Summer Sun, SaaS and Sales Tax ??

As we head into June it seems like people are starting to get excited about summer.?In our discussion with clients, partners, and our own team, it seems that everyone is ready for some summer travel and family adventures.?

You’d think that things might be slowing down a bit, but we’re not seeing that.?Our CPA firm colleagues are a bit stressed out about the extended filing season as a result of California’s winter storm impacts. While a nice deferral for many residents, it strains the compliance efforts.

And in our multistate sales tax world, we keep engaging with both new and existing clients to shore up their retroactive exposures (via voluntary disclosures and back-filings) and put them on the path to compliance.?We’re also seeing notices and audits – no summer break in that space!?

Speaking of audits, we are kicking off a 5 part blog series on handling a sales tax audit – from beginning to end.?You can catch the first article here in Making Sales Tax Easy, our monthly LinkedIn newsletter, and stay tuned for the remaining coming up soon.?

This month, we also compare and contrast state tax nuances for technology companies in the states of Texas and New Mexico, and share an update to the taxability of SaaS in Mississippi.

The Sales Tax Audit Series- For California and Beyond

Over the next several weeks we will post five blogs that should interest any taxpayer who is in fear of a sales and use tax audit – especially an audit that results in a?“huge, unexpected liability.”?

These five blogs will help prepare you for all aspects of a sales tax audit by a government agency?(before, during and after) and, more importantly, will help to put you on a path to?owe little or nothing (you might even get a refund).

Jump right into the first blog here.

Texas & New Mexico and Sales Tax- SaaS, Software and More

Software as a Service (SaaS) is subject to sales tax in several jurisdictions across the country.?Approximately half of states (and some local jurisdictions) do tax the SaaS revenue stream.

In Texas, SaaS is treated as a data processing service and data processing services are taxable. However, twenty percent of the value of taxable data processing services is exempt from tax.?

So, in TX, 80% of the sales price of a SaaS subscription is taxable.

In New Mexico, services, including cloud computing services, are subject to the gross receipts tax, as long as the services are used in New Mexico.?

So, in NM, SaaS is taxable.

Both states are highly aggressive regarding their treatment of sales tax. Learn more in this compare and contrast blog.

Mississippi Reverses its Stance on Taxing SaaS

As businesses both utilize and develop technology product including electronically downloaded software and cloud computing or Software-as-a-service (“SaaS”), the taxability of these products continues to be varied and can be confusing.

The SaaS model continues to be a very?popular method of delivering software to users.?If you are a frequent reader of our blogs, you know that many states tax the?SaaS revenue stream?and many do not. In this blog, we take a look at how the rules in Mississippi have recently become more defined in this space and the state has changed its taxability of SaaS.

If you are traveling in the next few weeks, we wish you safe travels.?As always, if we can be of assistance with your state tax matters, please reach out and don't forget to subscribe to this newsletter.???

We wish you a happy slide into summer, and look forward to connecting with you during the season! ??

About Monika and Miles Consulting

Monika is President and Founder of Miles Consulting with over 21 years of experience in multistate tax consulting (sales tax, income/franchise and credits & incentives), plus a few more in federal tax! Before starting the firm in 2002, Monika was a Senior Tax Manager at a Big 4 firm.

Miles Consulting Group is a professional services firm specializing in multi-state tax solutions, which addresses state and local tax issues, including general state tax consulting, nexus & taxability reviews, audit support, voluntary disclosure agreements, and other special projects.

We also specialize in SaaS and other technology industries. For more information, visit?www.milesconsultinggroup.com?and to contact us please call us at 408-266-2259 or email?[email protected]