This month, we continue our blog series with a contrast of a couple of western states – Utah and Nevada – specifically their treatment of technology items for sales tax purposes.
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Software as a Service (SaaS) in Utah vs. SaaS in Nevada
Software as a Service (SaaS) is subject to sales tax in several jurisdictions across the country. Approximately half of states do tax the SaaS revenue stream. As you’ll see below, these two states differ regarding their treatment of sales tax for SaaS.
Cloud Computing Services are subject to sales and use tax in Utah.
Utah imposes sales and use tax on license fees for remotely accessed prewritten software, including hosted software, application service provider software, software-as-a-service (SaaS), and cloud computing applications, purchased for use of the software in Utah.
SaaS is exempt from sales and use tax in Nevada.
Nevada has not addressed in its statutes or regulations the application of sales and use tax to cloud computing transactions. Additionally, Nevada has not issued any guidance as to the application of tax to such transactions. However, the treatment of SaaS generally follows the treatment of prewritten computer software, which is exempt from taxation.
Software in Utah vs. Software in Nevada
As with SaaS, the two states differ in the taxation of software transmitted electronically.
Utah imposes sales and use tax on prewritten computer software sold electronically.
Whether delivered electronically or otherwise, prewritten computer software is tangible personal property subject to Utah sales and use tax.
Utah does not impose sales and use tax on custom computer software delivered electronically.
The sale of prewritten computer software delivered electronically is not subject to tax in Nevada. Prewritten software delivered electronically is not subject to sales or use tax within Nevada as the state does not consider the transfer a transfer of tangible personal property.
The sale of custom computer software delivered electronically is not subject to tax in Nevada.
Custom computer software delivered electronically is not subject to Nevada’s sales or use tax.
Digital Goods
States vary in their treatment of electronically delivered goods including e-books, music, and streaming video. Some states consider all of these types of products to be taxable or not, while others call out specific taxability depending upon the product.
In Utah, digital products are mostly taxable. Digital newspapers are nontaxable. However, Utah imposes tax on the sale of any product that is transferred electronically and would be subject to tax if the product were delivered in a manner other than electronically.
In Nevada, digital products are nontaxable. Nevada does not impose tax on the sale of “specified digital products”.
Sales Tax Holidays
States often offer sales tax holidays during specific times of the year, during which certain items are sold tax free. These vary greatly by state. Here’s how Utah and Nevada shake out.
Utah does not have a sales tax holiday.
In Nevada, purchases by National Guard Members are sales tax free. This occurs on October 27-29.
For more information on sales tax holidays, click here.
Special Situations
Nevada is one of 7 states that does not impose a corporate income tax. The state does impose a “Commerce Tax” on businesses with Nevada gross income exceeding $4M in the taxable year.
Economy
Major industries of Utah include mining, cattle ranching, salt production, and government services. In eastern Utah, petroleum production is a major industry. Near Salt Lake City, petroleum refining is done by a number of oil companies. In central Utah, coal production accounts for much of the mining activity.
Tourism is a major industry in Utah. With 5 national parks (Arches, Bryce Canyon, Canyonlands, Capitol Reef, and Zion), Utah has the third most national parks of any state after Alaska and California. In addition, Utah features 8 national monuments (Cedar Breaks, Dinosaur, Grand Staircase-Escalante, Hovenweep, National Bridges, Bears Ears, Rainbow Bridge, and Timpanogos Cave), two national recreation areas (Flaming Gorge and Glen Canyon) seven national forests (Ashley, Caribou-Targhee, Dixie, Fishlake, Manti-La Sal, Sawtooth, and Uinta-Wasatch-Cache), and numerous state parks and monuments.
The economy of Nevada is tied to tourism (especially entertainment and gambling related), mining, and cattle ranching. Nevada’s industrial outputs are tourism, mining, machinery, printing and publishing, food processing, and electric equipment.
Cattle ranching is a major economic activity in rural Nevada. Nevada’s agricultural outputs are cattle, hay, alfalfa, dairy products, onions, and potatoes. Over 90% of Nevada’s 484,000 acres of cropland is used to grow Hay, mostly alfalfa, for livestock feed.
Utah Fun Facts:
- Utah’s Great Salt Lake is about four times saltier than any of the world’s oceans. If a person boiled 1 quart of water from the saltiest part of the lake, a half cup of salt would remain. It is so salty because as the ancient Lake Bonneville dried up, salt and other minerals were left behind. Because the shrinking lake had no stream out to sea, the salt deposits became concentrated in the lake.
- The name “Utah” is derived from the name of the Ute Native American tribe. The name means “people of the mountains.”
- Utah is the second-driest state in the United States after Nevada. On average, Utah has about 300 sunny days a year.
- Kanab, Utah, is known as “Little Hollywood” because over 100 movies (mostly westerns) and many TV series have been filmed in Utah since 1924. Famous movies include Stage Coach, The Lone Ranger, Gunsmoke, Planet of the Apes, The Outlaw Josey Wales, and Sergeants 3.
- Lagoon, located in Farmington, Utah, is the oldest operating amusement park in the American West, and its original roller coaster, named Old Woodie, is the 3rd oldest in the nation.
- Because of the state’s high elevation and desert-like climate, its snow is dry and powdery. Hence, Utah claims to have the “Greatest Snow on Earth.”
- One of the most unique places in Utah is the Bonneville Salt Flats, named after the ancient sea that covered the area. Stretching over 30,000 acres, the white salt is millions of years old.
Utah has the highest consumption of Jell-O in the United States. In fact, Jell-O is Utah’s state snack.
Nevada Fun Facts:
- Nevada takes its name from a Spanish word meaning snow-capped.
- Nevada is the largest gold producing state in the nation. It is second in the world behind South Africa.
- It would take 288 years for one person to spend one night in every hotel room in Las Vegas.
- U.S. route 50 is known as the loneliest road in America.
- Construction worker hard hats were first invented specifically for workers on the Hoover Dam in 1933.
In Death Valley, the Kangaroo Rat can live its entire life without drinking a drop of liquid.
We invite you to further explore Utah and Nevada in these earlier blogs we crafted over the years. Our team at Miles Consulting Group is always available to discuss the specifics of your situation, whether in Utah, Nevada, or other U.S. States, and help you navigate the complex tax structures arising from multistate operations. Call us to help you achieve the best tax efficiencies.
