Appellate Tax Board Adds To Body of Law on Remotely Accessed Software

Massachusetts Lawyers Weekly
January 6, 2022

Richard Jones and Caroline Kupiec were quoted in the article, "Appellate Tax Board Adds To Body of Law on Remotely Accessed Software,"[sub. req.] which was published by Massachusetts Lawyers Weekly.

The article discusses the complexities in determining whether technology and cloud computing companies can qualify as “manufacturing corporations” for Massachusetts tax purposes. There may be significant state tax implications that hinge on this distinction. 

The article specifically refers to the recent opinion by the Massachusetts Appellate Tax Board (ATB), which ruled that Sullivan client, Akamai Technologies, Inc., was entitled to an abatement of corporate excise of nearly $7.5 million and should have been classified as a manufacturing corporation pursuant to G.L. c. 63, §§ 38 and 42B and G.L. c. 58, § 2. In this case, the ATB focused on the substance of Akamai’s CDN product sales and determined that they constituted sales of standardized software, which Akamai’s customers accessed and used remotely.

Caroline comments that the Akamai decision is "one of the clearest guide marks we have right now" in determining whether technology company offerings constitute software as opposed to services.

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