The Indiana Department of Revenue determined that a company’s charges for accessing its cloud-based educational services through a web-based platform with optional downloaded software are not subject to sales tax. Ind. Rev. Rul. # 2026-04-RST (June 26, 2026). This ruling should assist other companies that provide similar services.

The Facts: The company provides educational and training services that offer customers an opportunity to test and develop their trading and risk management skills. The company’s primary product is designed to teach users how to become successful traders in a simulated environment. The services are provided through a secure digital platform that offers various statistical and analytical capabilities, a simulated trading environment, and educational content accessible via any web browser.

Users primarily access the platform through the company’s website. However, the company also provides users with the option to download a simulation-only application component (trading platform) for use in place of the web-based application. The downloaded trading platform is developed by an unrelated third-party and offered as a freeware application.

The Sales Tax: Sales tax is imposed on sales of tangible personal property, specifically enumerated services, and specified digital goods. Prewritten computer software is included in the definition of tangible personal property. IC 6-2.5-1-27. However, charges for accessing prewritten computer software electronically via the internet where no permanent ownership interest, control, or possession in the software is acquired are not subject to sales tax. IC 6-2.5-4-16.7.

Specified digital products are defined as electronically transferred digital audio works, digital audiovisual works, or digital books. IC 6-2.5-1-26.5. 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. IC 6-2.5-4-16.4(b).

The Ruling: The Department determined that the company’s product does not meet the definition of a specified digital product as it does not meet the definition of a digital book, digital audio work, or digital audiovisual work, and customers do not obtain the right of permanent use of the product. Instead, the company’s product allows customers to gain access to software that is accessed over the internet.

The option to download the third-party software also does not make the company’s product downloadable software. As the Department found, “[t]he optional software that can be downloaded is not necessary to utilize the company’s product and does not add additional functionality, which is the object of the transaction to purchase the product.”

The Department concluded that the company is providing financial trading educational services. The company uses software in the performance of its services, which is electronically accessed by its customers who have no permanent ownership of the software and, as such, the accessed software is not subject to sales tax.

This ruling should help other companies since, as the ruling provides, “other taxpayers with substantially identical factual situations may rely on this ruling for informational purposes in preparing returns and making tax decisions.”