United States

Pennsylvania: Department Issues Guidance on Taxability of Canned Software Support Services

Feb 20, 2017
From KPMG TaxWatch

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Last year, legislation signed into law in Pennsylvania expanded the sales tax base to include digital goods and software accessed electronically. Specifically, effective August 1, 2016, the definition of “tangible personal property” was amended to include  videos, photographs, books, applications, games, music, other audio (such as satellite radio services), canned software, and any other taxable tangible personal property that is electronically or digitally delivered. Under the revised law, maintenance, updates, and support related to these items are also treated as tangible personal property. Recently, the Pennsylvania Department of Revenue issued guidance addressing the tax treatment of support services performed with respect to canned software. Notably, the Department considers the Legislature’s express inclusion of the “maintenance, updates and support” language within the definition of tangible personal property to render all such services with respect to canned computer software subject to tax. Specifically, any support involving the access to, use of, or alteration of software will be considered taxable. If a vendor providing support to software is afforded any access to the software itself, the vendor will be considered to be rendering taxable support. This includes electronic or remote access as well as direct physical access to the software. It also includes any updates, upgrades, enhancements, patches, modules, and/or other modifications to canned software, whether provided and billed separately, or in conjunction with such support. Support also includes consulting and training services related to canned computer software. Please contact Howard Sklaroff at 267-256-2891 with questions on Ruling No. SUT-17-001.


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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.