Software As A Service Ny Sales Tax. A recent New York State tax bulletin offers a valuable reminder that many states consider software as a service SaaS and other cloud services charges to be sales revenues subject to state sales tax. In New York State downloadable software prewritten software accessed via a license traditionally is subject to sales and use tax.
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However if a software maintenance agreement provides for the sale of both taxable elements such as upgrades to prewritten software and nontaxable elements the charge for the entire maintenance agreement is subject to tax unless the charges for the nontaxable elements are. Is computer software subject to New York State sales tax. As one of the most difficult and ambiguous areas of sales tax law software subscriptions are easy targets for a sales and use tax audit when each state takes different positions on the many issues presented above.
While New Yorks sales tax generally applies to most transactions certain items have special treatment in many states when it comes to sales taxes.
Accordingly the sale to a purchaser in New York of a license to remotely access software is subject to state and local sales tax. Therefore software sold on a disc is taxable assuming you have nexus the obligation to collect and remit sales tax in the state. The New York State Department of Taxation and Finance issued a Tax Bulletin addressing the application of sales tax to sales of computer software and related services. Taxing downloadable or SaaS software is likely to become more widespread too with states feeling the squeeze of the digital age.
