Vermont Assembly Reverses Cloud Computing Taxation
- May 8, 2012 | Susan McLain
UPDATE: 5/25/2012. HB 782 was signed into law by Vermont's governor.
The Vermont Assembly has passed House Bill 782 containing a number of tax provisions including one that reverses a previous decision on cloud computing services taxation.
The bill modifies existing law so that “Specified digital products transferred electronically to an end user regardless of whether for permanent use or less than permanent use and regardless of whether or not conditioned upon continued payment from the purchaser,” are taxable. But it makes a distinction between digital products and cloud computing software use:
“Charges for remotely accessed software” means charges for the right to access and use prewritten software run on underlying infrastructure that is not managed or controlled by the consumer. Enforcement of the sales and use tax imposed on the purchase of specified digital products pursuant to 32 V.S.A. § 9771(8) is not affected by this section.
The bill also creates a committee to “…examine issues related to the taxation of software as a service.”
Refunds On Previously Paid Sales Tax
The “general assembly” determined that assessments of the tax were based on a technical bulletin released September 2010. As a result, the “…imposition of sales and use tax on prewritten computer software by 32 V.S.A. chapter 233 shall not be construed to apply to charges for remotely accessed software made after December 31, 2006. Taxes paid on such charges shall be refunded upon request if within the statute of limitations and documented to the satisfaction of the commissioner.”
The bill is a “compromise legislation” and has been approved by the House and Senate. According to Tax Analysts, Governor Peter Shumlin has indicated that he would sign the bill.
For previous coverage on this topic, read Vermont Cloud Computing and Taxation.