Laws, Regulations and Annotations


Business Taxes Law Guide—Revision 2024

Sales and Use Tax Annotations

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120.0000 Automatic Data Processing Services and Equipment—Regulation 1502

Annotation 120.0102

(a) In General

120.0102 Data Processing and Data Entry. A taxpayer requested information regarding the application of tax to the following cases:

(1) Keying of customer's paper documents and providing magnetic media (diskette or computer tape). Custom program services are necessary to allow the data entry to commence.

Charges for data entry are taxable whether the storage media are furnished by the customer or by the data processing firm. When programming is performed for use in performing taxable data entry, the charge for programming is taxable. The programming service is an expense in fabricating the magnetic media desired. Section 6012 prohibits the deduction of these "service costs."

(2) Same as (1) except the data is transmitted over telephone lines, using a "modem."

Provided that tangible personal property is not transferred, tax does not apply to the charge if the transfer of information is by remote telecommunication from the data processing firm to or through the purchaser's computer.

(3) Same as (1) except that instead of magnetic media, an address list only is provided.

If a mailing list is created from documents provided by a customer by using a typewriter or word processor, tax does not apply to the charge for the original document and carbon copies produced simultaneously with the original. Tax does apply to charges for producing multiple copies of the document.

(4) Same as (3) but in addition to the address list, magnetic media is also provided.

Since magnetic media is transferred to the customer, the entire charge is taxable regardless that an address list is also provided to the customer. 4/15/92.

(Effective 1/1/94, due to a statutory change, "mailing lists" also includes a magnetic tape or similar device used to produce written or printed names and addresses by electronic or mechanical means. Therefore, magnetic tape mailing lists are exempt where a contract restricts the purchaser to a single use of the mailing list.)