The Colorado Department found that a company’s charges for computer program maintenance, including updates, are not subject to sales or use tax in a private letter ruling. The company provided computer program maintenance services in the form of system updates delivered electronically. The company’s services include telephone support and on-boarding services, which are bundled and invoices in a single non-itemized fee.
The company is not selling taxable computer software. Even if some tangible personal property is conveyed when the company provides its computer maintenance services, it is considered de minimis as the true object of the transaction is the provision of the service. The company’s charges for computer program maintenance, support services, and updates are not subject to Colorado sales or use taxes. (PLR 18-003, Colorado Department of Revenue, December 20, 2018).