No. 27085 (Amendment): R865-19S-92. Computer Software and Other Related Transactions Pursuant to Utah Code Ann. Section 59-12-103

DAR File No.: 27085
Filed: 04/13/2004, 02:13
Received by: NL

 

RULE ANALYSIS

Purpose of the rule or reason for the change:

Section 59-12-102 defines prewritten computer software and tangible personal property; and Section 59-12-103 indicates when sales tax is imposed on sales of software.

 

Summary of the rule or change:

The proposed amendment deletes definitions that are now treated in statute; deletes the definition of the term "license agreement," as that term is no longer used in the rule; and deletes language relating to the taxable and non-taxable nature of sales of software.

 

State statutory or constitutional authorization for this rule:

Section 59-12-103

 

Anticipated cost or savings to:

the state budget:

None--Any fiscal impacts were taken into account by S.B. 147 (2003). (DAR NOTE: S.B. 147 is found at UT L 2003 Ch 312, and will be effective July 1, 2004.)

 

local governments:

None--Any fiscal impacts were taken into account by S.B. 147 (2003).

 

other persons:

None--Any fiscal impacts were taken into account by S.B. 147 (2003).

 

Compliance costs for affected persons:

Some sales of software that were not taxable prior to the passage of S.B. 147 (2003) will now be subject to sales tax.

 

Comments by the department head on the fiscal impact the rule may have on businesses:

Some sales of software that were not taxable prior to the Streamlined Sales Tax will now be subject to sales tax.

 

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Tax Commission
Auditing
210 N 1950 W
SALT LAKE CITY UT 84134

 

Direct questions regarding this rule to:

Cheryl Lee at the above address, by phone at 801-297-3900, by FAX at 801-297-3919, or by Internet E-mail at [e-mail]

 

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

06/01/2004

 

This rule may become effective on:

06/02/2004

 

Authorized by:

Pam Hendrickson, Commissioner

 

 

RULE TEXT

R865. Tax Commission, Auditing.

R865-19S. Sales and Use Tax.

R865-19S-92. Computer Software and Other Related Transactions Pursuant to Utah Code Ann. Section 59-12-103.

[A. Definitions:

1. "Canned computer software" or "prewritten computer software" means a program or set of programs that can be purchased and used without modification and has not been prepared at the special request of the purchaser to meet their particular needs.

2. "Custom computer software" means a program or set of programs designed and written specifically for a particular user. The program must be customer ordered and can incorporate preexisting routines, utilities or similar program components. The addition of a customer name or account titles or codes will not constitute a custom program.

3.]A. "Computer-generated output" means the microfiche, microfilm, paper, discs, tapes, molds, or other tangible personal property generated by a computer.[

4. "License agreement" means the same as a lease or rental of computer software.

5. "Tangible personal property" includes canned computer software.]

B. The sale, rental or lease of [canned or ]prewritten computer software constitutes a sale of tangible personal property and is subject to the sales or use tax regardless of the form in which the software is purchased or transferred.[ Payments under a license agreement are taxable as a lease or rental of the software package. Charges for software maintenance, consultation in connection with a sale or lease, enhancements, or upgrading of canned or prewritten software are taxable.]

C. The sale, rental or lease of custom computer software constitutes a sale of personal services and is exempt from the sales or use tax, regardless of the form in which the software is purchased or transferred. Charges for services such as software maintenance, consultation in connection with a sale or lease, enhancements, or upgrading of custom software are not taxable.

[D. Charges for services to modify or adapt canned computer software or prewritten computer software to a purchaser's needs or equipment are not taxable if the charges are separately stated and identified.

E.]D. The sale of computer generated output is subject to the sales or use tax if the primary object of the sale is the output and not the services rendered in producing the output.[

F. This rule cites the most common types of transactions involving computer software and it should not be construed to be all inclusive but merely illustrative in nature.]

 

KEY: charities, tax exemptions, religious activities, sales tax

[October 29, 2003]2004

Notice of Continuation April 5, 2002

59-12-103