Electronically Delivered Software Not Taxable In Missouri

Wednesday, March 4th, 2015

Person typing on a keyboard.

The Missouri Department of Revenue published a letter ruling on prewritten software sold with an optional maintenance agreement.

The taxpayer was an out-of-state corporation selling and leasing prewritten software in Missouri. The software and associated updates were sold with optional maintenance contracts. The software and updates were delivered by download.

Missouri taxes sales of tangible personal property and certain enumerated services. Prewritten software sold in a tangible medium, such as a CD, is tangible personal property. Electronically delivered software is not. Optional maintenance agreements that include software updates do not provide a taxable service and therefore are not taxable. However, if a non-taxable optional maintenance agreement is sold with taxable tangible personal property in a lump sum, the entire purchase price is taxable.

The software sold by the taxpayer was not sold with tangible personal property, so it was not taxable. Because the software and updates were not taxable, the optional maintenance agreement was also non-taxable.


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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.

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