State Sales Tax in the Digital Economy: Navigating Electronic Taxability and the Factor Presence Rule

Determining When and Where Your Services and Products Trigger Liability

A live 110-minute CPE webinar with interactive Q&A

Thursday, January 26, 2017 (in 7 days)
1:00pm-2:50pm EST, 10:00am-11:50am PST

This webinar will provide guidance to corporate tax professionals, counsel and advisers for navigating the various and evolving standards of state taxability of digital products and services to determine what component of a company’s offering is taxable, and in which jurisdiction(s).


Sales tax advisers and IT companies providing software, bundled and cloud services face special challenges in determining how and where their products and services will be taxed. There are numerous approaches among the individual states regarding taxes on IT services and products. Some states have specific statutes and rules aimed at determining what products and services each state taxes, which may conflict with other states’ practices.

Among the challenges advisers face in assessing whether the software provider will be subject to transaction taxes in a particular state is defining the product or service in the transaction—particularly when the transaction has bundled elements.

If the “true object” of the item sold is included in a state’s definition of taxable products or services, then the sale is likely subject to transaction tax. In most jurisdictions, bundling an otherwise nontaxable service with a taxable product or service may render the entire transaction taxable.

Additionally, the rise of the factor presence rule adds another dimension to whether a transaction will be subject to taxation. States have been slow to adopt the Multi-State Tax Commission’s (MTC) model rule. However, nine states currently use it, including Ohio, Alabama, California, Colorado, Connecticut, Michigan, New York and Tennessee. This bright-line standard establishes nexus and tax liability whenever a statutory threshold is exceeded, including sales-only thresholds.

Listen as our experienced panel discusses the various challenges of determining the taxability of IT services and products; explains the pitfalls of the factor presence rule; and reviews best practices for structuring contracts and transactions to segregate taxable from nontaxable services and products.


  1. Categories of IT Products and Services
  2. Elements of determining taxability
    1. Character of service or product and “true nature” test
      1. Software;
      2. Installation;
      3. Maintenance
      4. Data Processing
      5. Information Services
      6. Cloud computing
    2. Sourcing
    3. Bundled services and products
    4. Nexus
  3. Factor presence rule
    1. MTC
    2. State implementations
  4. Special sourcing rules including addressing users in multiple jurisdictions


The panel will review these and other key issues:

  • What approaches are states taking to define the nature of IT products or services for purposes of determining taxability for sales and use tax?
  • How do various states address the sourcing of IT products and services?
  • How do the various states treat pre-written software, which is accessed remotely, for purposes of sales and use tax?
  • What are states doing regarding the factor presence (economic nexus)?

Learning Objectives

After completing this course, you will be able to:

  • Identify various factors used in determining states’ approaches to taxing sales of IT services and products
  • Recognize contracts and transactions that properly exempt nontaxable services from state sales tax
  • Determine techniques for segregating nontaxable services and products


David W. Bertoni, Partner
Brann & Isaacson, Lewiston, Maine

Mr. Bertoni is a partner at Brann & Isaacson who handles state and local tax cases across the United States involving questions of statutory and constitutional tax jurisdiction. He is currently representing a major Internet retailer in its Commerce Clause challenge to Ohio’s Commercial Activity Tax before the Supreme Court of Ohio, as well as constitutional challenges to sales and use tax and income tax assessments in states including Wisconsin, Georgia, Alabama, New York, and Maine. David is a graduate of the University of Rochester and the George Washington University Law School.

Michael E. Carey, Esq.
Brann & Isaacson, Lewiston, Maine

Mr. Carey is a Brann & Isaacson attorney who focuses his practice on state and local taxation of information technology and telecommunications services, regulatory and administrative proceedings (including state tax and other regulatory issues), and civil litigation. In addition to his work in the law, Michael has worked for a national information technology consulting company. Michael is a graduate of Dartmouth College and the University of Maine Law School.

Martin Eisenstein, Managing Partner
Brann & Isaacson, Lewiston, Maine

Mr. Eisenstein is one of the nation’s leading experts in state and local taxation of information technology. He has wide experience in state and local tax issues and has represented prominent providers in major litigations, including filing amicus briefs in the United States Supreme Court. He is a regular contributor to State Tax Notes, among other publications, writing on state tax developments. Mr. Eisenstein has been selected consistently by his peers as one of The Best Lawyers in America.

Registration per Person for Live Event

Live Webinar $247.00

Live Webinar & CPE Processing $282.00

CPE per Person on Live Event

Continuing Professional Education credit processing is available for an additional fee. CPE processing must be ordered prior to the event. To qualify for CPE you may not listen via the telephone.

This program is eligible for 2.0 CPE credits.

  • Field of Study: Taxes.
  • Level of Knowledge: Intermediate.
  • Advance Preparation: None.
  • Teaching Method: Seminar/Lecture.
  • Delivery Method: Group-Internet (via computer).
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of verification codes announced throughout the presentation.
  • Prerequisite: Three years+ business or public firm experience at mid-level within the organization, planning, preparing and filing sales and use tax collection and returns on behalf of multi-state businesses; supervisory authority over other preparers/accountants. Knowledge and understanding of the Multistate Tax Commission model rule and the various methodologies used by states to identify and calculate state sales and use tax, including the factor presence nexus standard and market-based sourcing standard.

NOTE: CPE credit processing for all attendees must be ordered by 2pm Eastern the day of the program to receive a Certificate of Attendance within 24 hours.


Recorded Event

Includes full event recording plus handouts (available after live webinar).

Note: Self-study CPE and EA credits are not offered on recorded events.

Recorded Webinar Download $247.00
Available 48 hours after the live event

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Recorded Audio Download (MP3) $247.00
Available 24 hours after the live event

How does this work?

DVD (Slide Presentation with Audio) $247.00 plus $9.45 S&H
Available ten business days after the live event

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Best value!

Live Webinar & Webinar Download $344.00

Recorded Webinar Download Only $97.00 with Registration/Webinar Combo

Live Webinar & Audio Download $344.00

Recorded Audio Download (MP3) Only $97.00 with Registration/MP3 Combo

Live Webinar & DVD $344.00 plus $9.45 S&H

DVD (Slide Presentation with Audio) Only $97.00 with Registration/DVD Combo


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Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

Program Materials

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Program Materials

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Customer Reviews

Provided a lot of information. Examples made it easier to put in everyday perspective.

Therese Au

Forsythe Technology

The webinar was fast paced and comprehensive.

Lorraine Round


The program had excellent presenters that were extremely knowledgeable.

Lisa R. Volland

Legacy Professionals

It was an excellent program!!

Marni Odermann


I especially liked the examples illustrating the topics concepts.

Melinda Tompkins


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Sales and Use Tax Advisory Board

Silvia Aguirre



Rick Bregitzer

Manager of Domestic Taxes


Stephanie Anne Lipinski-Galland


Williams Mullen

Joseph Geiger, Esq., CPA

Tax Consultant


Diane Matulich

Senior Manager, Local Taxes

Advanced Micro Devices

Rich Prem

VP of Indirect Taxes and Tax Reporting

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