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 120.0524

(a) In General

120.0524 Security Key Installed with Load and Leave Software. A taxpayer sells and physically installs software on the customer's computer at the customer's office, without leaving any software disks with the customer. The taxpayer also installs a "dongle" on the customer's computer. This is a piece of tangible personal property used as security key for the software. The software was designed to be effectively nonfunctional without the installation of the dongle. Therefore, when the customer purchases the software, the customer must also obtain an important piece of tangible personal property that the customer will use to make the software functional. Accordingly, the charge for the software license that involves the transfer of the dongle is taxable without regard to the manner of transfer of the software. 9/23/99. (2000–2).