<aside> 📖 Instructions
https://www.chargebee.com/blog/saas-sales-tax/
https://stripe.com/fr/guides/introduction-to-saas-taxability-in-the-us
<aside> ✅ Checklist before publishing
The taxability of Software as a Service (SaaS) in the United States is a nuanced issue that hinges on the specific tax regulations of each state.
Generally, SaaS is a model where software is hosted remotely and accessed via the internet, which falls into a gray area between tangible goods and services for tax purposes.
There is no uniform federal tax on SaaS; instead, each state determines whether to apply sales tax to SaaS transactions. Some states have ruled that SaaS is a taxable service because it involves access to a digital product. Other states treat SaaS as a nontaxable service because there is no transfer of tangible personal property.
For instance, New York taxes SaaS as it considers it a sale of tangible personal property, while California does not generally tax SaaS because it's deemed a service. The complexity grows as some states may only tax SaaS if the customer has a physical presence in the state, or they may apply different tax rates depending on whether the SaaS is for business use or personal use.
Businesses offering SaaS must stay informed about the varying legislation in each state where they have customers. They often need to use specialized software or consult with tax professionals to ensure compliance with the diverse and changing sales tax laws across the country.
Understanding the concept of nexus is essential for SaaS providers that doesn’t used automated billing, as it determines where they are obligated to collect and remit sales.
In the context of U.S. sales tax, a "nexus" refers to a business's sufficient physical or economic presence within a state that requires the business to comply with that state's tax laws, including collecting and remitting sales tax on sales made to customers in that state.
Physical presence: Traditionally, having a physical location, employees, inventory, or property in a state creates a physical nexus.
Economic nexus: Many states have adopted economic nexus thresholds, typically based on sales revenue or transaction volume within the state (e.g., $100,000 in sales or 200 transactions annually).
Affiliate nexus: If you have affiliates in a state that help generate sales, this can create nexus.
Click-Through nexus: Some states establish nexus if a business has agreements with in-state entities or websites that refer customers for a commission.
Marketplace nexus: Selling through online marketplaces can establish nexus if the marketplace doesn't collect sales tax on your behalf.
Trade shows and temporary physical presence: Attending trade shows or having temporary physical presence in a state can sometimes establish nexus.
State-Specific Rules: Each state determines if SaaS is taxable. Some tax all SaaS, others tax B2B or B2C differently, and some don't tax SaaS at all.
B2B vs. B2C: The customer type can affect taxability. Some states tax SaaS sold to consumers but not to businesses, or vice versa.