In the past year, Miller says, more than a dozen states have issued rulings on the tax status of cloud computing, representing a range of opinions on the subject. For example, the Bay State's ruling is consistent with one handed down in Utah this spring, which also found that licensed software is taxable but that some free, open source software is exempt. In many other states there have been no official rulings on when cloud services are taxed, which leaves service providers in an awkward position, she says. Miller works with clients to make inquiries to states asking for guidance on whether their services are taxable, which is how the Massachusetts ruling came down. The DOR issued the decision based on an inquiry by a company whose name was redacted when the ruling was released. "I think a lot of states are using this as an opportunity to provide some definitive guidance on the technology," she says, showing cloud computing's continued prominence in IT.

It will be interesting to watch how cloud providers respond to the rulings from Massachusetts and other states, Miller says. Companies can gain tax advantages in certain states by offering free or open source access to their software rather than licensing it. Miller says she'll be watching to see if any companies change their market offerings based on these new rulings.

Network World staff writer Brandon Butler covers cloud computing and social collaboration. He can be reached at BButler@nww.com and found on Twitter at @BButlerNWW.