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For Immediate Release
October 30, 2006
Georgia Adopts Sales and Use Tax Regulations for Computer Software and
Services
The GA Department of Revenue has adopted a regulation
concerning the application of sales and use taxes to computer software and
computer related services, as they pertain to Brick and Mortar and Click
and Order transactions. Many definitions mirror those from the Streamlined
Sales Tax Project.
Computer Software Sold in a Tangible Medium:
The sale, lease, rental, license, or use of
prewritten software is subject to sales and use tax when sold in a
tangible form. Prewritten software, even though it may be modified or
enhanced to a customer’s specifications, remains prewritten software. If
there is a separately stated charge on the vendor’s invoice for the
modification to the software, that charge is not subject to sales and use
tax.
The sale, lease, rental, license, or use of
custom computer software is considered a professional service transaction
and is, therefore, not subject to sales and use tax.
Computer Software Sold in an Intangible
Form:
Computer software that is delivered
electronically is not subject to sales and use tax because it is not a
sale of tangible personal property. Upon review or under audit, the
method of delivery must be documented. If it is not, it will be presumed
to have been delivered through a tangible medium. It will be the
taxpayer’s responsibility to prove that the software was delivered
electronically. In the case of software that is delivered both
electronically and through a tangible medium, the transaction will be
treated as wholly taxable as tangible personal property, unless the
software is custom software.
If you would like additional
information on this topic or have any questions,
please contact the taxdesk@thesaltgroup.com
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