Virginia royalty payments taxable when prewritten and custom programs included.

A Virginia taxpayer was liable for collecting tax on the sale of the right to use a software system which incorporated both custom and prewritten software. Although custom software is exempt under Virginia law, when lumped together with prewritten software in a single agreement for a single charge, the entire transaction subject to tax. (Ruling of Commissioner, P.D. 04-176, October 6, 2004)

Posted on December 15, 2004