One of the questions we have whenever we ship our software to a new state is whether we need to charge sales tax. This get more complicated because some states charge tax on perpetual software but not on maintenance with time-based licenses somewhere in the middle.
We classify software by:
- Perpetual: customer licenses the software forever
- Time-based: customer licenses software for a specific period of time
- Maintenance: the maintenance fee for perpetual software
In addition, we make a distinction between physical delivery of software and electronic delivery because this has an impact on the tax status in California and New Jersey.
Given that, so far we have information on the following states (note this is regardless of the buyers tax-exempt status):
- California
- Perpetual and time-based licenses as well as maintenance are taxable if there is a physical delivery and non-taxable otherwise.
- Colorado
- Perpetual and time-based licenses are taxable but maintenance is not.
- Florida
- Perpetual and time-based licenses as well as maintenance are always taxable.
- Massachusetts
- Perpetual and time-based licenses as well as maintenance are always taxable.
- Maryland
- Perpetual and time-based licenses. Maintenance is not taxed (see comments below)
- New Jersey
- Perpetual and time-based licenses are non-taxable if delivered electronically otherwise taxable. Maintenance is always non-taxable
- New York
- Perpetual and time-based licenses as well as maintenance are always taxable.
- Pennsylvania
- Perpetual and time-based licenses as well as maintenance are always taxable.
- Texas
- Perpetual and time-based licenses as well as maintenance are always taxable.
- Washington
- Perpetual and time-based licenses as well as maintenance are always taxable.
It would be great to complete this table for all states so if you have any additional information please add it.
