Service Occupation Tax, or Service Use Tax. If the provider transfers to the customer an API, applet, desktop agent, or a remote access agent to enable the customer to access the provider’s network and services, it appears the subscriber is receiving computer software that is subject to tax.
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