January 29, 2023

Volume XIII, Number 29

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January 27, 2023

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January 26, 2023

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Cloud Computing: The Answer Is Still ‘No’

This article serves as a follow up to a previous article, Cloud Computing: The Answer is 'No' (published in the October 8, 2012 issue of State Tax Notes), by examining the approaches of the Massachusetts and Michigan revenue departments towards determining the taxability of cloud computing services.  Similar to the previously analyzed approaches of Arizona, Colorado, Indiana, New York, Pennsylvania and Utah, these two state revenue departments have administratively determined that fees paid for those services are subject to sales and use taxes.  In these states, control of property must be transferred in order for a transaction to be taxable; however, neither department provides analysis of the control of the underlying software transferred to customers purchasing services from the cloud.  By ignoring the facts and determining transactions for cloud computing services to be subject to tax, the tax authorities have overstepped their bounds.  This article, which headlined the February 25, 2013 issue of State Tax Notes, provides in-depth analysis of the authorities regarding the type of control necessary to effectuate a taxable transfer in Massachusetts and Michigan, providing taxpayers affected by these rulings with the tools to challenge them as invalid applications of state law. 

Click here to read the full article.

© 2023 McDermott Will & EmeryNational Law Review, Volume III, Number 70
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About this Author

Arthur R. Rosen, Tax Planning Litigator, McDermott Will Emery, New York Law Firm
Partner

Arthur R. Rosen is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s New York office. His practice focuses on tax planning and litigation relating to state and local tax matters for corporations, partnerships and individuals. Formerly the Deputy Counsel of the New York State Department of Taxation and Finance, as well as Counsel to the Governor’s Temporary Sales Tax Commission and Tax Counsel to the New York State Senate Tax Committee, Mr. Rosen has held executive tax management positions at Xerox Corporation and AT&T....

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