Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2014
 

Sales and Use Tax Annotations


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A

120.0000 AUTOMATIC DATA PROCESSING SERVICES AND EQUIPMENT—Regulation 1502

Annotation 120.0525

(a) IN GENERAL

120.0525 Settlement of Disputed License Fees. A customer acquired software products under a license which limited its use to a central processing unit. The vendor claims that the software was being used in an unauthorized manner. The customer disputed the claim, but ultimately paid $250,000 in settlement of the claim. The $250,000 is part of gross receipts subject to tax. The settlement fee was paid in order to settle the dispute over amounts owed attributable to the acquisition of the software and the accompanying license fees. Such payment for additional license fees are subject to tax. 3/17/97.