Q&A with the Pennsylvania Department of Revenue

Has the DOR offered any guidance on “Platform as a Service” or “Infrastructure as a Service”?

Nov 04, 2015
The rental of space and/or capacity on a server (IaaS) is not taxable. However, when software tools such as operating systems and applications are included with the service, it becomes platform as a service (PaaS).  With PaaS, unless the taxable components are separately stated, the entire charge for the service is subject to tax.  For Pennsylvania Sales and Use Tax purposes, the Department follows the September 2011 National Institute of Standards and Technology definitions found below:

Infrastructure as a service (IaaS)--The capability provided to the consumer is to provision processing, storage, networks, and other fundamental computing resources where the consumer is able to deploy and run arbitrary software, which can include operating systems and applications.  The consumer does not manage or control the underlying cloud infrastructure but has control over operating systems, storage, and deployed applications; and possibly limited control of select networking components (e.g., host firewalls).

Platform as a service (PaaS)--The capability provided to the consumer is to deploy onto the cloud infrastructure consumer-created or acquired applications created using programming languages, libraries, services, and tools supported by the provider.  The consumer does not manage or control the underlying cloud infrastructure including network, servers, operating systems, or storage, but has control over the deployed operations applications and possibly configuration settings for the application hosting environment.

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These documents provide a summary of the answers provided by the Department of Revenue to the PICPA Committee on State Taxation at its annual question and answer session. These documents are classified as revenue information issued for informational purposes only for the convenience of PICPA members. Pursuant to 61 Pa. Code Section 3.4, these documents should not be relied upon for any purpose or used in tax appeals. Taxpayers requiring a binding opinion on their specific fact situation may request a written letter ruling under 61 Pa. Code Section 3.3.