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