The DOR ruled that sales of cloud computing that involve the customer's use of its own software or software available free on the Internet are not taxable when sold to customers in Massachusetts because they are not sales of prewritten software. However, sales of cloud computing that use software licensed by the cloud computing provider are taxable when sold to customers in Massachusetts, whether or not there is a separately stated charge for the software or whether or not there is a sublicense of the software to the customer. On the other hand, sales of remote storage service are also not taxable when sold to customers in Massachusetts because it is a nontaxable service. Also, the DOR ruled that separately stated data transfer fees are taxable telecommunications services when sold to customers in Massachusetts provided the sourcing rules in 830 CMR 64H.1.6(4) are met. Massachusetts Letter Ruling 12-8.
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