Sales Tax Compliance for Software Companies

The definition and taxability of Software and SaaS products can vary greatly by state. Some states consider SaaS tangible personal property (TPP), while others choose to exempt it based on specific qualities and business models (e.g., subscriptions).

PMBA can help your Software or SaaS company stay on top of the latest multistate sales tax rules and regulations. We’ve helped numerous companies tackle challenges like Sales Tax Audits, Software Implementation, and Ongoing Sales Tax Compliance.

Check out our Case Studies to learn how our clients successfully mitigate and manage sales tax challenges.

How a Global Digital Marketing Agency Saved Millions Through Proactive Sales Tax Strategies

Is SaaS Taxable in My State?

It can be cumbersome, especially during early or rapid growth periods, for companies to stay on top of the unique and ever-changing sales tax policies, state-by-state product definitions, and exemptions for SaaS and software products.

Get a high-level look at the taxability of SaaS.

Where is SaaS Taxable? Download our chart to find out.

Understanding sales tax responsibilities as a software company is only one part of the equation. Our team can build a custom sales tax strategy based on what you sell and how you deliver and charge for your products and services.

Our tax experts also assist with sales tax audits, audit defense and software implementation so you can automate the tax calculation and returns filing processes.

Questions? Contact Us

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    What is a SaaS product?

    SaaS or “Software-as-a-Service” can have a different definition depending on the taxing jurisdiction and is often classified by the way the product is delivered or used. In general, SaaS products are not downloadable and are accessed through a platform or cloud-based system. Customers usually pay a regular subscription fee to use the service.

    Popular SaaS products include Hubspot, Slack, Salesforce, and DropBox.

    Identify which states view SaaS as taxable services.

    View our State-by-State Sales Tax Chart for SaaS Products

    Common Sales Tax Mistakes

    • Forgetting to collect and remit sales tax
      • Consequence: Your business may unintentionally become non-compliant.
    • Not utilizing an automated sales tax solution
      • Consequence: Your business exhausts valuable manpower and risks human error tracking numerous tax rates within each jurisdiction.
    • Disputing audits without the help of sales tax specialists
      • Consequence: Your business may strain internal resources, or make errors that can cause problems down the road and incur fines or penalties from unpaid sales tax on software.

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