Utah ~ Sales and Use Tax: Use of Online Databases Was Taxable

The Utah State Tax Commission found that a taxpayer’s purchases of software as a service (SaaS) were subject to Utah sales and use tax. The taxpayer did not show that the primary object of the SaaS purchase transactions was a nontaxable service or use. In addition, the taxpayer did not show that the transactions were properly sourced outside Utah. Under statute, the use of a vendor’s online database to receive information and processing services is not taxable. The taxpayer’s purchases involved putting data into a vendor’s web-based software system and retrieving the information after it had been processed and organized. The commission found that the taxpayer used the online software itself, and that the vendor did not provide data processing and information services. Further, the taxpayer did not show that the vendors’ servers were located outside Utah, eliminating the possibility that the transactions could have been sourced outside Utah. The commission also addressed and dismissed the taxpayer’s statute of limitations claims and equitable estoppel claims.

Commission Decision, Appeal No. 10-2086, Utah State Tax Commission, July 15, 2015, released October 14, 2015, ¶401-114

 


 

AUTHOR

Wolters Kluwer Tax and Accounting

Wolters Kluwer Tax and Accounting is a leading provider of software solutions and local expertise that helps tax, accounting, and audit professionals research and navigate complex regulations, comply with legislation, manage their businesses and advise clients with speed, accuracy and efficiency. Wolters Kluwer Tax and Accounting is part of Wolters Kluwer N.V. (AEX: WKL), a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services. Wolters Kluwer reported 2016 annual revenues of €4.3 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 19,000 people worldwide. Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. Wolters Kluwer has a sponsored Level 1 American Depositary Receipt program. The ADRs are traded on the over-the-counter market in the U.S. (WTKWY).

All stories by: Wolters Kluwer Tax and Accounting