South Carolina Does Not Tax Software Directly Downloaded from Seller's Computer

Wednesday, March 28th, 2012

 
 
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South Carolina
General

The South Carolina Department of Revenue recently issued a revenue ruling discussing the taxability of electronically delivered software. S.C. Revenue Rul. No 12-1 (Dept. of Revenue Mar. 20, 2012). In the facts presented, a software company representative took software to the buyer's location on a laptop computer (owned by the software company). That representative then transferred the software to the customer by establishing a connection between the software company's laptop and the customer's computerand then downloading the software onto thecustomer's computer. Once the software is transferred, the connection between the customer's computer and the seller's laptop is terminated and the representative leaves. The software company does not leave the laptop or any other tangible personal property with the customer.

The Department stated that sales tax is generally charged on tangible personal property and only specifically enumerated services and intangibles. Since canned or custom software delivered electronically is not specifically mentioned in the statute as an intangible item subject to tax,the transaction described in the ruling is exempt. Had the petitioner provided the software to the customer in a tangible format, such as on back-up tapes, diskettes or flash drives, the entire charge would be subject to tax.


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Transaction (buying or selling things), Tax (the tax on this activity), Resources (our people, our website, our support services) - TTR, Inc.

TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

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