Digital Economy

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On March 15, 2022, the Ohio Supreme Court determined that the Ohio Board of Tax Appeals (BTA) must apply the true object test when determining whether a bank purchased nontaxable custom software or taxable services. The taxpayer was a bank that purchased computerized services which allowed the bank to run transactions on a daily basis…

The Virginia Tax Commissioner ruled that purchases of software and software maintenance were subject to use tax, where the taxpayer was unable to prove that the software was delivered electronically and exempt. Although the taxpayer presented correspondence with two vendors that referenced the software and maintenance being only delivered electronically, the taxpayer could not provide

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The North Carolina Department of Revenue issued a private letter ruling finding that a business-to-business online platform where businesses list inventory for sale for other businesses to order and pay was a marketplace facilitator responsible for collecting and remitting tax on sales that took place over its platform. The platform was not open to the…

The Tennessee Department of Revenue ruled recently that an information technology company’s platform product was subject to Tennessee sales and use tax. The platform was used to support a decision-making process.

The platform was hosted on Taxpayer or third-party servers, and users accessed the platform from their employer’s electronic software system. The platform was highly…

The New York Tax Appeals Tribunal upheld the New York Division of Tax Appeals’ determination that an information technology security company provides a taxable protective service. The taxpayer provides monitoring and firewall management services, by configuring its customers’ software and devices to prevent malicious activity. The Department of Taxation and Finance asserted that the taxpayer’s…

On March 4, 2022, the United States District Court for the District of Maryland partially dismissed a challenge to the Maryland Digital Advertising Gross Revenues Tax.

  • The plaintiffs asserted that the Tax violates the Internet Tax Freedom Act and the Commerce and Due Process Clauses of the United States Constitution.
  • The federal court held that

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Missouri Senate Joint Resolution 33 provides that voters will decide whether to amend the state constitution to tax digital products. Missouri’s constitution prohibits expanding the sales and use tax to any services that were not taxable as of January 1, 2015. Joint Resolution 33 proposes to allow taxation of “subscriptions, licenses for digital products, and…

In Technical Advice Memorandum (TAM) 2022-01, the California Franchise Tax Board (FTB) considered whether remote workers and various online activities eliminate P.L. 86-272 protection.  In large part reflecting the Multistate Tax Commission (MTC) guidance issued last year, the TAM concludes that a variety of activities may disqualify a taxpayer from the protections provided…

On February 6, 2022, the Washington Department of Revenue’s Administrative Review and Hearings Division issued a determination concluding that a company providing a license to use data center space owes business and occupation (B&O) tax on the profits from the service. The taxpayer provides colocation services, which includes renting space in data center facilities for…