Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2017
Sales and Use Tax Annotations
120.0000 AUTOMATIC DATA PROCESSING SERVICES AND EQUIPMENT—Regulation 1502
(a) IN GENERAL
120.0104 Database. A firm is engaged in the business of providing a computer database service. The firm contracts with a vendor who has a mainframe computer to store its database in the computer. The firm delivers software to its customers that enables the customer to connect to the database. The customer is charged based on time usage, access fees, and database utilized.
Assuming that title to the software is transferred to the customer or it was developed in-house and licensed for use, the transfer of the software is subject to tax as a "sale." The firm must make a fair and reasonable allocation of its charges between the charge for database access and the software. 1/24/90.