Kansas Taxability of Computer and Internet-Related Products & Services Discussed

The Kansas Department of Revenue issued an Information Guide detailing guidelines on the application of sales and use tax on charges for computer and internet-related products and services. The sale or use of computer hardware is treated as tangible personal property subject to tax. Moreover, Kansas taxes the services of installing, applying, altering, repairing, servicing, or maintaining tangible personal property. Sales of canned (prewritten) computer software” are also taxable, including charges for modifying, altering, updating, or maintaining prewritten software. However, charges for separately-stated software modification services are not subject to tax. Mandatory maintenance agreements for prewritten software are taxable, but optional maintenance agreements for prewritten software are exempt when charges for technical support services are separately-stated or when the agreement is only for technical support services. Maintenance agreements for custom software are also exempt. Destination-based sourcing applies to sales of prewritten software, software maintenance agreements, and computer hardware. Additional rules and regulations apply. (Information Guide No. EDU-71, Kansas Department of Revenue, February 15, 2008)

Posted on March 31, 2008