Summary
Summary
New York taxes prewritten computer software as tangible personal property regardless of delivery method, including remote access.
Background
New York already taxes many SaaS and remote access software transactions. Unlike states that are only now expanding their tax base to reach SaaS from 2027, New York has long treated remotely accessed prewritten software as taxable tangible personal property.
From 2027, California, with its SB 122, and Colorado, with its HB26 122, are expanding the taxable base for providers of SaaS and other types of remotely accessible software when they make supplies to customers based in these states.
New York’s current position is already broad: prewritten software is taxable whether delivered on physical media, by download, or by remote access. The New York Tax Department states this directly in its computer software bulletin.
New York Tax Framework for Software
New York treats prewritten computer software as tangible personal property. Its official Tax Department bulletin states that prewritten software is taxable whether sold on a disk, by electronic transmission, or via remote access.
This means that delivery method is not the decisive factor. A vendor cannot avoid New York sales tax solely because the customer accesses the software through the internet rather than installing a programme locally.
The state’s older technical memorandum, TSB M 93(3)S, also confirms the baseline rule: prewritten software is taxable, including software made by combining two or more prewritten programmes or prewritten components.
Canned Software and Prewritten Software
A remote provider selling standardised software to a New York customer is generally selling taxable tangible personal property. This applies where the customer downloads the software, receives access through a licence key, or accesses the same standardised software remotely.
How this is translated in a practical scenario could be grasped within the following framework:
A foreign company sells access to a standard accounting platform to a customer in New York. The software is hosted outside New York and accessed through a browser. If the customer receives the right to use prewritten software, New York generally treats the charge as taxable.
SaaS and Remote Access Software
New York generally taxes SaaS because it views remote access to prewritten software as a sale of taxable prewritten computer software. This position has often been supported by outcomes of different litigation and advisory opinions.
One of these Advisory Opinions is TSB A 24(8)S, which concluded that charges for use of a web portal by customers and applicants constituted the sale of prewritten software subject to sales tax.
When it comes to the reinforcement of the sales tax applicability related to the remote access to the web-based Software, the decision below shared by the New York Supreme Court is here to remove potential doubts for remote software providers that are using similar operating models.
In January 2026, the New York Supreme Court, Appellate Division, issued a decision in Matter of Beeline.com, Inc. v. State of N.Y. Tax Appeals Trib. holding that client access fees for a web-based vendor management system (VMS) constitute taxable sales of prewritten computer software licenses rather than nontaxable labor-management services.
Customized Software
Custom software is generally treated differently. New York’s computer software bulletin distinguishes prewritten software from custom software designed and developed to the specifications of a specific purchaser. Custom software is generally not subject to sales tax.
However, sellers should be careful. Merely configuring prewritten software, setting up user accounts, or modifying workflows inside an existing SaaS product normally does not convert the subscription into exempt custom software.
How this is translated in a practical scenario could be grasped within the following framework:
A New York business hires an EU developer to build a bespoke internal logistics programme from scratch. The programme is developed only for that customer and is not marketed to others. This is closer to exempt custom software. By contrast, if the customer subscribes to the developer’s existing platform and receives configuration, the subscription may remain taxable prewritten software.
Software Customization and Related Implications
New York can exempt separately stated and reasonable charges for modifying or enhancing software to a customer’s specifications. However, if customization, implementation, support, training, or consulting is bundled with taxable software access, taxability can become more difficult.
The practical issue is the “true object” or dominant purpose of the transaction. If the customer is primarily buying access to a software platform, New York may treat the charge as taxable software even when service elements are included.
How this is translated in a practical scenario could be grasped within the following framework:
A SaaS contract includes USD 90,000 for annual platform access and USD 15,000 for separately stated custom development of a unique module. The platform access is likely taxable. The custom development charge may be exempt if properly documented and separately stated. If the contract charges one all-inclusive price, the total could be under the statutory taxation principle.
Cloud-based Services and Cloud-Computing
Not all cloud-based services are necessarily taxable in New York. The distinction is whether the customer is receiving taxable prewritten software or a nontaxable service such as computing power, infrastructure capacity, or data processing without software use as the object.
New York Advisory Opinion TSB-A-15(2)S, issued in 2015, states that Infrastructure-as-a-Service (IaaS) cloud computing products are not subject to New York State sales and use tax. The state ruled that renting computing power, memory, and storage is a non-taxable service, even though customers incidentally access an operating system software interface
How this is translated in a practical scenario could be grasped within the following framework:
A customer pays an hourly fee for scalable server processing capacity and installs or uses its own software. This may be distinguishable from taxable SaaS. By contrast, access to a vendor’s hosted CRM, ERP, HR, accounting, or workflow tool is more likely taxable as remote access to prewritten software.
