State governments are taking a wary look at cloud computing and how best to adjust their tax laws to keep up with shifts in technology.
According to a report from Bloomberg, state governments are taking a hard look at the way they tax transactions as the traditional point-of-sale has shifted from a countertop to a Web page.
The report said, that the very nature of transactions is changing, and it’s become increasingly difficult for states to sort out when they have a right to tax a transaction. One issue the report raised, for example, was whether states should consider data accessed in the cloud a “taxable good or a nontaxable service.”
That question goes beyond the problem of the national and international nature of large online businesses, which states have tried to combat with so-called “Amazon laws,” which require nationwide online retailers to charge state taxes on all purchases. The laws have caused rifts between Amazon.com and state governments and prompted the retailer to cut ties with partners in several states to avoid the extra taxation. The company is now an integral part of an effort to repeal a California law that requires this kind of collection.
To deal with these issues, Washington state changed its laws in 2009 to deal with the shift, the report said. The state now requires that Washington residents pay state tax regardless of how their goods are delivered.