Digital Economy

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On August 10, 2021, the Hawaii Department of Taxation issued Tax Information Release No. 2021-06, clarifying the treatment and taxability of software sales under Hawaii’s general excise tax (GET). According to the Information Release, the sale of prewritten software is considered the sale of taxable tangible personal property regardless of whether the software is…

In Revenue Ruling 2021-001, the Alabama Department of Revenue ruled that IT services provided by a foreign company with no physical presence in Alabama are not subject to sales tax. The foreign company provided an information technology system remotely to an Alabama production plant. Although the company provided these services remotely, it would also…

The Multistate Tax Commission (MTC) adopted its long-awaited guidance interpreting Public Law (P.L.) 86-272 protections for internet businesses on August 4, 2021. P.L. 86-272 was passed by the U.S. Congress in 1959, and protects businesses from the imposition of state income tax when the business’s only activity in the state is the solicitation of orders…

On July 28, 2021, the Uniformity Committee of the Multistate Tax Commission’s (MTC) advanced the new project on Sales Taxation of Digital Goods (the Project). Specifically, the Standing Subcommittee recommended MTC staff draft an outline for a white paper that will explore issues concerning the state taxation of digital products and to provide guidance on…

The Mississippi Department of Revenue proposes to amend its regulation for Photographers and Film Developers to specify that certain digital products would be subject to sales tax. Under the proposed regulation, photographs, pictures, videos, discs, other tangible personal property and “specified digital products” sold by photographers and videographers are taxable. The proposed amendments would be…

The New Mexico Taxation and Revenue Department recently updated FYI-206, describing the gross receipts tax collection responsibilities for online marketplace providers and marketplace without physical presence in New Mexico. Marketplace providers and marketplace sellers with at least $100,000 of taxable gross receipts in New Mexico in the previous calendar year have a tax collection…

Last year, the Texas Comptroller proposed a regulation that affects how local sales tax is allocated for online sales, to become effective October 1, 2021. While Texas generally uses origin-based sourcing, under the new rule, online sales will generally be sourced to the destination of the sale. Local governments protested these amendments, arguing that…

The Indiana Department of State Revenue recently published Letter of Findings 01-20181612 (dated April 27, 2021), upholding the disallowance of a state research expense credit for the production of two enterprise level software applications. The Department found that the Indiana research expense credit claimed by the taxpayer was based on a similar federal credit, and…

The Arizona Department of Revenue recently released Private Taxpayer Ruling LR 21-003 (dated May 27, 2021), finding that gross income arising from the provision of temporary use of digital information and data is subject to the transaction privilege tax (TPT). The taxpayer is an information and analytics company that provides primarily publically available information and…

Effective July 1, 2021, Kentucky has enacted sales tax and utility gross receipts exemptions for certain transactions involving the commercial mining of cryptocurrency. The Kentucky DOR explained the two recently enacted bills here. HB 230 exempts the sale or purchase of electricity used or consumed in the commercial mining of cryptocurrency from sales tax and…