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Sales Tax See Saw: Vermont Cloud Computing

  • May 2, 2013 | Gail Cole

 Vermont: Is a storm brewing over the taxation of cloud computing services?

Will Vermont lawmakers decide to tax cloud computing services? As the current legislative session draws to a close, they have still not decided.

Extended Moratorium

An amended version of H 528 passed the Vermont Senate on May 1, with 24 yeas and 5 nays. If it obtains the governor's signature and becomes law, it would extend the "temporary moratorium on enforcement of sales tax on prewritten software accessed remotely" to July 1, 2015. The moratorium was previously set to expire on July 1 of this year.

Implementation Requirements

In addition to delaying the imposition of sales tax on cloud computing services, the legislation places certain reporting requirements on the Vermont Department of Taxes. H 528 reads in pertinent part:

"The Department of Taxes shall report to the Senate Committee on Finance and House Committee on Ways and Means on how it plans to implement the sales and use tax on the sale of prewritten software accessed remotely under Vermont law."

Section 23b goes on to clarify that the DOT "shall specify the types of transactions that would be taxable under current law and the types of transitions that would not be taxable."

Finally, recommendations must be offered for any "outstanding issues with implementing the tax" discovered by the Department of Taxation.

The Cloud Computing See Saw

Vermont lawmakers are split on whether or not cloud computing services should be subject to sales and use tax. Last year, a tax study committee voted by a very narrow margin to exempt cloud computing. But on March 28, an amendment to permanently exempt cloud computing services was rejected by the Vermont House.

Back in 2012, Governor Peter Shumlin (D) said he would "sign legislation that imposes the state sales tax on cloud computing software…." However, he also said he would "try to persuade lawmakers … to drop this tax before it goes into effect."

Where will the see saw drop? Will cloud computing services eventually be subject to sales tax in Vermont, or will they become permanently exempt? As of yet, no one knows.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.