1. Sales Tax on Services and Multistate Taxation of Software/Cloud Computing Providers & Users Edward Bernert ( ebernert@bakerlaw.com ) ebernert@bakerlaw.com Janette Lohman ( jlohman@thompsoncoburn.com ) jlohman@thompsoncoburn.com Todd Whittaker ( todd.whittaker@franklin.edu ) todd.whittaker@franklin.edu

2. What is cloud computing?

3. Cloud Computing - Definition Image source http://www.entechcomputers.com/resources/what-is-cloud-computing/

4. Cloud Computing - Definition Image source http://www.entechcomputers.com/resources/what-is-cloud-computing/

5. Cloud Hype Cycle Source: Gartner, 2012 Software as a Service (SaaS) Infrastructure as a Service (IaaS) Platform as a Service (PaaS)

6. Three types Infrastructure as a Service (IaaS) Image source http://strawdogs.files.wordpress.com/2009/08/spaghetti-bowl.jpg

7. Three types Platform as a Service (PaaS) Image source http://www.freedomdigitalnetworks.com/images/uploads/posts/images/offshore-platform-4.jpg

8. Three types Software as a Service (SaaS) Image source http://energyzarr.typepad.com/energyzarrnationalcom/2011/09/will-binary-communications-survive.html

9. Pendulum swing ? ?

10. 10 How the Web Works

11. 11 How the Web Works Browser sends HTTP request as text GET /article.pl?sid=06/12/19/2256259/ HTTP/1.1 Host: it.slashdot.org GET /article.pl?sid=06/12/19/2256259/ HTTP/1.1 Host: it.slashdot.org

12. 12 How the Web Works Server sends back HTTP response HTTP/1.1 200 OK Date: Thu, 21 Dec 2006 21:31:30 GMT Content-Type: text/html Content-Length: 1354 Should JavaScript Get More Respect? (more file contents). HTTP/1.1 200 OK Date: Thu, 21 Dec 2006 21:31:30 GMT Content-Type: text/html Content-Length: 1354 Should JavaScript Get More Respect? (more file contents). This is a “document,” containing text, formatting, and display instructions.

13. 13 How the Web Works Web browser examines document to identify and request other resources (e.g. images). Place elements and display to user

14. 14 How the Web Works Begs two questions: – Where is “the cloud?” – Where is “the software?”

15. 15 Where is “the cloud?” Asking the question is against cloud principles

16. 16 Where is “the software?” Is it a download? Is it remote access? Who runs it?

17. 17 Where is “the software?” A web browser doesn’t just display documents. It also runs programs written in a language called JavaScript.

18. 18 Where is “the software?” So, is this “the software?”

19. 19 Where is “the software?” What does this end do? So, is this “the software?”

20. 20 Where is “the software?” Is it a download? Is it remote access? Who runs it? No. Some program code is downloaded, but it provides no value without the part that stays on the server. No. Parts run on the local machine as well as remotely. Not quite like timesharing. Probably the most important legal question.

21. 21 Who runs it? End usersThe company

22. 22 Who runs it? End usersThe company “The software is obviously responding to what they do. End users are in the driver’s seat.”

23. 23 Who runs it? End usersThe company “The software is obviously responding to what they do. End users are in the driver’s seat.” “End users are just doing data entry. The software runs on our servers, stores data there, and makes decisions there.”

24. 24 Who runs it? End usersThe company “You are charging users a monthly fee to use your software. You even call them ‘users’ and ask for their ‘username.’”

25. 25 Who runs it? End usersThe company “You are charging users a monthly fee to use your software. You even call them ‘users’ and ask for their ‘username.’” “They are users of the service we provide. Our service goes beyond data entry. We are paid for our business processes.”

26. 26 Who runs it? End usersThe company “Service? Really? Who uses any software that doesn’t provide a service? ”

27. 27 Who runs it? End usersThe company “Service? Really? Who uses any software that doesn’t provide a service? ” “I’m not hearing a problem.”

28. 28 Who runs it? End usersThe company “Service? Really? Who uses any software that doesn’t provide a service? ” “I’m not hearing a problem.”

29. It’s a mess

30. Questions?

31. Download these slides! http://bit.ly/CloudTax2