Sales of iPhone apps to Apple treated as sales for resale in Illinois

Thursday, December 20th, 2012

 
 
Share
Link
Illinois
General

In a recent general information letter, the Illinois Department of Revenue (DOR) addressed the taxability of applications ("apps") for smartphones. Ill. Gen. Info. Ltr. ST 12-0055-GIL (Dept. of Revenue Oct. 3, 2012).

A college developed apps for Apple's iPhone, which the college sold to Apple. In turn, Apple then re-sold the apps through its iPhone App store website. In return, the college received a percentage of these sales. The college wanted to know how to treat the sales to Apple.

The DOR determined that the sale of the apps to Apple was (1) a sale of tangible personal property and (2) a sale for resale. Illinois treats canned computer software as taxable tangible personal property. Computer software is "canned" if it is not prepared to the special order of the customer. Here, there was no evidence that the college prepared the apps to the special order of the customer. The apps, therefore, were tangible personal property. Also, Illinois does not tax purchases for resale. Because Apple purchased the apps with the intent of reselling them to purchasers for use or consumption, this was a purchase for resale. The college, therefore, needed to obtain a certificate of resale from Apple for the sale of the apps.


About TTR

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.

Please visit TTR on the web at www.ttrus.com or call 866.578.8193.

Sales Tax Does Not Apply to Carryout Bag Fees in New York

Wednesday, October 24th, 2018 -The New York State Department of Taxation and Finance recently released a ruling determining that sales tax do...

Texas Releases Detailed Guidance on Exempt Organizations

Thursday, October 18th, 2018 -The Texas Comptroller has released a publication that provides detailed information on how sales and use tax a...

Telephone Answering Services Taxable in Arkansas

Tuesday, October 16th, 2018 -The Arkansas Department of Finance and Administration recently ruled that the service of answering calls on be...

Washington Provides Guidance on Lodging Tax for Online...

Friday, October 12th, 2018 -The Washington Department of Revenue released updated guidance that provides tax reporting information for bed...

Economic Nexus in West Virginia

Wednesday, October 10th, 2018 -The West Virginia State Tax Department announced that it will require remote sellers to begin collecting sales...

Idaho Provides Guidance on the Exemption for Medical...

Monday, October 8th, 2018 -The Idaho State Tax Commission recently released guidance that explains Idaho's sales and use tax laws for buy...