Indiana ~ Sales and Use Tax: Cloud Computing Services Were Not Taxable

CCH Tax Day Report

Cloud computing fees, remote storage fees, and data transfer fees were not subject to Indiana sales tax because the fees were paid for services and not for tangible personal property, specified digital products, prewritten computer software, or telecommunication services. Indiana imposes sales tax on products transferred electronically only if the products meet the definition of specified digital products, pre-written computer software, or telecommunication services. Neither the open source cloud computing software nor the third-party owned cloud computing software used by customers was ever transferred to customers. The customers pay remote storage fees based on the storage capacity used each month, and based on the amount of data stored and the volume of data uploaded and download to and from the server. But the company did not charge customers for software used to store, upload, or download data, as customers could use third-party software. Finally, transferring data within the company’s network, as part of the customer’s usage of could computing services, was a nontaxable service.

Revenue Ruling No. 2012-05ST, Indiana Department of Revenue, October 4, 2016, ¶402-500



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