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 120.0531

(a) In General

120.0531 Software and Software Updates Installed into Customer's Computer. When a person operates a customer's computer to transfer computer software directly into the permanent storage memory of the customer's computer, and maintains complete and exclusive control over the customer's computer during the entire process, the transaction is not a sale of tangible personal property, provided the taxpayer does not provide the customer with a hard copy or any other tangible personal property. On the other hand, when the transferor downloads the software onto "some other type of computer storage device owned by the customer," such as diskette, tape or CD, the transferor would be performing fabrication labor on customer-furnished property. This fabrication is a "sale" under section 6006(b). The same analysis applies to optional software maintenance agreements where software updates are delivered as described above. 4/10/97.