Cloud Computing Tax Rules Need Changes, Industry Groups Say

By Sony Kassam

Bloomberg Tax reported on the Tax Section’s latest report on proposed Section 861 regulations. (may require subscription)

An IRS proposal to change how companies source cloud computing transactions is ambiguous and burdensome, industry groups said.

Proposed regulations (REG-130700-14) under tax code Section 861 update existing rules on classifying transactions under Section 861-18, which were introduced in 1998 and updated in July. The regulations also introduce Section 861-19, which guides companies in determining whether to classify their cloud transactions and digital content access as a provision of services or a lease of property.

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