The Illinois Department of Revenue Issued letter ruling ST 21-0001, addressing the retailer’s occupation tax and use tax treatment of a company’s fleet management service. The company provided a web-based management service for the administration, management, and record-keeping of motor vehicle fleets. The company used a Software as a Service (SaaS) model that allows customers to remotely access software applications. Customers have the option to download the company’s application or to use the platform through the internet. However, customers can enter information into the application only when connected to the internet. Customers can view fleet management data through a web portal on their computers or through the application. Illinois taxes electronically delivered software but does not tax SaaS models. The Department concluded that computer software provided through a cloud-based delivery system in which the software is never downloaded and is only accessible remotely, is not taxable in Illinois. Revenues received from subscriptions of SaaS model web-based fleet management services are not subject to tax. The Department also concluded that an application downloaded for free by the service subscriber from a server located in another state is not subject to tax as the taxpayer has not exercised power or control over the property in Illinois and the customer would not have made any taxable use of the property in Illinois.
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