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Business Taxes Law Guide—Revision 2024
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
S
515.0000 Service Enterprises Generally—Regulation 1501
Annotation 515.0016.500
(a) In General—Service Distinguished from Sale
515.0016.500 Shared Use of Computer and Files. Pursuant to a Joint Powers Agreement, a group of local governments purchases and operates a computer system. A library district which is not a party to the agreement is granted access to the computer which has the district's database information which was, in the past, merged into the database of one of the members of the Joint Powers Agreement. The access allows the library district to update the database. The library district is charged a one time fee for a simultaneous user port, 50,000 item records, and 1,000 bibliographic records. It also pays a monthly maintenance fee which represents a pro-rated share of the expenses. No tangible personal property is furnished (e.g., computer hardware, software, or records in tangible form).
The contract is not for the sale or lease of tangible personal property but only computer access and space on the hard drive that is accessed by remote telecommunications. Tax does not apply to the initial charge or the monthly prorated charge. 10/10/96.