Tax Type
Retail Sales and Use Tax
Description
Software subscription updates; Deposit charges; Time of purchase of service
Topic
Taxability of Persons and Transactions
Date Issued
08-12-1991
August 30, 1991
Re: Request for Ruling: Sales and Use Tax
Dear********************
This is to clarify two points addressed in my ruling letter of August 12, 1991 (P.D. 91-161) to you.
Taxability of the deposit charge: The deposit charge made for the use of a returnable tape containing standard or noncustomized information is taxable. However, if the information on the tape is customized to a client's specifications, the deposit charge is exempt from the tax as the true object of the transaction is the services of the Taxpayer and the tangible personal property transferred is inconsequential.
Time of purchase of service: In my previous ruling letter I indicated that the fact that the time of purchase of the update service has no bearing on its taxability. Please note, however that this is applicable only to certain services. Regardless of whether an update is customized or standard has no bearing on the taxability of such when contracted for at the time of purchase of a computer system. In both instances, it would be taxable. However, if purchased at a later date, a customized update may be purchased exempt from the tax yet a standard update is taxable.
If you have any questions about the above, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Related Documents
Rulings of the Tax Commissioner