Digital Economy

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The Michigan Department of Treasury issued a Notice announcing that it will no longer impose sales or use tax on certain prewritten computer software accessed electronically and associated online services. The Notice comes on the heels of the Michigan Court of Appeals decision in Auto-Owners Insurance Company v. Department of Treasury and the Michigan Supreme …

By Suzanne Palms and Charlie Kearns

The Commonwealth Court of Pennsylvania held that network infrastructure services (including local dial networks, telephone numbers and modems, i.e., Internet “backbone”) sold to Internet service providers (ISPs) to provide Internet access to end users were not subject to Pennsylvania sales and use tax. The commonwealth court found that the…

By Nick Kump and Charlie Kearns

On October 27, the Michigan Court of Appeals affirmed the trial court’s decision in favor of the taxpayer and held that several contracts for data processing services, access to computer programs and databases, and other online services did not include the use of taxable prewritten computer software. After considering…

By Nick Kump and Charlie Kearns

The Iowa Department of Revenue issued a policy letter declaring that the delivery of a digital software key on a tangible card is exempt from sales tax, as long as the software itself is delivered digitally and there is not a separate charge for the key. Iowa Code section…

By Nick Kump and Charlie Kearns

The Ohio Board of Tax Appeals held that medical transcription services are taxable automatic data processing services, rather than tax-exempt personal or professional services, because of the minimal level of personal skill involved in transcription services. Under Ohio law, personal or professional services are not subject to Ohio sales…

By Stephen Burroughs and Charlie Kearns

The Indiana Department of Revenue (Department) concluded that a company’s employment screening and background checking services are not subject to sales tax. The company in this matter receives requests from customers seeking to verify the background, employment history or education of a potential employee or tenant. The company then…

By Stephen Burroughs

The Kentucky Board of Tax Appeals (Board) has held that Netflix’s digital streaming service is not subject to the state’s telecommunications taxes.

Kentucky’s telecommunications tax regime is comprised of three distinct taxes, each imposed on the provision of “multichannel video programming service” (MVPS). The taxes consist of a gross revenues tax, an…

By Evan M. Hamme and Open Weaver Banks

The New York State Department of Taxation and Finance released an advisory opinion explaining how it will treat drop shipment facilitation services for sales and use tax purposes. The petitioner uses proprietary software to create an Internet-based “hub” through which a web-based merchant orders products from a…

By Robert P. Merten III and Prentiss Willson

The New Jersey Division of Taxation has issued a technical advisory memorandum (TAM) explaining New Jersey’s tax position that transactions involving convertible virtual currency— “electronic/digital money” with an equivalent or substitute value in real currency, such as bitcoins—are subject to state tax liability, including sales and use…