Shaking things up in state and local tax
Shaking things up in state and local tax
By Nick Kump and Charlie Kearns
On October 27, the Michigan Court of Appeals affirmed the trial court’s decision in favor of the taxpayer and held that several contracts for data processing services, access to computer programs and databases, and other online services did not include the use of taxable prewritten computer software. After considering…
By Nick Kump and Charlie Kearns
The Iowa Department of Revenue issued a policy letter declaring that the delivery of a digital software key on a tangible card is exempt from sales tax, as long as the software itself is delivered digitally and there is not a separate charge for the key. Iowa Code section…
In a significant rebuff of the California State Board of Equalization (BOE), the California Second District Court of Appeal held that a manufacturer’s sale of software on tangible media was exempt from sales tax under the technology transfer agreement (TTA) statutes. Lucent Technologies, Inc. v. State Bd. of Equalization, No. B257808, 2015 WL 5862533.
In Part I of their series for State Tax Notes, Sutherland attorneys Leah Robinson and Evan M. Hamme provided a roadmap describing how to challenge a department of revenue’s assertion that online services are taxable as licenses of software. While focused on New York audits, the roadmap can assist in any similar audit.
In Part…
By Mike Kerman and Charlie Kearns
The Indiana Department of Revenue (Department) found that a medical research company that purchased software licenses was entitled to an exemption from use tax for purchases of taxable computer software as long as it could show the licenses were ultimately used outside of Indiana. The Department added that an…
By Robert Merten and Charlie Kearns
The Missouri Department of Revenue has issued a comprehensive letter ruling answering 12 software-related sales tax questions on issues concerning canned software, custom software, software licenses, software invoices, software installation and software maintenance agreements. Missouri Department of Revenue LR 7615, Aug. 21, 2015. In the letter ruling, the…
In his State of the State address at the beginning of the year, Texas Governor Greg Abbott tasked the Legislature with enacting meaningful business tax relief. The Legislature responded by reducing the franchise (also called the margin) tax rate and creating new exemptions and incentives for sales tax. At the same time, however, the Legislature…
Since late 2008, the New York State Department of Taxation and Finance has routinely taken the position that charges for application service provider services, software as a service, or other online services may be subject to New York sales tax as licenses of software. Some sellers began collecting sales tax on this basis, and the…
By Evan M. Hamme and Open Weaver Banks
The New York State Department of Taxation and Finance released an advisory opinion explaining how it will treat drop shipment facilitation services for sales and use tax purposes. The petitioner uses proprietary software to create an Internet-based “hub” through which a web-based merchant orders products from a…
By Charles C. Capouet and Andrew D. Appleby
The Indiana Department of Revenue found that software training is not subject to sales and use tax because it does not constitute tangible personal property. The Department audited the taxpayer and assessed additional use tax on its purchase of a software license agreement. Nearly half of the…
