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Daily Tax Report: International

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

Aug. 9, 2019, 10:31 PMUpdated: Aug. 9, 2019, 11:36 PM

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...

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