• Paul Peter Nicolai

Sale Taxable Without A Transfer

Updated: Aug 13

Citrix sold subscriptions for three online software products that enabled users to have access to a remote computer, depending on the specific product. After determining Citrix’s subscription fees were sales of software subject to sales tax, the Commissioner of Revenue assessed sales tax.


The board found the online products were tangible personal property within the law and the sales of the online products were subject to the sales tax. The board rejected two primary arguments (1) because there was no transfer of software as required by law, there was no taxable sale of software, and (2) sales of the online products were sales of services and not tangible personal property.


The Massachusetts Supreme Court affirmed


WHY THIS IS IMPORTANT … This is the latest in ongoing litigations over whether a transaction was a sale of software or a sale of a service. There are many instances where the issue is uncertain. Although this decision does not finally resolve that problem, it lays down a new marker.


Many prior cases centered on whether there was a transfer of title or possession, making the sale taxable. Here, the Supreme Court announced that transfer of title or possession is not required to find that a taxable event occurred.

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