Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2017
Sales and Use Tax Annotations
120.0000 AUTOMATIC DATA PROCESSING SERVICES AND EQUIPMENT—Regulation 1502
(c) CUSTOM PROGRAMS
120.3088 Custom Programming Included in Sale of Computer. Where custom programming is furnished with computer equipment under a lump-sum contract, a reasonable allowance for the nontaxable custom programming must be made. The legislative finding that accompanied the enactment of section 6010.9 stated that sales of custom computer programs are service transactions not subject to tax and that the media used is only incidental to the true object of the transaction. The allowance mentioned above should not be given if the programming consists of modifications to a canned program. In such cases, section 6010.9(d) requires a separate charge for the modifications made. 11/13/84.