Manage your Cloud Infrastructure Spend

You’re No Tax Expert

“Be wary of strong drink. It can make you shoot at tax collectors… and miss."

- Robert Heinlein

You may be paying more tax on your cloud expenses than is necessary. Don’t assume Google or your reseller knows the correct amount to charge. This article gives some overview and pointers on how to make sure you’re paying only what is necessary.

I have helped organizations who assumed they were paying the right amount of tax. But after some digging, it was revealed that they were paying more than they needed to. The finance and accounting teams also assumed they were paying the correct amount.

“Surely”, they thought, “Google (or reseller of choice) knows the correct tax to charge, right?" No. Don’t make this assumption. They simply charge your locale’s standard rate unless you instruct them otherwise. There may be reasons why you should pay less.

For example, the city of Chicago tax cloud expenses. Yet, you can cut a percentage of the tax by demonstrating1 that some of your users are not in Chicago.

An inquiry with those organization’s tax consultants revealed they could reduce their tax. Paperwork sent to Google (or reseller of choice) provided immediate reduction, and in some cases a credit for past tax incurred.

This may be a moving target2 with the stress COVID is placing on many cities. Work closely with your tax professionals.

You’re not a tax expert, and neither am I. Talk with your tax consultants about your cloud bill. Send them this article. Talk with them about how you’re using the services to support your business. Ask them to investigate whether there are any (legal) opportunities to pay less.

  1. City of Chicago - Affidavit for Apportionment of Use of Nonpossessory Computer Leases ↩︎

  2. Jones Day - Insights - Remote Work Could Reduce Chicago Lease Tax ↩︎