Bill # and Title: SB 257 – Sales Tax on Software
Author: Sen. Travis Holdman (R-Fort Wayne)
Summary: Provides that for purposes of the sales tax, a person is a retail merchant making a retail transaction when the person sells, rents, leases or licenses for consideration the right to use prewritten computer software delivered electronically. Specifies, however, that a transaction in which an end user purchases, rents, leases or licenses the right to remotely access prewritten computer software over the internet, over private or public networks or through wireless media it does not constitute a retail transaction.
Chamber Position: Support
Status: Amended and passed by the House Ways and Means Committee 20-1.
Update/Chamber Action: This bill took a very positive turn on Tuesday when it was amended by the House Ways and Means Committee. After hearing considerable testimony from members of the Chamber’s Technology and Innovation Policy Committee in a hearing last week, it appears the message was received! That message: It would be beneficial to the software industry to provide simple clarity regarding the exempt status of software as a service (SaaS). The Ways and Means Committee amendment deleted a good amount of language that we were concerned could raise new questions and run counter to the objective of reducing uncertainty about software transactions.
These changes make clear that it is only in the case where prewritten software is delivered electronically (downloaded) that the transaction is considered a retail sale subject to sales tax. And when someone buys the right to remotely access software, the transaction is not taxed. Through these positive amendments, the bill now more directly serves the objective of clarifying that SaaS transactions – those involving the use of software to essentially provide a service – are excluded from taxation.
The Indiana Chamber has been making the case for the need to eliminate the previously existing ambiguous language and convincing legislators that a clear, simple, straightforward piece of legislation can reap very real economic benefits. Our efforts are reflected in this much streamlined version of SB 257. We thank the Ways and Means Committee for listening to our members and taking this important step forward to demonstrate the Legislature’s commitment to embracing the growth of the SaaS industry in Indiana. The revised bill puts Indiana in a very favorable position to attract more and more of this burgeoning industry to our state.
Resource: Bill Waltz at (317) 264-6887 or e-mail: [email protected]