Illinois Exempts Cloud Software from Sales Tax: Clarification on Taxation of Computer Software

• Illinois confirms that software delivered via a cloud-based system is exempt from the state’s sales tax
• Canned computer software sales are typically taxable in Illinois
• Custom computer programs may not be subject to sales tax
• Software as a service is a cloud computing service model where the provider licenses software to a client
• Providers of software as a service are considered servicemen and do not incur Retailers’ Occupation Tax
• Computer software accessed through a cloud-based delivery system is not subject to tax
• If an Illinois customer downloads software for free from an out-of-state retailer, it may not be subject to tax

Source: regfollower.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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