Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 175.0149

175.0149 Sales of Software, Leases of Modems, and Access to Information System. An out-of-state taxpayer who is engaged in business in California sold application software to hospitals. It also leased modems to hospitals and allowed the hospitals to access its information systems center in its out-of-state location.

As a retailer engaged in business in this state, the taxpayer is required to collect California use tax from a purchaser purchasing the property for use in California unless the use is exempt or excluded from tax. The hospital's purchase of the software for use in this state is subject to use tax. Also, the purchase of any other miscellaneous items is subject to use tax. Generally, the lease of the modems to the hospitals in this state is subject to use tax. The taxpayer must collect the use tax from the hospital at the time rentals are paid by the lessee (see Regulation 1660). Tax does not apply to the amount of the monthly charge attributable to allowing the hospital access to the information system center. 4/6/94.