IRS Staffers Back Cloud-Income Sourcing Tax Rules Amid Criticism

IRS staffers defended the agency’s proposed regulations for determining the source of cloud-transaction income, terming the rules their best attempt to allocate that income and assess where it comes from.

Some business groups and tax practitioners have criticized the proposed rules, issued in January, as too complex and rigid. The IRS’s proposal attempts to determine where a taxpayer’s income should be deemed as coming from when it results from cloud transactions—digital transfers or provisions of services that involve on-demand network access to computing through remote servers hosted on the internet, as opposed to having the transaction tied to a physical ...