The Alabama Supreme Court held that all software, including custom software created for a particular user, is “tangible personal property” and therefore subject to Alabama sales and use tax, affirming the decision of a lower court. For purposes of Alabama sales and use tax, all software – whether canned or custom – is subject to tax. However, the Court noted that nontaxable services sold in conjunction with software are not subject to tax if they are separately stated and invoiced. These services include, but are not limited to, determining a particular software user’s needs, designing and programming new software for a particular user, modifying or configuring existing software programs to meet a particular user’s needs, installing software, and training users to operate software. Per the Court, the relevant distinction is how the transaction is documented and invoiced, which is left up to the seller and purchaser. In the case at hand, a healthcare software vendor/consulting firm installed computer software and accompanying equipment for a hospital. The hospital had subsequently petitioned the Alabama Department of Revenue for a refund of sales tax paid on the transaction. We will monitor any modifications to the current regulation as the Department works to clarify the decision particularly how to document the separately invoiced services which remain exempt. (Russell County Community Hospital, LLC, d/b/a Jack Hughston Memorial Hospital v. Alabama Department of Revenue, Alabama Supreme Court, No. 1180204, May 17, 2019)