Laws, Regulations and Annotations
Business Taxes Law Guide – Revision 2023
Sales and Use Tax Annotations
A B C D E F G H I J L M N O P R S T U V W X
120.0000 Automatic Data Processing Services and Equipment—Regulation 1502
(a) In General
120.0560.750 Software Sublicensing Agreements. A software licensor (L) provides software to a computer equipment manufacturer (M) to be sublicensed to the end users of M's equipment. The agreement between L and M provides for a number of specified fees, some of which are taxable and some of which are not taxable.
Nontaxable fees include: An initial participation fee and an annual nonrefundable renewal fee, both of which are paid to L by M for the right to participate in the sublicensing program; commissions paid to M by L for each sublicense M issues to an end user; royalties paid by M to L for each sublicense issued; fees for optional product support offered by L through M to M's sublicensees; fees paid by M to L for requested porting of program updates; and certification fees.
Taxable fees include: Charges to end users for the use of pre-existing programs, and technical support service fees which provide for updates paid by the end-user where the end-user has contracted directly with L or with M. 9/26/91.