Tech Companies Get Clarity on IRS Plans to Tax Cloud Transactions (2)

Tech companies now know how the IRS wants to tax cloud computing transactions—a question they’ve been asking since 1998.

The Internal Revenue Service on Aug. 9 released proposed rules (REG-130700-14) under tax code Section 861, to guide companies in determining whether to classify their cloud transactions and digital content access as a provision of services or a lease of property.

“In general, application of the relevant factors to a cloud transaction will result in the transaction being treated as the provision of services rather than a lease of property,” the agency said. The rules contain ...