Our lives are filled with intangible goods (things that can’t be touched or seen even though money may have been paid to purchase them) and with software-as-a-service and digital goods offerings becoming more mainstream, state lawmakers have begun to sit up and take notice of ways in which to tax these intangible goods.
Estimates that states could raise as much as $4 billion each year (source: Seattlepi.com) by taxing assets such as digital goods, software as a service, patents and trademarks (to name just a few) are appealing to state lawmakers who continue to see budget shortfalls year after year.
Last year the State of New Jersey implemented the “Intangible Asset Nexus Initiative” where businesses were offered the chance to voluntarily disclose their intangible assets and fulfill their tax and compliance requirements. The benefits to businesses with nexus in New Jersey included an appealing waiver of most penalties (if incurred) and other concessions. However, it’s important to note that whether or not your business is offered a voluntary disclosure act in the states where it has nexus, your organization will still be subject to an audit. If this happens to you, you will want to be ready.
If you are buying or selling digital goods, or are providing software as a service, join us for a one-hour webinar,
Intangible assets can be very valuable to an organization, so it is important to account for them properly and comply with state tax and regulatory laws.