Although levying a tax on accounting, healthcare and other professional services isn’t new, it is somewhat revolutionary to add managed service providers to the list as part of various states’ efforts to replenish depressed state coffers. The story was reported in ChannelPro.

Managed service providers include vendors offering cloud computing, hardware as a service (HaaS), and software as a service (SaaS).

State auditors are confused as they attempt to delineate between managed service providers providing a “good” and/or a “service.” If companies provide “goods,” then the tax is clear cut. If they provide “services,” coming to terms with potential tax is more difficult. Previously, any professional service was not taxed.

“But where it gets tricky is if the MSP provides ongoing management and maintenance not on the device per se, but the data on it,” says Charles Weaver, president of MSPAlliance. “But now you have auditors who look at an invoice for a piece of hardware and see what looks like a one-year maintenance agreement, and say you have to pay sales tax on that whole year of revenue. Public-policy-wise, it’s really foolish to start taxing IT and IT services, the one sector that is actually thriving in this economy.”