Tax Type
Retail Sales and Use Tax
Description
Protective claim for refund; Custom software
Topic
Payment and Refund
Date Issued
03-14-1986
March 14, 1986
Re: Protective Claim for Refund/Sales and Use Tax
Dear ******************
This will reply to your letter of January 13, 1986, in which you submit a protective claim for refund of sales and use tax paid upon the lease of computer software by *********************.
As noted in my November 29, 1985 ruling, the department has contemplated a policy change under which the charges for the creation of custom computer software would be retroactively exempted from the sales and use tax. Because such a change was contemplated, I held out the possibility of filing a protective claim for refund in my ruling to you, but only with respect to custom software.
Based upon the invoice furnished with your most recent letter, it appears that the licensed computer software in question is of the prewritten or "canned" variety rather than software created specifically for your company. If this is indeed the case, I will not be able to hold your protective claim pending the publication of a computer software regulation by the department. However, if any of the transactions involve custom software, please advise within 30 days and I will hold your claim pending the publication of a regulation addressing that subject.
It should be noted that legislation has passed both houses of the General Assembly that would exempt custom software from the sales and use tax as well as labor or service charges in connection with the sale of modified prewritten software. This legislation, a copy of which is enclosed along with the department's legislative impact statement, would have no impact upon sales of unmodified prewritten software, however.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner