Cloud Computing and New Jersey Sales Tax
The bulletin walks through three product categories: Software as a Service (“SaaS”), Platform as a Service (“PaaS”), and Infrastructure as a Service (“IaaS”), and explains that in each case, the sale is not the sale of tangible property or the sale of a service subject to sales tax. Because the customer is merely granted access to the software or platform rather than it being downloaded, delivered or otherwise transferred, the Division views these as sales of services which are not taxable. Similarly, data hosting and webhosting are also not subject to New Jersey sales tax.
The Service also reminds customers that the sale of information services continues to be subject to tax even if accessed through ‘the cloud.’ Information which has been collected, compiled or analyzed by the seller, such as LexisNexis or CCH, are examples of information services.
Service providers may not need to collect and remit New Jersey sales tax on the sale of its cloud computing services; however, New Jersey sales tax continues to apply to the purchase of tangible goods, telecommunications services, utilities, repairs, or other charges for setting up and maintaining cloud computing systems.
The information contained herein is not necessarily all inclusive, does not constitute legal or any other advice, and should not be relied upon without first consulting with appropriate qualified professionals for your individual facts and circumstances.
Learn More About our Technology Services>>
How Can We Help?