SST Board Repeals MPU

In December 2006, the Governing Board voted to repeal the controversial multiple points of use (MPU) provisions previously included with the SST Agreement and, instead, adopt sourcing rules for software transactions. Prior to the repeal, a business purchaser was required to deliver to the seller an exemption form claiming MPU if it was purchasing a digital good, computer software, or a service that would be available for use in more than one jurisdiction. However, several concerns were expressed by this rule. The burden of collection shifted from software sellers to business purchasers of software. There were also concerns that allowing MPU would create unnecessary complications, as long as there are nonmember states. The Board approved the repeal of the MPU provisions, along with adopting a new rule offered by the business community. This rule describes the application of the general sourcing provision in the Agreement to the transactions involving prewritten computer software, computer-related services, and “software post-sale support agreements.” This change gives member states two years to come into compliance with any amendments made to the Agreement. (Streamlined Sales Tax Governing Board and State and Local Advisory Council Meetings, Seattle, Washington, December 11-14, 2006)

Posted on March 23, 2007