The Indiana Department of Revenue (DOR) has issued a letter ruling regarding the taxability of a company’s fees for cloud-based educational services. The company provides educational and training services that allow its customers to test and develop their financial market trading and risk management skills. The services are provided to customers through a secure digital platform that offers statistical and analytical capabilities, a simulated trading environment and educational content accessible via web browser.
Users primarily access the platform through the company’s website. The company also provides users with the option to download a simulation-only application component, which is a simulated trading platform. The downloaded trading platform is developed by an unrelated third-party and offered as a freeware application.
Indiana imposes sales tax on products that meet the definition of specified digital products. Per Indiana tax law, a person is engaged in making a retail transaction if they electronically transfer specified digital products to an end user and grant the end user the right of permanent use of specified digital products that is not conditioned upon continued payment by the purchaser.
The DOR found that the company’s product does not meet the definition of a specified digital product. It does not meet the definition of a digital book, digital audio work, or digital audiovisual work, and customers do not obtain the right of permanent use of the product. Instead, the company’s product allows customers to gain access to software that is accessed over the internet. The option to download the third-party software (trading platform) does not make the company’s product downloadable software since it is not necessary to utilize the company’s product and does not add additional functionality.
The company provides financial trading educational services and uses software in the performance of its services. The software is electronically accessed by its customers who have no permanent ownership of the software. As a result, the company’s services and software are not subject to Indiana sales tax. (Revenue Ruling # 2026-04-RST, Indiana Department of Revenue, June 26, 2026)