The Massachusetts Supreme Judicial Court held that sales tax applied to subscription fees for three online Citrix products, “GoToMyPC,” “GoToAssist” and “GoToMeeting,” which allow users to remotely access other users’ computers. Citrix Systems, Inc. v. Comm’r of Revenue, No. SJC-12741 (Mass. Feb. 5, 2020). In so holding, the Court affirmed the Massachusetts Appellate Tax Board’s determination that Citrix made taxable sales of tangible personal property, rather than nontaxable sales of services.
(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.