Last year, Governor Butch Otter signed a bill that was intended to exempt cloud computing services. The Idaho Tax Commission narrowly interpreted the legislation, which effectively taxed many types of software services. Otter did not believe this followed the intent of the legislation, so earlier this month he signed House Bill 598, which makes it exceedingly clear which services are exempt from tax.
Idaho House Bill 598 was signed into law on April 4, 2014, and will take effect on July 1, 2014. The legislation amends Idaho Code Section 63-3616, which is the definition of tangible personal property, to specifically exclude software as a service. Based upon this legislation, specifically excluded from the definition of taxable software will be: “computer software that is delivered electronically; remotely accessed computer software; and computer software that is delivered by the load and leave method where the vendor or its agent loads the software at the user’s location but does not transfer any tangible personal property containing the software to the user.”
Governor Otter conducted a ceremony for his signing of House Bill 598 last week in his Ceremonial Office. In attendance were industry members as well as the House Majority leader. The fiscal note to the legislation estimates the fiscal impact to be between 2 to 5 million. Interestingly, the Tax Commission has stated that the bill’s wording could lead to more exemptions, which could add up to 40 million.
