Learn about Taxes in the Sharing Economy. Register for the Aug. 30 webinar!
Stay up to date with sales tax: Join our mailing list!
In North Carolina, canned software licenses taxable.
Upgrade licenses for canned software in the state of North Carolina are subject to sales tax. Since the fees paid constituted a lease of tangible personal property, North Carolina sales tax was applicable. The taxpayer, in this particular case, argued that no additional tangible personal property was delivered. Only the license fees were paid. The state's definition of "tangible personal property" includes prewritten computer software delivered on a storage medium. The Revenue Department found that the original purchase of the canned software included upgrade capabilities for a later time and once the upgrades were utilized they were subject to state sales tax. (Secretary of Revenue Decision No. 2002-141, North Carolina Department of Revenue, August 9, 2002, received February 20, 2003)