Sales of cloud-based texting software services are subject to Indiana sales and use tax. The texting services are a telecommunications service. Telecommunications services are taxable.
Texting Services Subject to Sales Tax
In Indiana, telecommunications services subject to sales tax include electronically delivered:
- data processing services; and
- information services.
These both include services that electronically allow data to be:
- processed; or
Here, the texting service is cloud-based software owned and maintained by the taxpayer. It allows hotels and hotel guests to send texts back and forth. This transmitting of information via the texting service is a telecommunications service.
Texting Services Subject to Utility Receipts Tax
In addition, the taxpayer is liable for utility receipts tax on the sale of the texting service. Indiana imposes utility receipts tax on retail sales of utility services. Utility services include telecommunication services that involve transmitting information through specific media such as wire, cable, or fiber optics. Here, the texting service is a telecommunications service for utility receipts tax purposes.
Revenue Ruling No. 2015-08ST, Indiana Department of Revenue, March 7, 2017, ¶402-604