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 1st Quarter 2021 checklist include:

  • Colorado: The Department of Revenue addressed the taxability of on-demand content that was provided through remote servers. Customers could purchase on-demand content, watch live television and other content on their phones or computers, store content on a cloud DVR, and download content to a mobile device for offline viewing. The Department noted that the vast majority of content, if it is not simply delivered via fiber optic or coaxial cable, was stored on servers that are remote from customers, and customers do not receive a full, finished copy of the purchased content. The Department found that while the content delivered by the taxpayer constituted tangible personal property, it included a service component, resulting in a mixed transaction, which was more analogous to a service. Thus, the taxpayer’s charges were not subject to sales tax.
  • Maryland: The Maryland legislature voted to override the Governor’s veto of HB 732 and HB 932, which were passed last year. HB 732 imposes a new tax on the gross revenues of a person derived from digital advertising services in Maryland. On the other hand, HB 932 redefines the term “retail sale” to include the sale of certain digital products.
  • Illinois: The Chicago Department of Finance issued a bulletin establishing safe harbor revenue thresholds for the city’s amusement tax and personal property lease transaction tax (PPLTT). The safe harbor, intended to relieve compliance burdens and give certainty with respect to nexus for the amusement tax and the PPLTT, is available beginning July 1, 2021 to out-of-state entities that received less than $100,000 in revenue from Chicago customers during the most recent consecutive four calendar quarters.
  • New York:  The New York Division of Tax Appeals held that a taxpayer’s IT security services were a taxable protective service. The taxpayer’s services included managing and monitoring firewalls, various types of IT threat detection and analyses, a threat intelligence service to educate customers about the likelihood of their organization being breached, and providing employees to work on-site at customers’ offices and evaluate IT threats as they arise. The DTA held that that both the managing and monitoring elements of many of the taxpayer’s services were protective services.

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

State and Local Tax Technology Checklist - 1st Quarter 2021
Technology-related state and local legilsative developments and guidance

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