In General Information Letter ST 13-0074-GIL, Illinois determined that certain software applications and remote services offered through the cloud are not considered telecommunications, and thus are not subject to the Telecommunications Excise Tax. The software and services, while used to support customers’ telecommunications equipment, are accessed by customers through their own telecommunications connections that the customers purchase from third-party telecommunications providers. As such, the state does not consider the cloud-based software and services to be taxable telecommunications.
With regards to sales and use tax, the state notes that electronically transferred or downloaded information or data is nontaxable pursuant to 86 Ill. Adm. Code 130.2105(a)(3). A distinction is made between information or data and “canned computer software,” which is taxable when electronically delivered unless it meets the qualifications of a license of software according to 86 Ill. Adm. Code 130.1935(a)(1).
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