LexisNexis® Legal Newsroom
Found in Translation: Online Drop Shipment Facilitation Service Not Subject to New York Sales and Use Tax

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”...

Hoosier Daddy? Background Checks Not Subject to Indiana Sales Tax

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...

Customer Is Not Always Right in the Buckeye State: Ohio Board of Tax Appeals Holds Transcription Service Is not a Personal or Professional Service Exempt from Use Tax

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...

Are Your Software Keys Delivered the Old Fashioned Way? Iowa DOR Declares Tangible Digital Software Keys Exempt from Sales Tax

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...

Code Control: Michigan Court of Appeals Holds Contracts Allowing Access to Online Databases, Remote Access Software and Related Services Are Not Subject to Use Tax

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...

"PoP" Goes the Assessment - Commonwealth Court of Pennsylvania Finds Internet Backbone Services Not Subject to Sales Tax

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...

Utah Taxes Online Banking Service Provider

By Liz Cha and Amy Nogid The Utah State Tax Commission ruled that sales to financial institutions in Utah of the right to use online banking software, finance and budget tool software, online bill payment software, mobile banking software, and a mobile banking application are sales of tangible personal...

Tax Base Creep: Ohio Asserts Expanded Taxability of Electronic Information Services, Internet Access

By Zach Atkins and Madison Barnett The Ohio Department of Taxation issued a revised information release announcing its new positions regarding sales and use tax on electronic information services used in business. In the release, the Department takes the position that taxable electronic information services...

Technical Support: Tennessee Publishes Guidance on Sales Tax Treatment of Computer Software Maintenance Contracts

By Chris Mehrmann and Charlie Kearns The Tennessee Department of Revenue has issued guidance explaining that the retail sale of, use of, or subscription to a computer software maintenance contract is subject to sales and use tax when: (1) the maintenance contract is sold as part of a taxable sale of...

The Grandpappy of All Extensions: Congress Permanently Extends the Internet Tax Freedom Act

On February 11, the United States Senate approved a permanent extension of the Internet Tax Freedom Act (ITFA), which previously passed the House of Representatives on December 15, 2015. Additionally, ITFA’s Grandfather Clause, which allows certain states to continue to tax Internet access, is...

For Your Health: Health-Related Information Service Not Subject to Georgia Sales and Use Tax

By Charles Capouet and Charlie Kearns The Georgia Department of Revenue released a letter ruling stating that a taxpayer’s health-related information service was not subject to sales and use tax. The service includes a web portal to provide health information and track the user’s personal...

Look But Don't Touch: Tennessee DOR Ruling Analyzes Web-Based Software and Service

By Liz Cha and Todd Lard Applying the “true object” test to the taxpayer’s web-based services, the Tennessee Department of Revenue ruled that charges for granting access to the taxpayer’s website for purposes of obtaining information would not be subject to sales tax. While...

"Stay Just a Little Bit Longer" by Booking Online: Court Holds Orbitz's Services Not Taxable in Wisconsin

By Todd Betor and Jonathan Feldman On February 11, the Wisconsin Court of Appeals held that the receipts earned by Orbitz, an online travel company, from its services and markups for reserved rooms are not subject to sales tax. Specifically, the court determined that Orbitz is not “furnishing”...

New Michigan Law Exempts Certain Data Center Equipment Purchases from Sales and Use Taxes as of January 1, 2016

By Evan Hamme and Charlie Kearns Purchases of “data center equipment for assembly, use, or consumption in the operations of a qualified data center” on or after January 1, 2016, are exempt from Michigan sales and use tax. M.C.L. §§ 205.54ee , 205.94cc ; see generally Notice Regarding...

Electronically-Delivered Software Upgrades Not Taxable in Florida

By Jessica Eisenmenger and Amy Nogid The Florida Department of Revenue determined that software upgrades that are delivered electronically are not subject to sales tax because the upgrade was a stand-alone version of the software and did not rely on the earlier, physically-delivered software to operate...

Florida Renews Its Membership: Florida DOR Finds Certain Online Membership Benefits Not Subject to Tax

By Hanish Patel and Marc Simonetti The Florida Department of Revenue (DOR) determined that the sale of certain online membership benefits—early, exclusive access to products and deals and unlimited cloud data storage—were not subject to Florida sales tax or the Communications Service Tax...

Quill Part Deux: North Dakota Lost the Nexus Battle. Will South Dakota Win the War?

On March 22nd, South Dakota Governor Daugaard signed into law Senate Bill 106, the passage of which may be the ultimate vehicle to challenge Quill at the U.S. Supreme Court. With landslide support in the South Dakota Senate and House of Representatives, S.B. 106 adopts an economic nexus standard for...

Texas Court of Appeals Upholds Cost of Goods Sold Deduction for Seismic Data Gatherer

By Elizabeth Cha and Scott Wright The Texas Court of Appeals held that a seismic data gathering company was entitled to a cost of goods sold (COGS) deduction for costs of labor and materials incurred to acquire and process seismic data for its clients. Pursuant to Tex. Tax Code § 171.1012(i),...

Tax-Free Transfer: Online Document Delivery Services Not Subject to New York Sales Tax

By Chris Mehrmann and Madison Barnett The New York State Department of Taxation and Finance issued an advisory opinion explaining that the petitioner’s Internet-based document transfer subscription plans are not subject to sales and use tax. Because the primary purpose of the transactions is...

New York State Tax Appeals Tribunal Holds that Pricing Information Services Are Taxable

By Jessica Eisenmenger and Jeffrey Friedman The New York State Tax Appeals Tribunal sustained a determination by a Department of Taxation and Finance Administrative Law Judge that receipts obtained from the sale of retail pricing information services are subject to sales tax. Under New York law, information...

Bills, Bills, Bills: Texas Court of Appeals Scrubs Bill Pay Service Provider Free of Sales Taxes

By Elizabeth Cha and Charlie Kearns In Hegar v. CheckFree Serv. Corp. , a Texas Court of Appeals affirmed the trial court’s decision and held that the taxpayer’s online bill pay service was not a taxable data processing service for Texas sales tax purposes. Based on the trial court’s...

NYC Administrative Law Judge Determines Long Distance Telecommunications Service Fees Exempt from Utility Tax

On December 29, 2016, a New York City administrative law judge (ALJ) determined that Sprint’s long distance telecommunications service fees were exempt from the City’s Utility Tax. In the Matter of the Petitions of U.S. Sprint Communications Co., LP , TAT (H) 14-12 (UT) et al. Sutherland...

California Legislative Committee Holds Informational Hearing on Lucent and Administering California's Technology Transfer Agreement Law

On January 30, 2017, the California Legislature Assembly Committee on Revenue and Taxation held an informational hearing on “Life after Lucent : Administering California’s Technology Transfer Agreement Law.” The California State Board of Equalization and the Board’s staff are...

It's Not So Electric: Telecommunications Provider's NYS Electricity Purchases Not Exempt Sales for Resale

By Nicole Boutros and Scott Wright A New York State Division of Tax Appeals administrative law judge (ALJ) determined that a telecommunications provider’s electricity purchases were not exempt from sales tax as sales for resale. In so doing, the ALJ rejected the taxpayer’s assertion that...

Marketplace Providers Are Statutorily Required to Collect Sales Tax in Minnesota and Washington

By Jeff Friedman and Stephanie Do A new landmark sales tax statute has been adopted in Minnesota, which expands sales tax collection requirements to those retailers that sell their goods on certain “marketplaces.” Generally, only a retailer that is physically present in a state is required...