Background
The Indiana Department of Revenue(IDOR) issued Revenue Ruling No. 2026-04-RST on June 26, 2026. This letter ruling serves as a clarification and implied guideline on the taxability rules concerning its offerings. The company in question charges access to its cloud-based educational services through a web-based platform with optional downloaded software.
The offering consists of educational and training services that permit users to test and develop their trading and risk management skills through usage of the software via online browser access. The primary product is designed to educate users in a virtual environment.
The services are provided through an online platform, and educational content is accessible via any web browser. Users primarily access the platform through the provider’s website. There is also an option for users to download a simulation-only application component that is developed by third parties and offered as a freeware application.
Sales Tax Framework
Sales tax is imposed on sales of tangible personal property, specifically designated services, and specified digital products. Prewritten computer software is included in the definition of tangible personal property. Fees for accessing the prewritten computer software online via the browser, where there is no permanent ownership interest, control, or possession in the software, are exempt from sales tax.
Enumerated digital products are defined as electronically transferred digital audio works, digital audiovisual works, or digital books. A person is considered to be engaged in making a retail transaction with respect to specified digital products only when the person (1) electronically transfers specified digital products to an end user and (2) grants the end user the right of permanent use of specified digital products that is not conditioned upon continued payment by the purchaser.
Indiana Department of Revenue Ruling
The IDOR found that the offered product doesn’t meet the definition of a specified digital product. The offered product permits users access to software that is accessed only through the internet, via any browser. The add-on option to download the third-party software(trading platform) doesn’t make the main product downloadable software since it is not necessary to use the main product, and it doesn’t add any new functionality.