State Sales Taxes on Software-as-a-Service

Frequently Asked Questions

What states are currently collecting sales tax on SaaS products?

The list of states currently collecting sales tax from out-of-state sellers includes Alabama, Alaska, Connecticut, Louisiana, Maryland, Massachusetts, New Mexico, New York, Ohio, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Washington, and West Virginia. We will update this list as states update their legislation.

Why am I going to be charged sales tax?

The question of state sales taxes on Software-as-a-Service (SaaS) products came up during the Supreme Court case South Dakota v. Wayfair, Inc. South Dakota passed a state law in March 2016 with the intent of collecting sales tax from out-of-state vendors regardless of their lack of physical presence in the state.

South Dakota brought a lawsuit against the online furniture retailer Wayfair, Inc. over their refusal to comply with the ruling. The case elevated to the Supreme Court, where the Court ultimately decided 5-4 in the state’s favor.

While Wayfair, Inc. does not provide SaaS products, the federal ruling affects all out-of-state sellers providing services in taxing states that have passed laws similar to South Dakota. As a result, certain states are now collecting sales tax on Bid Express^® and Appia^®.

When will these changes go into effect?

Bid Express users will see state sales tax reflected in their subscription fees beginning July 1, 2020.

Appia users will see state sales tax reflected in any annual renewals and supplemental license purchases that occur after July 1, 2020.

Who will be charged sales tax?

DOT and LPA licensees will not be affected by this ruling, all other users will - contractors, consultants, etc.

How does Infotech know to charge me the right amount of sales tax?

Infotech uses Tax Jar to ensure accurate sales tax compliance.

What if I have more questions?

Please direct any additional questions to customer support.