Treasury Department Issues Proposed Rules On Cloud Transactions, Other Digital Content

On August 9, the US Department of the Treasury released proposed regulations on the federal income tax treatment of “cloud transactions” and certain other transactions involving digital content (the “Proposed Regulations”). The Proposed Regulations, if finalized, would arguably represent the most significant US federal tax guidance on computing transactions in more than 20 years. A cloud transaction is generally defined as a transaction through which a person obtains non-de minimis on-demand network access to computer hardware, digital content or other similar resources, not including network access to download digital content for storage and use on the end user’s computer or mobile device.