States split on issue of cloud taxability

02/7/2013 | Wall Street Journal, The

The rise of cloud computing has helped businesses cut costs, improve efficiency and enhance productivity. But for state regulators, it has presented something of a conundrum: Is virtually hosted software a product or a service, and more importantly, is it taxable? Idaho became the latest state to levy a sales tax on businesses that sell cloud services as well as those that use them, joining Arizona, Indiana, New York, Texas and Washington state. Other states, including Kansas and Nebraska, have determined that hosted software only counts as a taxable product if users download it.

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