Hi, I am an IT consultant and resell software subscriptions, such as Microsoft 365. Some of those are true cloud-based services - i.e., just an email box, no software included. Some of those have downloadable software that only works while the subscription is active (typically annual). I moved my LLC to Florida, but I have nexus in Indiana as nearly all of my clients are there. For those clients, should I be charging sale tax on all of these products, or just the ones that have downloadable software? I also resell 1Password for MSPs (managed service providers.) Their wording is much more like an internet access only situation - i.e., they give you access to their app free but it only works when you pay the subscription, so same question on that product specifically. Thank you in advance! Gary

Good question—the key factor is where your customers are located, not where your LLC is formed. Because your clients are in Indiana, Indiana Department of Revenue rules govern whether sales tax applies. Under Indiana Sales Tax Information Bulletin #8, prewritten computer software downloaded to a device is treated as taxable tangible personal property, whereas pure cloud-hosted Software-as-a-Service (SaaS) accessed entirely through a web browser with no local software download is exempt from Indiana sales tax.

Applying this rule to your products: standalone email mailboxes or web-only cloud subscriptions with no local downloads are non-taxable. Conversely, Microsoft 365 plans that include downloadable desktop applications (Word, Excel, Outlook) are taxable, even though they operate on active annual subscriptions. Password management platforms like 1Password are also taxable because functional deployment requires installing local desktop apps, mobile apps, or browser extension binaries onto the client's devices. To stay compliant, be sure to itemize taxable downloaded software separately from exempt pure-SaaS or support services on your invoices, and use Form ST-105 with your distributors to buy these licenses tax-free for resale.