SALT technology checklist

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

Reid Okimoto

Reid Okimoto

Principal, State & Local Tax, KPMG US

+1 206-913-4682

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 2022 checklist include:

  • Louisiana: A Louisiana appellate court held that online travel companies were not liable for parish sales and occupancy taxes for the facilitation of hotel room reservations. The appellate court found that the OTCs were not “dealers,” and had no duty to remit sales and occupancy taxes.
  • Missouri: The Missouri Administrative Hearing Commission held that a telecommunications company’s affiliate’s purchases of network equipment qualified for a manufacturing exemption. The Commission concluded that the items were “necessary for the production and transmission of [the affiliate’s] telecommunication services via [the taxpayer’s] equipment” given that the affiliate’s customers could not have made phone calls without the use of the equipment in question. Additionally, the Commission held that the items were required for the parent company’s customers to make and receive calls and, as such, met the statutory requirement that they be “used and consumed in the manufacturing” of telecommunications service. The Commission further held that the taxpayer did not have to be registered with the state public service commission as a telecommunications company to avail itself of the manufacturing exemption.
  • Tennessee: The Tennessee Department of Revenue advised a taxpayer on the taxability of separately stated fees associated with the sale of remotely accessed software. The taxpayer charged customers three separately stated fees: a platform fee, an implementation fee, and a content fee. The mandatory platform fee covered the access and use of the computer software, and it was not disputed that this fee was taxable as access to software. With regard to the implementation and content fees, the Department found that although the fees were separately stated, the fees were either necessary to complete the sale or essential and integral to the sale of the remotely accessed software, and thus were subject to tax.
  • Washington:  The Washington Department of Revenue determined that a taxpayer’s purchase of servers used to provide digital automated services did not constitute a “resale” of such servers. The taxpayer sought a refund of sales tax on purchases of servers used in providing its services to customers based on the resale exemption. The Department, in rejecting the taxpayer’s refund claim, reasoned that to qualify for the resale exemption the taxpayer would have to actually resell the servers as tangible personal property rather than use them to provide digital automated services to customers.

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

State and Local Tax Technology Checklist - 1st Quarter 2022
Technology-related state and local legislative developments

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