The North Carolina Department of Revenue released an important notice regarding updates to the taxability of software support services.
Effective March 1, 2016, repair, maintenance, and installation services are taxable. This means that optional software maintenance contracts sold with prewritten software that only provide support services are fully taxable if the support services meet the definition of repair, maintenance, and installation services. If they do not meet the definition of repair, maintenance, and installation services, the underlying contracts are not taxable.
North Carolina has updated its state taxability matrix to reflect this change.