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Showing posts from February, 2013

Requirements Gathering: A Transaction Tax System Implementation’s Most Important Phase

The following is a guest post by Diane Yetter, founder of The Sales Tax Institute.  For more about Diane and The Sales Tax Institute, see the guest blogger box after the post.

The first phase of any transaction tax systems implementation should be the evaluation and gathering of all the business and tax requirements. A best practice is to complete this phase before a solution is selected, but this rarely occurs. Deciding on the optimal solution is dependent on these requirements. Choosing the solution before the requirements are known can lead to incurring more costs than necessary or making compromises. Therefore, you ideally want to do all requirements gathering first.
Of all the phases of a tax system implementation, requirements gathering is by far the most important.  The efforts of the entire team – tax and business stakeholders - are needed during this phase. If this phase is limited either by time, resources or participation by key stakeholders, underdeveloped or undiscovered re…

Sales Tax on Cloud Computing, SaaS and Related Business Solutions: Massachusetts Issues Draft Directive, Provides Criteria for Establishing Taxability

Cloud computing”, “Software-as-a-Service”, “business solutions” which include an incidental transfer of software – subject to Massachusetts sales tax, or not? A recently issued Massachusetts Department of Revenue Working Draft Directive establishes criteria for determining whether transactions involving software and related solutions are subject to the Massachusetts sales tax.
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Massachusetts Issues Working Draft Directive 13-XX, Criteria for Determining Whether a Transaction is a Taxable Sale of Pre-written Software or a Non-taxable Service
Within the last two years, the Massachusetts Department of Revenue (“the Department”) has issued numerous private letter rulings addressing the taxability of Software-as-a-Service, cloud computing and other business solution offerings which have involved a software component that in some instances, has been bundled with other non-taxable services. (For more on these Private Letter Rulings, see below.)
I…