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IaaS, Storage and Data Transfer Fees Are Nontaxable Information Services in Florida


Software/Hi-Tech

Sales of Infrastructure as a Service (IaaS), simple storage services, and data transfer fees charged in conjunction with those two services are information services and are not subject to sales and use tax or communications services tax (CST) in Florida. Simple storage service allows a customer to utilize the storage capacity within the seller’s server/computer equipment, but the seller does not actually provide access or license to use that equipment or the real property facilities where the servers are located. As such, this service is not a taxable communications service. Additionally, the customer is not purchasing or being granted a license to use tangible personal property or real property, and, as such, the service is not a sale subject to sales tax. IaaS is properly classified as a nontaxable information service. The IaaS service is an information service whether the customer chooses an open source or a third-party instance. As an information service, it is not subject to CST. IaaS is not subject to sales tax because there is no sale or lease of software, tangible personal property, or real property. For the data transfer fees, while the seller may utilize communications services to move the data from or between data centers, the charge is not for the seller providing the communications service to the customer, because the customer is not being sold the ability to transmit, convey, or route data. The charge is for the seller to make the data or the computing power accessible in the data center or region in which the customer has requested it. Whether this charge is incurred as part of either the simple storage service or the IaaS, the charge is an information service not subject to sales tax or CST. (Technical Assistance Advisement, No. 14A19-001, Florida Department of Revenue, March 13, 2014, released June 13, 2014)

(07/21/2014)
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