Other Digital Products
New York’s software rule is broad, but it does not automatically tax every digital product. Many electronically delivered non-software digital products, such as certain e-books, videos, music, or informational content, may be nontaxable unless they are classified as taxable information services, taxable software, or another taxable service or product.
The key classification question is whether the product is:
- Prewritten software
- Taxable information service
- Digital content that is not taxable
- A bundled product with taxable software access
- A taxable entertainment, amusement, or telecommunications service
How this is translated in a practical scenario could be grasped within the following framework:
A downloadable PDF research report may require analysis as an information service rather than software. A web-based analytics dashboard allowing the customer to manipulate data through software tools may be taxable as SaaS or prewritten software access.
Remote Seller Registration
New York’s remote seller threshold is relatively high compared with many states, but both threshold elements should be met. The Tax Department states that if a seller has more than USD 500,000 of gross receipts from sales of property into New York and more than 100 sales transactions into New York, the seller meets the threshold and should register for New York sales tax.
This applies to remote sellers without physical presence. Foreign sellers are not excluded. If an Italian or Lithuanian SaaS provider exceeds the New York threshold with taxable software sales, it should review New York registration and collection obligations.
Tax Collectors
In-state vendors
New York-based vendors selling taxable software, SaaS, or taxable services should register, collect, file, and remit sales tax.
Remote sellers
Remote sellers exceeding the New York threshold should register and collect tax on taxable New York sales. This includes remote SaaS or software providers if the products are taxable.
Marketplace providers
Marketplace providers are responsible for collecting New York State and local sales tax on taxable sales of tangible personal property that they facilitate and that take place in New York or are delivered to a New York address.
This is important because New York treats prewritten software as tangible personal property. If a marketplace facilitates taxable software sales, marketplace rules may be relevant.
Marketplace sellers are generally not responsible for collecting sales tax on tangible personal property sales facilitated by a marketplace provider where they receive a Certificate of Collection or the marketplace publicly states it will collect. However, the seller remains responsible for non-marketplace sales and for taxable transactions not covered by the marketplace provider rule.
B2C and B2B treatment
New York sales tax is not limited to B2C transactions. It applies to taxable sales to New York purchasers unless an exemption applies.
A local sales tax registered business is not automatically exempt. If a New York business buys taxable SaaS for internal use, the provider should charge sales tax if it has a collection obligation, unless the customer provides valid exemption documentation.
Valid documentation may include:
- Resale certificate
- Exempt organization certificate
- Direct pay permit, where applicable
- Multiple points of use documentation for qualifying software use
- Other New York-approved exemption certificate
Final Remarks
New York already has a broad software tax framework. Prewritten software is taxable whether delivered physically, electronically, or by remote access. This means SaaS and many cloud-based software subscriptions are already subject to New York sales and use tax if the customer receives access to prewritten software in New York.
Custom software can remain exempt, and pure cloud infrastructure or computing power may be distinguishable from taxable SaaS depending on the facts. Other digital products require separate classification, because not every digital item is automatically taxable.
Remote providers, including foreign providers, should register if they exceed New York’s economic nexus threshold of more than USD 500,000 in New York gross receipts from sales of property and more than 100 New York transactions. B2B transactions are taxable where the buyer uses taxable software internally and does not provide a valid exemption certificate. Marketplace collection may relieve sellers for covered marketplace transactions, but not for direct sales or non-covered transactions.
Frequently Asked Questions
Yes, in many cases. New York generally treats remote access to prewritten software as a taxable sale of tangible personal property. The customer does not need to download or physically receive the software for sales tax to apply.
Yes. Prewritten software is taxable regardless of whether it is provided through physical media, electronic download, or remote access. The method used to deliver the software does not determine its taxability.
Generally, yes. If the customer receives the right to use prewritten software remotely, New York generally treats that transaction as a taxable software sale.
New York has specifically confirmed that charges for customers to use web based prewritten software can constitute taxable sale.
Generally, software designed and developed to the specifications of a particular purchaser is treated differently from taxable prewritten software.
However, configuring, modifying, or implementing an existing standard SaaS product does not automatically transform the underlying software into exempt custom software. The substance of the transaction and contractual documentation remain important.
Separately stated charges for qualifying custom modifications may receive different treatment from the underlying prewritten software.
Businesses should clearly separate genuine custom development from standard platform access, implementation, training, and support when contracts and invoices allow it.
It depends on what the customer actually purchases.
Access to a vendor’s hosted prewritten software is generally taxable. Pure infrastructure services may receive different treatment where the customer essentially purchases computing capacity, memory, or storage rather than access to taxable software.
New York has previously concluded that qualifying Infrastructure as a Service arrangements can fall outside sales tax
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