This is a question that we get all the time. We get the questions from
sellers of software and buyers of software alike. The taxability of
software maintenance turns sometimes on whether it is mandatory or
optional. The taxability also depends often on exactly what is
included in the "maintenance".
Often having a "maintenance agreement"
means you get software updates; sometimes it just means someone will
be helping you deal with issues that come up from time to time. We've
pulled together a taxability matrix thanks to CCH that shows the
taxability of maintenance agreements in the top 5 states. When you
look at the chart we've provided take note of the comments. It may
indicate a "maintenance agreement" is taxable, but the note may say if
it's just telephone support, it's exempt.
Keep in mind that this chart addresses the general situation. Your
specific facts and circumstances may indicate a different answer. If
you would like to discuss your specific situation, or if you need this
chart in additional states, just give us a call.
