LR 8250
Taxability of Software as a Service
June 28, 2023
Dear Applicant:
This is a letter ruling issued by the Director of Revenue under Section 536.021.10, RSMo, and Missouri Code of State Regulations 12 CSR 10-1.020, in response to your communication of May 3, 2023.
The facts as presented in your letter ruling request, along with independent research are summarized as follows:
Applicant represents that it is a Software as a Service (SAAS) company located outside of Missouri.
ISSUE:
Is the Applicant's SAAS agreement with a Missouri customer subject to Missouri state sales tax?
RESPONSE:
No. Applicant's SAAS agreement is not subject to Missouri state sales tax.
Section 144.020.1, RSMo, provides that a "[...] tax is hereby levied and imposed [...] upon all sellers for the privilege of engaging in the business of selling tangible personal property or rendering taxable service at retail in this state."
Section 12 CSR 10-109.050(2)(I), provides that the: "[...]sale of software as a service is not subject to tax."
In this instance, the Applicant's SAAS agreement does not result in the taxable sale of tangible personal property. Therefore, the Applicant's SAAS transaction is not subject to state sales tax.
This letter ruling is binding upon the Department of Revenue with respect to the Applicant for three (3) years from the date of this letter and is subject only to statutory changes by the General Assembly and to changes in the interpretation of law by the courts or administrative tribunals. If a change occurs, the taxpayer who relies upon an outdated interpretation may be subject to additional taxes, interest and penalties, which may be imposed prospectively from the date of the change. For this reason, the interpretation set forth above should be reviewed on a regular basis. Please note that any change in or deviation from the facts as presented will render this ruling inapplicable.
Should additional information be needed, please contact Legal Counsel Nathan Jefferson, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.
Sincerely,
Wayne Wallingford