Both business-to-business (B2B) and business-to-consumer (B2C) SaaS transactions are considered nontaxable in Wyoming. However, Wyoming does impose a use and sales tax on certain digital goods, such as downloadable software. This article will explain Wyoming’s sales tax rules, including how they apply to both SaaS and digital goods.
Taxation rules in Wyoming
SaaS is not typically taxed in Wyoming because the state does not classify SaaS as tangible personal property. The Wyoming Department of Revenue defines tangible personal property as property that can be “weighed, measured, felt, or touched,” citing examples including water, gas, steam electricity, and prewritten computer software. SaaS, which is typically accessed through a subscription, with no transfer of tangible goods, does not meet this definition.
While there may be no current plans to start taxing sales of SaaS in Wyoming, tax laws are subject to change. For products that are taxable, Wyoming applies a statewide rate of 4%. In addition, some jurisdictions in Wyoming apply their own sales tax; the average combined state and local tax rate is 5.44%. Providers must stay up-to-date on any potential changes in these rates and the taxable status of SaaS in order to stay compliant.
Are digital goods taxable?
Certain digital goods are subject to tax in Wyoming, including software, movies, music, and e-books. However, according to Wyoming’s Sales Tax Imposition Statutes, a digital product is subject to tax only if the purchaser has permanent use of the product. If a product is bought for the purpose of transmission, licensing, relicensing, distribution, or exhibition, the purchaser can be considered a wholesaler, and the sale is therefore not taxed.
While Wyoming doesn’t tax SaaS, compliance is still important
Many states require SaaS companies to collect and remit sales tax. Providers that operate in multiple states or sell digital goods in addition to their SaaS products will need to understand and meet their tax obligations. States where SaaS is subject to tax include:
- South Dakota: South Dakota taxes SaaS under its sales tax rules, applying the statewide rate of 4.5% plus applicable local tax rates. This taxation extends to the sale, lease, or use of any prewritten software accessed remotely.
- Tennessee: In Tennessee, SaaS is treated as a taxable computer service. The state tax code specifies that the use, lease, sale, or licensing of prewritten computer software is subject to sales tax, no matter how it is delivered. The installation or configuration of software may also be subject to tax, which could create additional tax obligations for providers who bundle these services with their SaaS products.
- Alaska: Alaska does not have a statewide sales tax, but its home rule system allows many local jurisdictions to set their own tax policies. Municipalities, including Juneau and Sitka have their own tax rates, which could apply to digital goods or SaaS, depending on whether they fall under their definitions of taxable services. Alaska also has a specific entity to help businesses understand this tax system, the Alaska Remote Seller Sales Tax Commission (ARSSTC).
- Illinois: Like Alaska, Illinois does not apply a statewide sales tax to SaaS. However, the City of Chicago does, through their Personal Property Lease Transaction Tax, or PPLTT.
- Georgia: In Georgia, SaaS is classified as a service rather than tangible personal property, exempting it from sales tax. However, certain digital goods (such as music downloads, electronically delivered computer software, and e-books) are subject to tax.
- Mississippi: Mississippi classifies all software, including SaaS, as tangible personal property and imposes a tax. The Mississippi Department of Revenue clarifies that this sales and use tax applies if the software is maintained on a server physically located in the state.
Tracking the various requirements of each state and jurisdiction can create significant challenges for SaaS companies. In addition to understanding these local requirements, providers will need to determine whether they have nexus (a connection that creates a tax obligation) in the states where they do business.
How does nexus work in Wyoming?
Nexus is a connection to a state. Many states have nexus thresholds that, if met, create an obligation to collect and remit sales tax. In Wyoming, there are two primary types of nexus: physical and economic.
- Physical nexus: Physical nexus is a tangible presence in Wyoming — for instance, employees, contractors, offices, inventory, warehouses, or any other type of property in the state.
- Economic nexus: Like many states, Wyoming follows the economic nexus standard set by the South Dakota v. Wayfair Supreme Court decision. This decision dictates that remote sellers (those who don’t have a physical presence but still serve customers within a state) that meet certain thresholds in a specific state have established nexus. In Wyoming, that means $100,000 in gross sales in the current or previous year. Wyoming dropped its 200 transaction threshold in 2024.
Businesses that have economic nexus and that aren’t directly exempt from taxation will need to collect sales tax on sales in Wyoming and remit it to the state.
How to stay compliant as a SaaS company
Even though SaaS may be exempt from taxation in Wyoming, businesses selling other taxable digital goods or operating in multiple states will need to take steps to ensure compliance. These steps can include:
- Register: If your products and services are not exempt, and you have established nexus, you’ll typically need to register with the appropriate state authorities. In Wyoming, this would be the Wyoming Department of Revenue.
- Calculate and collect: After you have registered, you’ll want to calculate the correct state and local tax rates. Then you’ll want to collect from your customers during each transaction.
- File: Most states require regular sales tax returns to be filed at a frequency determined by your sales volume or overall tax liability. These filing frequencies can vary but typically occur monthly, quarterly, or annually.
- Remit: Companies will need to remit (or pay) the appropriate amount of tax along with their returns to the appropriate state agencies. In Wyoming, returns and remittances are delivered through the Wyoming Internet Filing System for Business (WYIFS).
Failure to follow these steps or stay current with the tax laws in each area you operate may result in noncompliance. This can lead to significant fines, interest, audits, and the loss of state business permits. In order to avoid these negative consequences, it can be helpful to use a tax compliance platform such as Numeral, alongside resources provided by each state.
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Resources
Several resources and organizations can help businesses maintain compliance in Wyoming, including:
- The Wyoming Department of Revenue’s Official Website
- Wyoming Taxpayers Association
- Wyoming Internet Filing System for Business (WYIFS)
The correct way to contact the Wyoming Department of Revenue can vary depending on which region you operate in. For example, if you operate in Region 1 (Laramie County), you can call 307-777-5541. The Department of Revenue can also be emailed at dor@wyo.gov.
The bottom line
Because SaaS is considered a service, it is typically exempt from sales tax in Wyoming. However, certain digital goods, such as downloadable software and digital media, are subject to tax as tangible personal property.
Companies providing SaaS or other digital products need to consider numerous factors to stay compliant, including whether they meet nexus thresholds in the states where they do business.
Compliance can also require registering with each state you operate in, tracking where your customers are located, calculating and collecting the correct tax rate, and filing regular sales tax returns. These processes can be simplified by using compliance platforms like Numeral, as well as resources provided by the appropriate state tax authorities.
