[Hidden-tech] FW: Additional guidance from the Department ofRevenue on Computer Software Tax

[Bruce Hooke]

Thanks Scott. One correction based on the most recent technical guidance
from the DOR: modifications to free, open-source software are not taxable.
So, Drupal and Joomla "modifications" are not taxable. 
 
Bruce

  _____  

From: hidden-discuss-bounces at lists.hidden-tech.net
[mailto:hidden-discuss-bounces at lists.hidden-tech.net] On Behalf Of Scott
Reed
Sent: Friday, August 23, 2013 7:05 PM
Cc: 'hidden-discuss'
Subject: Re: [Hidden-tech] FW: Additional guidance from the Department
ofRevenue on Computer Software Tax


The following is lifted from the DOR's FAQ:


2.  What are modifications to prewritten software that are taxable under the
new law?

A.  Modifications to prewritten software that are subject to tax under the
new law are modifications to  software which is licensed, sold or otherwise
made available to more than one user, where such prewritten software is
modified for the use of a specific customer.  The modification may be made
either by the original seller/licensor of the software or by a third party.


For purposes of this tax on modification, integration, enhancement,
installation or configuration of standardized (prewritten) software,
prewritten software does not include proprietary code owned by the provider
(seller) of the modifications if that proprietary code is not separately
licensed to customers.  

Custom application software (including custom software that incorporates
such proprietary code) that is designed to run on a prewritten operating
system is treated as custom software and not as a modification of the
prewritten operating system software.


I interpret the second sentence to say that there is no tax on original code
as long as the modifications are not licensed to the customer (i.e. as long
as the customer is paying for the coder's time and not for a license to use
the coder's product).

I interpret the third sentence to say that there is no tax on original
(unlicensed) code that uses prewritten, third party, libraries and runs on
prewritten OSs.

This lets those that write code off the hook for the most part and it helps
clarify that the tax does apply to development within standalone database
frameworks like Excel, Access, Drupal, Joomla, etc. where much of the
development involves modification to an underlying database. 

I wonder, however, if they tax bookkeeping services and, if not, how is that
different from working within these other database frameworks?

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