Mar 20, 2017
From KPMG TaxWatch
The Pennsylvania Department of Revenue recently removed a letter ruling (Ruling No. SUT-17-001) from its website. The ruling addressed the taxability of support services provided with canned software and other digital products. Per the Department, additional conversations about the taxability of such services will be occurring and presumably revised guidance will be issued in the future. Recall, legislation signed into law in Pennsylvania last year 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. In the now-pulled guidance, the Department addressed the tax treatment of support services performed with respect to canned software. Notably, the Department considered 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. Furthermore, any support involving the access to, use of, or alteration of software would have been considered taxable under the now-pulled guidance. Please contact Howard Sklaroff at 267-256-2891 or Joe Duch at 412-232-1578 with questions.
For more information about TWIST or to view archived episodes, please visit our TWIST homepage.
To receive TWIST e-mails each Monday morning, make sure that state, local and indirect is checked off as one of your topics of interest on the KPMG TaxWatch registration site.
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.