Indiana Provides Guidance on the Taxability of Cloud Computing

An Indiana taxpayer requested guidance from the Department of Revenue regarding the taxability of certain software and cloud computing transactions. The taxpayer, an Indiana corporation, is a multi-brand technology solutions provider, who sells to business, government, education, and healthcare customers in the United States and Canada. Among other things, the taxpayer offers a cloud-based offering that supports customers’ telecommunications equipment, including video, messaging, audio, and web conferencing.

In its analysis of the taxpayer’s cloud computer service offering, the Department focused on whether the service included the transfer of prewritten computer software, specified digital products, or other tangible personal property. The taxpayer’s customers were required to use their own equipment and Internet to access the cloud offering. Due to this and the lack of any other evidence showing a transfer of prewritten software, specified digital products or other tangible personal property, the Department concluded the taxpayer’s sale of cloud computing services was not subject to tax. Further analysis on this issue can be found in Indiana Revenue Ruling #2013-01ST.