Tax Type
Retail Sales and Use Tax
Description
Software, in any form is tangible personal property
Topic
Appropriateness of Audit Methodology
Date Issued
09-10-1982
September 10, 1982
Re: 58-1118 Application/Sales and Use Tax
Dear **************
This responds to your application of March 31, 1982, in which you petitioned for relief of sales tax assessed against as the result of our audit.
FACTS
**********purchases software from various suppliers. The information from this software, whether in the form of punched cards, tapes, or discs, is used by ********** and often the reels of tape are returned to the suppliers.
DETERMINATION
The Department of Taxation has consistently taken the position that software, either in the form of punched cards, tapes, or discs, is tangible personal property within the meaning of § 58-441.3(1) and subject to the tax on the selling price at the time of purchase. If software is leased from a supplier, the charge for such lease is also subject to tax, even if the tape reels are returned to the supplier. While the charge for the software may largely represent the production of the program, the object sought by the purchaser/lessee is the tape itself containing the program. The fact that ********* chooses to transfer the software from the tape to its own system does not alter the manner in which the tax applies.
Based upon the facts presented and the department's long-standing policy in this matter, I must deny your application.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner