Sales and Use Tax on Computer Software

Is the purchase of computer software for use in my business subject to sales/use tax? In New York the answer is maybe.

Custom software is exempt from tax. Custom means software developed exclusively for the purchaser. It does not mean a software package modified for a purchasers use.

Software consumed in the production of property held for resale is exempt, as is software used in research and development activities.

Also exempt from tax are services related to the software (such as installation and technical support). However, the charges must be separately stated on the invoice and they must be reasonable.

Pretty much everything else is taxable.

For more information, contact our office.

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