- The Arizona Court of Appeals ruled in favor of the Department of Revenue, rejecting a refund request from an HR software company.
- The court rejected the taxpayer’s view that their software did not qualify as tangible personal property.
- The court re-affirmed the state’s position that licenses to access cloud-based software are taxable as rentals of tangible personal property under Arizona’s transaction privilege tax.
- The court clarified that the software should be defined as a service, and the taxpayer’s customers have exclusive use and control over their own login to the software.
- The taxation of cloud software has become a challenge for taxpayers, as it can be classified as a service, tangible personal property, a digital good, or a rental, depending on the state’s definition.
- Many states still have outdated tax laws for internet-based products, making it difficult for taxpayers to navigate the sales of these products.
- The Arizona Supreme Court has denied ADP’s Petition for Review in this case.
Source: salestaxinstitute.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
