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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 120.0510

(a) In General

120.0510 Sales of Computer Software and Hardware. In making sales of computer software and hardware systems, a company itemized its billings, separately listing charges for hardware, software, and sales tax reimbursement on the hardware charges only. The software was fabricated out of state and shipped to the purchaser directly from the out-of-state developer. The transactions consisted of the company: (1) soliciting the sale of the system, (2) billing the customer for the hardware, software, training, and sales tax reimbursement on the hardware; (3) receiving payment from the customer in full; (4) paying the developer for the software, and (5) receiving a commission on the software sale from the developer. The company claims it always acted as agent for the software developer and that the collection of payments from the customers does not affect its status as an agent for the out-of-state developer.

The fact that the company collected payments for the software does not conclusively show that the company was selling the software on its own behalf, rather than as an agent of the developer. However, it does create an inference that the company was the seller of the software. Therefore, it is necessary for the company to rebut this inference. 11/6/92.