On Jan. 1, 2027, the state will expand its sales and use tax base to include digital products. Digital products primarily include prewritten software delivered electronically or accessed remotely. As a result, the change will generally bring downloaded software, software subscriptions and software-as-a-service (SaaS) offerings within the tax base, replacing California’s longstanding delivery-based distinction under which electronically delivered software and remotely accessed SaaS were generally nontaxable.
Watch the recording for a discussion on changes to California’s Revenue and Taxation Code made by Senate Bill 122 regarding electronically delivered software and SaaS, including distinctions between prewritten and custom software, exclusions, sourcing and use tax rules and exemptions for out-of-state use. In addition, we will explore issues contemplated in the new law, including treatment of software concurrently available in multiple locations and new requirements for large software purchases over $5 million.
The recorded webinar will also identify implementation issues that remain important for contracts, invoices, exemption certificates, tax systems and bundled software-and-services arrangements as the California Department of Tax and Fee Administration drafts an emergency regulation.
