Sale of Virtual Computer Offerings Taxable in Massachusetts

Sales of virtual computing offerings, including remote access, remote support, and online conferencing, are subject to Massachusetts sales and use tax when sold to customers located in Massachusetts. The sales are subject to tax because the true object of the transactions is the use of computer software. The fact that the provider may provide personal and professional services in connection with the offerings is inconsequential. The customer’s involvement with and use of the provider’s software with these offerings is essential to meeting the customer’s objectives. Each of the virtual offerings is designed so that the customer accesses and uses prewritten software with little or no interaction with the provider’s employees. No analysis, content, or data is provided to the customer by the provider beyond the software’s functionality. As a result, the customer is purchasing the right to use the provider’s software, and the sale is subject to sales and use tax. (Letter Ruling 12-10, Massachusetts Department of Revenue, September 25, 2012)

Posted on June 12, 2013