United States

State and Local Tax Technology Checklist (Techlist)

Jul 12, 2018
From the KPMG TaxWatch

While technology and business models continue to evolve at warp speed, state tax laws change much more slowly. As a result, businesses deploying new technologies and business models face a great deal of uncertainty in attempting to evaluate how a tax law developed 75 years ago applies today.

States are increasingly attempting to address the application of tax to emerging technology and business models through new law, court cases and administrative rulings. Tracking developments is critical not only for technology providers, but also for purchasers of technology—which includes everyone.

To make recent developments more accessible to our clients, KPMG's Washington National Tax –State and Local Tax practice has created a Technology Checklist (Techlist) that summarizes recent state guidance for topics such as the taxability of software, guidance on digital equivalents and much more. The Techlist will be published on a quarterly basis.

If you have any questions about the Techlist, please contact Harley Duncan or Reid Okimoto.

Current Issue

State and Local Tax Techlist - Guidance from the Second Quarter of 2018 - highlights include:

  • Iowa: The Iowa legislature expanded the sales and use tax base to include various technology-related offerings, effective January 1, 2019, including specified digital products, "software as a service," "information services," storage of electronic files, and ride sharing services. The legislature also enacted economic nexus thresholds for retailers, "marketplace facilitators," and "referrers."
  • Illinois: The Circuit Court of Cook County upheld a ruling by the City of Chicago Comptroller extending Chicago's 9 percent amusement tax to cover Internet-based streaming services. 
  • Connecticut: The Connecticut Department of Revenue Services ruled that a food delivery business must collect sales tax on the sale of meals to customers, including on the delivery fee.
  • Pennsylvania: The Pennsylvania Department of Revenue ruled that two taxpayers did not meet the definition of a "referrer" required to make an election to either collect sales tax or comply with use tax notice and reporting requirements for transactions in which it is involved.