Indiana ~ Sales and Use Tax: Cloud-Based Messaging Service Subject to Sales Tax and Utilities Receipts Tax

CCH Tax Day Report

Sales of cloud-based texting software services are subject to Indiana sales and use tax because the services are a telecommunications service. Telecommunications services are taxable and include data processing and information services that allow data to be generated, acquired, stored, processed, or retrieved and delivered by an electronic transmission to a customer who will then use the processed data or informations. A taxpayer’s texting software service allows hotels and hotel guests to send texts back and forth through cloud-based software owned and maintained by the taxpayer. This transmitting, conveying, or routing of data or information with the cloud-based software is a telecommunications service. The taxpayer is also liable for utility receipts tax on the gross receipts received for use of the texting service. Utility receipts tax is imposed on retail sales of utility services, including telecommunication services involving the transmission of messages or information by or using wire, cable, fiber optics, laser, microwave, radio, satellite, or similar facilities. The texting software service is a telecommunications service for utility receipts tax purposes.

Revenue Ruling No. 2015-08ST, Indiana Department of Revenue, March 7, 2017, ¶402-604

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