Missouri has amended its sales and use tax rule on taxation of software to address new items. The amended rule provides that the sale of software as a service (SaaS) is not subject to tax. The SaaS provider must pay sales or use tax on tangible personal property used to provide the service that is purchased or used in Missouri. The amended rule also defines software as a service as a model for enabling ubiquitous, convenient, and on-demand network access to a shared pool of configurable computing resources that can be rapidly provisioned and released with minimal management effort or service provider interaction. Per the rule, the term includes platform as a service (PaaS), infrastructure as a service (IaaS), and similar service models. It does not include any service model that gives the purchaser the right to use specifically identified tangible personal property.
The amended rule also addresses more traditional software products and stipulates that tax does not apply to the amount charged to a customer for customized software. Sellers of customized software are subject to tax on the purchase of any tangible personal property or taxable services used to provide the service. The rule also provides that mandatory software maintenance agreements for canned software provided on a tangible medium are subject to tax, whether or not the charges are separately stated. Optional software maintenance agreements that provide for canned software updates, upgrades, or enhancements delivered on a tangible medium are subject to tax. If the optional maintenance agreements do not provide for canned software updates, upgrades, or enhancements delivered on a tangible medium, the separately stated cost of the maintenance agreement is not taxable. Charges for custom software maintenance agreements that provide for software updates, upgrades, or enhancements delivered on a tangible medium are not subject to tax. (12 CSR 10-109.050, Missouri Department of Revenue, effective July 30, 2014)