Cloud Sector Taxes, TSheets Make Waves in Wall Street Journal

The debate raised here recently just became a Wall Street Journal cover story. In a lengthy article on the front page of today’s Business Technology section, the issue of state taxes on cloud-based technology took center stage, focusing on Idaho and featuring TSheets.

A month ago, our CEO Matt Rissell posted his take on the subject, “Of Tech and Taxes: How a SaaS tax could hurt our customers!”  Acknowledging that he was teetering on a tightrope, he compared the fast-paced, customer-pleasing SaaS tech sector that has “the potential for mass innovation at a low cost” to the typical state’s tax division “moving at tortoise speed.” That is, until the recent controversial decision by the Idaho State Tax Commission to tax—and even penalize with back taxes—cloud-based subscription services. Citing their “poorly educated stance…[this new tax] could be the death knell to the booming tech sector.”

As the Feb. 7 WSJ article confirmed, this issue is nationwide growing concern, with individual states taking a stance, and Idaho being the latest to enter the fray. Read more about how Boise-based Micron Technology and IdaCorp, the Idaho corporate office of SuperValu, and the Idaho Technology Council have joined together with TSheets to back an effort to reverse the Idaho State Tax Commission’s stand on cloud-based technology taxes.

We want to hear from you, too. Should SaaS solutions be taxable? Do you own a business or are you a customer who might be affected by this tax?

 

3 Responses to Cloud Sector Taxes, TSheets Make Waves in Wall Street Journal

  1. No they should tax a service subscription from a cloud based software. Their argument is that if you went to a store to buy software you would pay a tax, but you would only pay that tax one time for the purchase. If you have a subscription to a cloud based software to use, you would be required to pay that tax monthly.

    I wouldn’t own any part of the service software, and if the service would happen to go out of business I wouldn’t be able to use the service any longer.

    Idaho code states and I am paraphrasing that is the product is more valuable than the service the event is taxable. If the service is more valuable than the product it’s not. My opinion at least as it relates to T-sheets the service is the value. There is a lot of ways you can record time, but to record time from all over the nation each day, that service is invaluable.

    [Reply]

    Victoria Reply:

    @Tracy Hopkins, Thanks Tracy, you make a great point here! The recurring tax fees each month would raise the price point of the services substantially!

    Also, as a side note, I like your insight to the product versus service value aspect of the tax code – I had no idea this was their general rule of thumb!

    [Reply]

  2. Pingback: The Timesheet Blog | LAW AND ORDER: How TSheets helped stop a bad tax on SaaS

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