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 2nd Quarter 2020 checklist include:

  • Colorado: The Department of Revenue issued guidance on taxable and nontaxable software delivery methods. Taxable software delivery methods include computer software that is prepackaged for repeated sale or license, governed by a tear-open nonnegotiable license agreement, or delivered in a tangible medium. Nontaxable delivery methods include providing software through an application service provider that retains custody over or hosts software used by third parties, by electronic delivery, or by load and leave. 
  • Multistate: The Internet Tax Freedom Act (ITFA) bars state and local governments from imposing a "tax on internet access." ITFA included a grandfather clause for those state and local governments, including Texas, which imposed a tax on internet services prior to October 1, 1998. This clause expired on June 30, 2020. Ohio, South Carolina, and Texas, which imposed tax under the grandfather clause, recently issued guidance on the taxation of internet access and other digital services after July 1, 2020. 
  • New York: A New York appellate court denied a sales tax refund request on electricity that powered telecommunications equipment. The court held that the definition of tangible personal property specifically excluded electricity and that it had previously ruled in a decision involving the taxpayer's corporate predecessor that electricity "does not qualify as tangible personal property." The court also rejected the taxpayer's argument under the sale for resale exemption, holding that the taxpayer was not in the business of selling electricity, did not advertise to its customers that it was offering electricity for sale, or that the electricity could be independently consumed. 
  • Texas: The Texas appeals court, in reviewing the franchise tax sourcing of receipts from satellite radio services, held that the receipt-producing, end-product act that allowed customers to receive satellite radio programming occurred when the taxpayer decrypted the program by activating or deactivating the chip set in the customer's satellite-enabled radio. This act occurred where the satellite radio (i.e., a customer's car) was located, which could reasonably be presumed to be where the taxpayer's customer resided. 

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

State and Local Tax Technology Checklist - Q2 2020
Technology-related state and local tax guidance issued during the 2nd quarter of 2020

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