In general, I assume there is a risk that you will turn a tax-free service transaction into a taxable license by mischarging a SaaS subscription as a software license. Intellectual property laws that deal with copyright give the owner of the software exclusive rights to reproduce or copy the software, so the customer needs his or her own copyright license to have a copy on his or her own computers. As a general rule, however, most SaaS offers do not require any software installation on a computer. Instead, the vendor stores the software on their computer or in a third-party data center, and the customer can access it via the Internet. […] The best article I`ve found, “Don`t Use Licensing Agreements for Software as a Service,” written by David W. Tollen, J.D., most clearly explains the differences in risks and liabilities between the indeterminate licensing agreement and the software subscription and, as the title shows, it offers highly targeted advice that is not easy to understand.