Written by: Kamil Ponicki, Director of Talent Acquisition, Digital Colliers
California's SB 122 comes into force on 1 January 2027. From that date, prewritten SaaS and AI tools sold to California-based buyers incur state sales tax at 8-10%. If you run a mid-market bank with operations in California, the question your finance team will ask in about eight months is simple: which contracts does this apply to, and what does the bill look like?
Most mid-market banks cannot answer that question today. The problem is not that the contracts do not exist. The problem is that nobody maintains a complete list. Shadow IT means business units spin up tools without procurement. Vendor renewals live in email threads across a dozen managers. The official vendor register in finance sits three quarters out of date.
Why the SaaS inventory question keeps failing
The pattern I keep seeing at mid-market banks runs like this. Procurement knows about the big contracts because those went through the formal RFP process. Finance knows about the recurring charges because those hit the ledger every month. But neither group sees the full picture.
A business unit manager signs a DocuSign agreement for a $3,000 annual SaaS tool and expenses it. IT provisions Okta access for a new AI assistant someone in trading discovered. A department head renews a contract via email because it has been on autopilot for three years. None of these show up in the systems that finance or procurement query when the CFO asks for the California SaaS inventory.
Most mid-market finance teams still run month-end close in spreadsheets, pulling numbers across systems by hand. Month-end close at mid-market finance teams typically runs 8-10 days. If your team needs eight days to close the books each month, they do not have cycles left over to reverse-engineer a complete vendor list from email threads and expense reports.
The DORA connection you already have
DORA has been in force since 17 January 2025. If your bank operates in scope of the Digital Operational Resilience Act, you already need to maintain a register of ICT third-party service providers. That register tracks the vendors who supply business-critical systems and data. You need to know who they are, what they provide, and what the operational dependencies look like.
The data model that satisfies DORA is the same data model you need to answer the California SaaS tax question. Both require you to list every vendor, every contract, every renewal date, and every service scope. Both fail if procurement, finance, and IT each maintain separate spreadsheets that do not reconcile. Both require a single source of truth.
What the winning operators are building
The banks that will answer the SB 122 question in Q3 2026 instead of Q4 2026 are the ones building the ICT register as a real system, not a compliance checkbox. They are pulling contract data from procurement, spend data from finance, and access logs from IT into one queryable model.
That model needs to capture a few specific things. Contract effective dates and renewal dates. Vendor headquarters and service delivery location. Whether the software is prewritten or custom-built. Whether it is hosted in California or delivered to California-based users. Whether it qualifies as a taxable service under SB 122 or falls into one of the exemptions.
You do not need a custom-built enterprise system to do this. You need a structured data model and the discipline to keep it current. The teams I see shipping this in 2026 tend to start with a simple relational schema in Airtable or Postgres, hook it to procurement and finance APIs where those exist, and commit to a weekly reconciliation ritual where procurement, IT, and finance compare notes.
Timeline pressure is real
1 January 2027 is not a soft deadline. You cannot file for an extension. If you buy SaaS in California after that date, the vendor charges you sales tax or you owe use tax. If you cannot list which contracts fall in scope, you cannot model the cash impact. If you cannot model the cash impact, your CFO cannot budget for it.
The vendors who sell to you will not do this work for you. They will update their invoicing systems to collect the tax, but they will not tell you which of your other vendors also fall in scope. That is your job.
You have eight months. If your ICT register is still a spreadsheet that three people update when they remember, the SB 122 inventory question will land in November 2026 as a crisis. If your ICT register is a live system that reconciles procurement, finance, and IT data every week, the SB 122 inventory question will land in November 2026 as a SQL query.