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For Immediate Release
December 3, 2007
Missouri Discusses Computer Software and Services – Are they Taxable or
Not?
Like many other states, Missouri has
attempted to help Taxpayers understand the complexities of software sales
and services.
For sales or use tax determinations, an out
of state corporation’s sales of canned computer software are subject to
the state’s sales or use tax. If the order is taken and approved outside
of Missouri and the software is shipped via common carrier to customers in
Missouri, the transaction is subject to use tax. On the other hand, if
the order is taken and approved in Missouri, or delivered in Missouri,
then the canned software is subject to sales tax.
Sales of customized software developed by
the Taxpayer are not subject to either sales or use tax, as the real
object of the transaction by the purchaser is the services of the seller
in developing the customized software, not the tangible personal property
produced from the service.
To further clarify the taxability, custom
work on canned software the Taxpayer purchases and installs for the
customer is subject to sale tax if the custom work makes the software
compatible with the customer’s equipment. However, charges for custom
work on canned software purchased by the Taxpayer’s customer and installed
by the Taxpayer under a separate contract are not subject to sales or use
tax. Similarly, charges for custom work on canned software purchased and
installed by the customer are not subject to sales or use tax.
If you would like additional
information on this topic or have any questions,
please contact the taxdesk@thesaltgroup.com
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