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ACTION NEEDED: Verify tax code selections for SaaS transactions in Ohio before July 1, 2022

Overview

Effective July 1, 2022, Ohio individual use transactions for software as a service (SaaS) are exempt from tax, whereas business use transactions for SaaS are subject to tax per statute.

Avalara has updated many of our taxability rules for those codes from taxable to exempt.

What this means for you

  • Should you sell SaaS to customers for individual use, your transactions will be exempt from sales tax.

  • Should you sell SaaS to customers for business use, your transactions will continue to be subject to sales tax.

Verify your tax codes to confirm accurate selection for your SaaS transactions. If these codes are not verified or updated by July 1, they may inaccurately return as taxable or exempt.

See the Resolution section below for tax codes.

Environment

AvaTax

Resolution

Some of our tax codes for SaaS have been updated to indicate within their description whether they are intended for individual use or for business use.

Verify your tax codes to confirm accurate selection for your SaaS transactions. If these codes are not verified or updated by July 1, they may inaccurately return as taxable or exempt.

Tax code Description

SW052000

ASP / Hosted software / Server not in the state / Individual use

SW052001

ASP / Hosted software / Server not in the state / Business use

SW053000

Cloud Services / Software as a Service (SaaS) / License Agreement / Individual use

SW053001

Cloud Services / Software as a Service (SaaS) / License Agreement / Individual use

SW053002

Cloud Services / Software as a Service (SaaS) / License Agreement / Individual use

Note: Use of this code will return the rate for the Chicago Personal Property Lease Transaction Tax

SW053003

Cloud Services / Software as a Service (SaaS) / License Agreement / Business use

SW053004

Cloud Services / Software as a Service (SaaS) / License Agreement / Business use

SW053005

Cloud Services / Software as a Service (SaaS) / License Agreement / Business use

Note: Use of this code will return the rate for the Chicago Personal Property Lease Transaction Tax

SW054000

Cloud Services / Software as a Service (SaaS) / Service Agreement / Individual use

SW054001

Cloud Services / Software as a Service (SaaS) / Service Agreement / Individual use

SW054002

Cloud Services / Software as a Service (SaaS) / Service Agreement / Individual use

Note: Use of this code will return the rate for the Chicago Personal Property Lease Transaction Tax

SW054003

Cloud Services / Software as a Service (SaaS) / Service Agreement / Business use

SW054004

Cloud Services / Software as a Service (SaaS) / Service Agreement / Business use

SW054005

Cloud Services / Software as a Service (SaaS) / Service Agreement / Business use

Note: Use of this code will return the rate for the Chicago Personal Property Lease Transaction Tax

SW054100

Cloud Services / Software as a Service (SaaS) / Service Agreement / Database Products / Individual use

SW054101

Cloud Services / Software as a Service (SaaS) / Service Agreement / Database Products / Individual use

SW054102

Cloud Services / Software as a Service (SaaS) / Service Agreement / Database Products / Individual use 

Note: Use of this code will return the rate for the Chicago Personal Property Lease Transaction Tax

SW054103

Cloud Services / Software as a Service (SaaS) / Service Agreement / Database Products / Business use

SW054104

Cloud Services / Software as a Service (SaaS) / Service Agreement / Database Products / Business use

SW054105

Cloud Services / Software as a Service (SaaS) / Service Agreement / Database Products / Business use 

Note: Use of this code will return the rate for the Chicago Personal Property Lease Transaction Tax

 

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