SALT technology checklist

A quarterly publication that summarizes technology-related state tax guidance and legislative developments.

Harley T. Duncan

Harley T. Duncan

Managing Director, State & Local Tax, KPMG US

+1 202-533-3254
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States are increasingly attempting to address the application of tax to emerging technology and business models through new law, court cases, and administrative rulings. Tracking developments is critical not only for technology providers, but also for purchasers of technology. 

To make recent developments more accessible, KPMG's Washington National Tax –State and Local Tax practice has created a quarterly Technology Checklist that summarizes recent state guidance for topics such as the taxability of software, guidance on digital equivalents, and much more. 

 

 

Highlights of the 4th Quarter 2020 checklist include:

  • California: A California trial court issued a Writ of Prohibition against the CDTFA concerning the sales tax due on bundled sales of mobile devices and wireless telecommunications service. The petitioners challenged California's Regulation 1585, which provides that a provider-retailer must calculate and pay sales tax on the unbundled price of the mobile device - the price that the consumer would pay if purchasing the mobile device separately. The court found that Regulation 1585 was arbitrary and capricious to the extent that it calculated sales tax due based on the price of an unbundled mobile device. It held that Regulation 1585 may not be applied to the bundled sale of a mobile device and wireless service in which the telecommunications service provider does not pay a commission to the retailer. 
  • New York: The New York State Department of Taxation and Finance determined that the taxpayer was providing taxable prewritten computer software when customers were provided software tools to create and deliver digital ads and to track the placement and exposure of those ads. By granting customers access to the software for their own use, the taxpayer was making a sale of taxable tangible personal property to the extent any of its customers' employees who used the software were in New York. 
  • Virginia: The Virginia Department of Tax ruled that sales of the prewritten "canned" software were considered sales of tangible personal property for purposes of computing the sales factor. The department further determined that sales of such software and any associated updates would be sourced on a destination basis for tax purposes.  
  • Washington: The Washington Department of Revenue issued guidance regarding two data center exemptions: the qualifying tenant exemption and the exemption for data centers consisting of multiple buildings. 

Many more developments are covered in the Techlist - download it below.

State and Local Tax Technology Checklist - 4th Quarter 2020
Technology-related state and local legislative developments and guidance

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