One of the biggest gray areas in the sales and use tax compliance arena today is the taxability of cloud (SaaS) services. For CRUSH 2016, Avalara’s national tax compliance conference, May 9-11 in New Orleans, we sat down with one of the conference speakers, and a highly-recognized expert in the area of Cloud taxability, Carolynn Kranz, CEO of Industry Sales Tax Solutions:
Avalara: The title for your session at CRUSH 2016 is “Navigating the Cloud: A Sales & Use Tax Guide.” What do you hope attendees take away?
Carolynn Kranz: Great question; I think there are three concepts: to recognize the differences between the different cloud models, how states are taxing these transactions – including the factors that directly impact the taxability decision – and the challenges to sellers and purchasers to ensure they are properly complying with each state’s provisions surrounding these models.
Avalara: Your firm specializes in state and local tax consulting. Why is this niche interesting to you and how has a focused niche helped build your practice?
CK: The great interest to me is the fact that it’s complicated and ever-changing. With 45 states, plus the District of Columbia, imposing a sales tax or variation – for example, Hawaii’s general excise tax – as well as each state’s unique laws, regulations and policies result in inconsistencies that create constant challenges for taxpayers. It is never dull!
Avalara: SaaS is pretty well understood by our audience. How do Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) differ from SaaS?
CK: The essential difference between SaaS and PaaS is that PaaS is more frequently used by developers, and allows customers to launch their own applications on the cloud infrastructure using programming languages and other tools supplied by the cloud service provider. On the other hand, SaaS allows the customer to access the provider’s software via a cloud infrastructure.
IaaS allows customers to outsource their IT. The cloud service provider gives the customer the ability to outsource its data center environment; in return, the customer gets storage space and processing power to run software, applications, and operating systems in a secure environment. Examples of the IaaS model include web hosting and remote storage service.
Avalara: Can you give us a few examples for when SaaS, IaaS and PaaS make sense for an accountant’s clients?
CK: Cloud computing services provide users with tremendous benefits in cost savings and efficiency. Businesses no longer need to expend their limited resources on purchasing and maintaining costly computer hardware and software, or endure the IT costs associated with managing and maintaining those resources. All those services, including remote access to software, the platform to run one’s own applications, and the hardware to store data or run applications, can now be provided more effectively by third parties operating in the cloud. In my own practice, I use a SaaS provider such as Intuit for remotely accessing accounting, and an IaaS provider, Dropbox, for data storage and hosting our website.
Avalara: What are you looking forward to most at CRUSH?
CK: I want to connect with tax and accounting professionals, as well as address any questions they have regarding the quickly evolving cloud services tax environment.
Join Carolynn Kranz for her session, “Navigating the Cloud: A Sales & Use Tax Guide,” on May 10. For more information on CRUSH 2016, visit our website that includes all conference sessions, speaker bios and location information.