Colorado Issues Emergency Regulation Explaining Taxation of Multiple Points of Use Software

In response to Colorado’s recent elimination of the exemption for electronically-delivered software, an emergency regulation has been issued that explains, among other things, the taxation of standardized software that is concurrently available for use in multiple jurisdictions. If the purchaser knows at the time of purchase the software is Multiple Point of Use (MPU) Software, he or she should present the seller with a MPU Exemption Certificate. Upon receiving the MPU Exemption Certificate, the seller is relieved of all obligations to collect, pay, or remit tax, and the burden is on the purchaser to apportion, pay and remit the tax and submit a copy of the certificate to the Colorado DOR.

The purchaser can use any reasonable, consistent, uniform method of apportionment, as long as it is supportable by business records. The apportionment should be based on the total purchase price paid by the purchaser; individual licenses may not be apportioned to specific jurisdictions. The MPU Exemption Certificate is not valid for software that is received at the seller’s business location or software that is loaded onto computer hardware prior to sale. (Emergency Reg. 39-26-102.13, Colorado DOR, effective March 2, 2010)

Posted on April 22, 2010