Multi-State – Sales Tax on Cloud Computing: The Need for Clarity and Predictability

Bloomberg BNA Tax Management Weekly State Tax Report

January 23, 2017

Michael Wasser is a senior manager in the National Tax department at Ernst & Young LLP in Washington, D.C. Rebecca Helmes is a state and local tax senior with Ernst & Young LLP in Washington, D.C.

Tax Policy

“Sales and use taxes have historically been imposed on the consumption of tangible personal property, and recently that tax base has been expanded in a few states to include specific types of services. In this article, Ernst & Young’s Michael Wasser and Rebecca Helmes discusses managing the risks of multiple taxation and financial reporting of cloud based transactions.

As the US economy incorporates new technologies, states have struggled to adapt their manufacturing-age sales and use tax structures to the 21st century. Sales and use tax is a tax on consumption that was historically imposed on transactions in which a buyer and seller exchanged tangible personal property. Over time, several states expanded their sales and use tax bases so that specifically enumerated services became subject to sales and use tax, too”…

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