Massachusetts SJC Affirms SaaS Is Taxable in Citrix Systems

Tax Notes
March 9, 2020

Richard Jones was quoted in the article "Massachusetts SJC Affirms SaaS Is Taxable in Citrix Systems," which was published by Tax Notes on March 9, 2020.

On February 5, the Massachusetts Supreme Judicial Court affirmed the Massachusetts Appellate Tax Board's holding that receipts from sales of subscriptions to Citrix's online products constitute sales of standardized software and are tangible personal property subject to Massachusetts sales or use tax. This decision is significant not only because it represents the first decided case in Massachusetts addressing the taxablility of Software-as-a-Services (SaaS) transactions but also because of the extent to which some of the largest internet companies that provide similar platforms and products could be affected.

On a positive note, companies that develop software on which their online products are based should note that their software development activities may qualify as manufacturing under the Massachusetts statute. Rich comments that this "silver lining" benefits Massachusetts-based software vendors as the manufacturing classification may entitle them to numerous benefits.

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