5 ms·
Ask HN: Do you collect sales tax for SAAS?
We sell SAAS software. Our customers can sign up on our website and use software that we host or they can download a copy of our software and install on their own computer. We don't ship any software in CD or any other physical means. We only have offices in CA.
Do we need to collect sales tax?
- ergo14 9y agoConsult your accountant or lawyer instead of internet. Only then you will be sure.
- tedmiston 9y ago(IANAL) Most likely not since you don't distribute a tangible medium. It may be different if you distribute through an App Store. Apparently Google Play vs Apple address it differently. https://www.quora.com/Does-sales-tax-apply-to-downloadable-software-in-California https://www.quora.com/Does-sales-tax-apply-to-downloadable-s...
- patio11 9y agoThis is surprisingly complicated. None of the following is advice, but rather pointers to discuss the surprisingly complicated issues with your professional advisors. You may have nexuses ("sufficient connection to trigger sales tax obligation") in other US states even in absence of an office, for example if you have an employee working there remotely. Some states also consider actively selling within the state to establish a nexus, and consider a website accessible to be actively selling; this is a talk-to-an-accountant sort of question. You unambiguously have a nexus in California and are subject to California's laws regarding sales tax. You likely do not have to charge California sales tax on the downloadable software; c.f. https://www.boe.ca.gov/formspubs/pub109/ https://www.boe.ca.gov/formspubs/pub109/ Your accountant will likely point you to Cal. Code Regs. tit. 18, §1502(c) with regards to the SaaS part, deeming it to also be untaxable.
- tamalsaha001 9y agoThanks patio11. This is exactly what I was looking for, some pointers from experienced persons on this matter. This will be helpful when I talk to my accountant. Does software like TaxJar, etc. useful in this scenario?
- jakejohnson 9y agoIf you have nexus in one or more states where SaaS is taxable, TaxJar can certainly help out. Here's a breakdown of SaaS taxability in the United States: http://blog.taxjar.com/saas-sales-tax/ http://blog.taxjar.com/saas-sales-tax/ As patio11 mentioned, SaaS products are non-taxable in CA. For other states you can use TaxJar's sales tax API for calculations. This post describes how to use TaxJar with subscriptions in Stripe: https://developers.taxjar.com/blog/handling-sales-tax-with-stripe/ https://developers.taxjar.com/blog/handling-sales-tax-with-s... Disclaimer: I'm the developer advocate for TaxJar. If you have any other questions, please let me know!