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Vermont to Tax Cloud Computing, July 1, 2013


 Vermont to tax cloud computing, July 2013

The Vermont cloud computing sales tax see saw has dropped. On June 30, 2013, the "legislative moratorium on collection of sales tax on prewritten software accessed remotely" will expire. As a result, purchases made on and after July 1 will be subject to Vermont sales and use tax.

To help consumers understand the upcoming tax policy change, the Vermont Department of Taxation has published a fact sheet: The Sales and Use Tax Treatment of Cloud Computing.

Sales and use tax will apply whether prewritten software "is bought or leased for the customer's use on a disk, as a download, or accessed on a remote server." However, transactions that involve only "custom software, a personal service, or professional services" will not be subject to sales and use tax.

The fact sheet clarifies that these products are taxable when they'll be used in Vermont, whether or not sales tax applied at the point of sale. In other words, beginning July 1, if you don't pay sales tax for prewritten software when you buy it, you have to remit use tax to the state.

Products that are "only available by remote access" may or may not be subject to the tax. As a result, the department advises both vendors and customers to consider the factors listed on page 2 of the fact sheet until more specific regulations are released.

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Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.