Colorado has new statute pertaining to mainframe computer access that might subject services such as Amazon Web Services (AWS) to sales tax.

By Alexander Korzhen and Judy Vorndran

How do the new taxes on Amazon Web Services (AWS) in Colorado work?

Colorado, along with many other states, has introduced legislation that adds sales tax to Amazon Web Services (AWS) and similar services by targeting mainframe computer access.

While a business may be receiving these services outside of Colorado, if their “mainframe” or center of operations is in Colorado, they are subject to sales tax on these services.

Even if your server is somewhere else in the nation, you could receive the bill in Colorado because the sale is in Colorado or the server was built in Colorado. A business that relies heavily on AWS  should carefully consider the sourcing of these services as the additional tax burden can be significant.

How are states targeting AWS?

This is a relatively new area of tax, and the Colorado Department of Revenue (DOR) has released little administrative guidance thus far. As a result, we don’t yet know how this tax will be enforced by the DOR. The statute leaves a lot open to interpretation.

With this tax expansion, Colorado appears to be singling out AWS and similar services. Because this situation is still developing, if your business uses services like AWS, it is important to keep an eye on the changing tax landscape.

For more guidance, reach out to the tax professionals at

More Tax News