Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2014
 

Sales and Use Tax Annotations


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L

330.0000 LEASES OF TANGIBLE PERSONAL PROPERTY—IN GENERAL—Regulation 1660

Annotation 330.2156

(a) IN GENERAL

330.2156 Diskettes Containing Database Information. Company X produces floppy disks that contain "database information" supplied by Company Y. Company Y purchases these diskettes tax-paid and subsequently licenses them to customers in substantially the same form as acquired from Company X. The license agreement provides that Company Y owns all rights, title, and interest in the database information contained on the diskettes. The agreement further provides that the diskette must be returned to Company Y if the customer chooses not to renew the license agreement. The license agreement does not provide the customer with an option to purchase the diskette.

Based on these facts and assuming the transfer of the diskettes by Company Y to its customers is for a fixed term, the transaction is a lease of the diskettes to its customer by Company Y in substantially the same form as acquired pursuant to Regulation 1660(c)(2), and no use tax is due with respect to the rentals Company Y charges its customers. 2/23/95. (Am. 2003–1).