Missouri Rules on Remote Software Usage

The Missouri Department of Revenue addressed a taxpayers questions in regards to the taxability of software licenses provided to Missouri customers by an out-of-state vendor. Customers could purchase a stand-alone traditional license agreement or a vendor-hosted license. A vendor-hosted license sold by the vendor provided for remote access to the software, support and infrastructure, but not ownership of the software after the license lapsed. The Department’s response to the taxpayer inquiry was that the traditional license agreement was subject to Missouri sales and use tax since tax was applied to software sales. Fees for the vendor-hosted license would not be subject to sales and use tax as long as the software was delivered electronically as there was no sale or use of tangible personal property. (Letter Ruling No. LR4920, Missouri Department of Revenue, July 3, 2008)

Posted on January 1, 2009