As you know Cloud Software is a very hot topic especially due to its positive impact on businesses. Cloud based software allows companies to nimbly respond to market demands as they grow their business. Naturally this hot bed of business activity is catching the attention of lawmakers who are now trying to determine how and if Cloud based software will or will not be taxable. The Idaho Tax Commission has recently applied a 1966 use case tax law that is adversely affecting software companies developing and distributing cloud based software. Not only is the Idaho Tax Commission ruling that software as a service is taxable but they are trying to make it retroactive exposing software companies to back taxes and penalties.
Matt Rissell, CEO of Idaho Based Company T-Sheet articulates his understandable ire and concerns in his blog, “OF TECH AND TAXES – How a SaaS tax could hurt our customers!“. Matt is a key voice in helping drive the Cloud Based Software taxation discussion here in Idaho.
Our position mirror’s Matt’s. There is no tangible distribution of software with SaaS based software. Thus it should not be taxable under current law. Customers simply have access to use our software for a nominal service fees. If customers choose to discontinue using our software they no longer have access to the software or our systems.
We are working closely with the Idaho Tech Council, T-Sheets and other members of the ITC to help define taxation issues relating to Cloud Services. Recently we joined other ITC Members to meet with key stakeholders including Governor Butch Otter and the Idaho Department of Commerce to help redefine the outdated tax codes that are being applied to today’s technology.
The ITC is crafting proposed legislation that would clearly define cloud computing as a non-taxable services. Even the Boise Metro Chamber of Commerce is rallying the support of the legislation being tentatively titled “The Cloud Services Clarification Act”.
We will continue to proactively participate in this key discussion that is already negatively impacting technology based companies in Idaho that are servicing customers world wide.
Related news and blogs
Update on ITC Initiatives; Software Talent Initiative and Cloud Computing Clarification Act
Taxes on computing irk Idaho tech businesses
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Jody Sedrick, CEO
Follow me on Twitter: @jodysedrick and @zenewareinc
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Zenware is a Boise Idaho based company that specializes In custom mobile software development, custom iOS development, custom Android development, ipad software development, iphone software development, custom web development, web hosting and Saas based work order management software.