Bradley attorney Bruce Ely was quoted in Bloomberg Law on the uncertainty of Alabama’s new sales tax ruling. The state’s Supreme Court recently ruled that the sale of computer software in Alabama is taxable, whether it’s off-the-shelf or customized software. However, there is lingering uncertainty about what counts as tangible personal property and what doesn’t.
The decision could have broad implications, and businesses will need clarification from the state—hopefully to say this new standard will be applied prospectively but not on previous transactions, explained Ely.
“We’re going to need some prompt guidance from either the Department of Revenue or the state Legislature or both,” Ely said. “It’s a landmark ruling, no doubt about it. But it leaves some open questions.”
The ruling doesn’t seem to reach the potential taxability of cloud-based software or apps downloaded onto a mobile device, Ely added, although it perhaps “frames the issue for the Alabama Legislature” to address next session.
The complete article, “Software Ruled Taxable in Alabama, Whether Canned or Custom ” first appeared in Bloomberg Law on May 17, 2019.