The Utah State Tax Commission has revisited a private letter ruling that discusses the application of Utah sales tax to a corporation’s sale of a software-supported automobile dealer management service and associated services. Although the original letter ruling found the associated services to be taxable, the newly described facts indicate that set-up and training fees charged to customers are not taxable. Since the services are separately-stated on the invoice, optional to the client, and because some clients utilize other companies for these services or use the instructions provided by the seller to perform the services themselves, they are not “necessary to complete the sale”, and,, therefore, should not be included in the purchase price.
The Tax Commission determined that separately-stated custom programming and forms programming fees charged to customize the software are not taxable, because such charges are not included in the definition of “prewritten software”. Separately contracted for support fees were also found to not be taxable because they are not among the specifically enumerated taxable services, and because the support fees did not relate to installing, enhancing, or upgrading prewritten computer software.
However, since the Tax Commission still holds that the software-supported automobile dealer management service is “prewritten software”, it denied the corporation’s request to rule that application service fees and monthly licensing fees to access the software-supported service were also not taxable. (Private Letter Ruling, Opinion No. 08-002, Utah State Tax Commission, amended July 10, 2009)