Bill # and Title: HB 1316 – Sales Taxes and Credits; SB 257 – Sales Tax on Software
Authors: Rep. Tim Brown (R-Crawfordsville); Sen. Travis Holdman (R-Markle)
Summary: Provides that for the 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 a user purchases, rents, leases or licenses the right to remotely access prewritten computer software: (1) is not considered to be a transaction in which prewritten computer software is delivered electronically; and (2) does not constitute a retail transaction (and is therefore not subject to sales tax). House Bill 1316 was amended to make other amendments unrelated to software as a service (SaaS).
Chamber Position: Support
Status: House Bill 1316 passed the Senate Tax and Fiscal Policy Committee 11-0; next goes to the full Senate. Senate Bill 257 passed the House unanimously
96-0 and now goes back to the Senate for final determination.
Update/Chamber Action: While the Senate added some unrelated provisions to HB 1316, the SaaS components are identical to the language the House put in the Senate bill (SB 257). So, there is agreement: SaaS is not to be taxed in Indiana. Now it is a matter of which bill will become the forum for this clarification to be put into code. It looks like SB 257 may be concurred on and sent to the Governor for signature. Then in conference, the SaaS provisions could be dropped out of HB 1316 – thus leaving only the unrelated, non-SaaS provisions subject to conference committee consideration. Of course, it is still possible that they leave the SaaS provisions in SB 257 and pass it along with the other unrelated provisions. Either way it looks like a clean, straightforward, simplified statement on the clarification of the non-taxation of SaaS in Indiana is in the works. This is exactly what we at the Indiana Chamber having been working toward since long before the session began and it is good news for the SaaS industry.
Resource: Bill Waltz at (317) 264-6887 or e-mail: [email protected]