Indiana Rules Generative AI Chatbot Services Exempt from Sales Tax

• Indiana Department of Revenue ruled that generative AI chatbot services are not subject to Indiana sales tax.
• The decision is based on the legal framework for examining software-related services and taxation.
• Indiana DOR previously stated that software accessed remotely is not considered a taxable retail transaction.
• The AI chatbot service is accessed via a website or app, not downloaded, aligning with prior guidance.
• Other state DORs may use similar frameworks to determine the taxability of generative AI services.
• Key considerations include whether AI functions are downloaded or accessed remotely and their role in the service.

Source: insidesalt.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.

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