A federal district court held that under comity principles, Indiana state court is a more appropriate venue for a putative class action brought by three Indiana municipalities seeking to impose franchise fees on a group of online video providers. Order, City of Fishers v. Netflix, Inc. No. 1:20-cv-02351-JMS-MPB (S.D. Ind. Nov. 18, 2020). The federal district court remanded the case to the Marion Superior Court, where it was originally filed.
(This article originally was published by Law360 on May 17, 2019.)
In the last year, several state legislatures have enacted laws and several state courts have published decisions on whether software as a service, or SaaS, is subject to sales and use tax. These developments impact many SaaS providers, especially due to the expanded nexus provisions that many states are enacting after the United States Supreme Court’s South Dakota v. Wayfair Inc. decision.1 The states have gone in different directions—Indiana enacted legislation exempting SaaS, while Iowa and Rhode Island began taxing SaaS. The Massachusetts Appellate Tax Board and the Pennsylvania Board of Finance and Revenue have both issued decisions clarifying the taxability of SaaS offerings.