I’m in Illinois. SaaS is not taxable even if you’re selling within the state. What part of the bill are the taxes going on?
What about Bitdefender? We are basically reselling the services and collecting sales tax on the invoice for Managed Services already. Can we submit an NJ ST3 form to prevent double tax?
I am confused as well. I am not sure how Syncro falls under any Nexsus rules by offering an online service outside of having employees or offices in such states. We don’t pay sales tax on MS365, Webroot, Bitdefender, SentinelOne, or nearly any SaaS that I can think of at the moment.
We’d also like some more information. I double-checked with our finance team, and New Jersey does not charge sales tax on B2B SaaS as per S&U-4 (“Prewritten Computer Software Delivered Electronically, Used directly in the conduct of the purchaser’s business/trade”).
We also ran an Avalara calculation from Servably, Inc.'s Washington state address to our legal address in NJ (code SW054000), and you are not hitting any sort of state, county, or city nexus, even at $5m/year gross revenue across 50,000 transactions in NJ. We know for a fact that Avalara already considers the Wayfair decision in their calculations, so please be more transparent in how Servably is hitting a nexus in NJ, as it isn’t really gross revenue or transaction volume as you claimed in the original post.
I’m not sure who is giving Syncro sales tax advice, but it’s bad advice. Intangible property is not subject to sales tax in Georgia.
SaaS is not taxable, but because their solution includes software that is installed on a machine. It becomes taxable. The Syncro agent is considered “canned software” under the law. See https://www2.illinois.gov/rev/questionsandanswers/Pages/145.aspx
How is it considered canned? The law you linked to specifically says RETAIL sales, You are doing B2B sales, I would think
While you may think it’s a B2B transaction, the state considers you the end user in the situation where you have software you install on a computer. If the was an all cloud solution with no server presence within the state of Illinois, it would be exempt of taxes.
The state considers ANY software that is installed on a computer to be “canned software”. This would include workstation backup software, etc.
You could ask Syncro for tax exception (reseller) status by filling a CRT-61 and then you’d have to collect the sales tax and remit to the state.
I don’t make the rules.
I agree with @chad - In Illinois this would not be taxable as we are never giving the end user control over the software in a way that allows them to transfer, sell, or copy it. Read the law right here: https://www2.illinois.gov/rev/research/legalinformation/regs/Documents/part130/130-1935.pdf
Working in Virginia, we have gone by the following definition of “taxable vs. non-taxable” when it comes to software installed for a customer. Since we are your customer, this should also apply to your software that we use:
Since all of your software is remotely installed and not delivered to us on physical media, all of this should be non-taxable. Please explain the reasoning behind taxing installed software that is transferred via electronic means and not physical media.
Thank you for bringing to our attention your concerns regarding our plan to implement sales tax withholding in your state. Despite using multiple verification methods, we may have acted prematurely in alerting you to sales tax changes.
You will receive a separate email with more detailed information very soon.
Thank you for your continued support and understanding.
Thank you for your reply to our concerns. We appreciate your attention to this matter.
I was here to say the exact same thing. Services Sold and Delivered online-only, such as SaaS subscriptions, are NOT taxable.
Negative. No sales taxes on any software, installed or not, so long as it is delivered electronically (via download) to install, etc. so no, no sales tax on Syncro. Can you please provide the exact law, or reference from the state of Illinois where this applies?