United States

State and Local Tax Technology Checklist (Techlist)

Apr 13, 2016
From the KPMG TaxWatch

While technology and business models continue to evolve at warp speed, state tax laws change much more slowly. As a result, businesses deploying new technologies and business models face a great deal of uncertainty in attempting to evaluate how a tax law developed 75 years ago applies today.

States are increasingly attempting to address the application of tax to emerging technology and business models through new law, court cases and administrative rulings. Tracking developments is critical not only for technology providers, but also for purchasers of technology—which includes everyone.

To make recent developments more accessible to our clients, KPMG's Washington National Tax –State and Local Tax practice has created a Technology Checklist (Techlist) that summarizes recent state guidance for topics such as the taxability of software, guidance on digital equivalents and much more. The Techlist will be published on a quarterly basis.

If you have any questions about the Techlist, please contact Harley Duncan or Reid Okimoto.

Current Issue

State and Local Tax Techlist - Guidance from the First Quarter of 2016 - highlights include:

  • The Arizona Department of Revenue ruled that a taxpayer was subject to transaction privilege tax (TPT) on subscription-based receipts from providing access to an online research database.
  • On February 24, President Obama signed The Trade Facilitation and Trade Enforcement Act (P.L. 114–125) making permanent the moratorium on state taxation of charges for internet access and multiple or discriminatory taxes on electronic commerce contained in the Internet Tax Freedom Act (ITFA). The ITFA’s grandfather clause, allowing certain states to continue taxing internet access, was extended to June 30, 2020.
  • Louisiana adopted expanded nexus provisions, including click-through and affiliate nexus language that becomes effective April 1, 2016.
  • A Washington State Administrative Law Judge determined that a taxpayer’s cloud-based fax and messaging services were telecommunications services and its cloud-based e-mail services were digital automated services, both of which are subject to retailing B&O and retail sales tax.