Tax Rules: Final: 5703-9
5703-9-59 Sales and Use Tax, Transactions Involving
Optional Computer Software Maintenance Contracts.
(A) As used in this rule:
(1) “Computer software maintenance contract” means a contract
that obligates a vendor or seller of computer software to
provide a customer with future updates or upgrades to
computer software, support services with respect to computer
software or both.
(2) “Mandatory computer software maintenance contract” means
a computer software maintenance contract that the customer is
obligated by contract to purchase as a condition to the
retail sale of computer software.
(3) “Optional computer software maintenance contract” is a
computer software maintenance contract that a customer is not
obligated to purchase as a condition to the retail sale of
computer software.
(B) A charge for a mandatory computer software maintenance
contract is considered to be part of the sales price of the
computer software to which it relates.
(C) In any case where an optional computer software
maintenance contract for prewritten computer software is sold
to an Ohio consumer by a vendor or seller, the following
treatment shall apply.
(1) If the optional computer software maintenance contract
only obligates the vendor or seller to provide upgrades and
updates, the contract will be deemed to be a sale of
prewritten computer software, which is defined to be tangible
personal property by division (YY) of R.C. 5739.01. Such a
sale will be considered taxable unless the consumer has a
claim of exemption.
(2) If the optional computer software maintenance contract
only obligates the vendor or seller to provide support
services, and no upgrades or updates, the transaction will be
considered to be the sale of a non-taxable personal or
professional service.
(3) If the optional computer software maintenance contract
includes both upgrades or updates and support services that
are not itemized separately on the invoice or similar billing
document, the contract shall be characterized as a sale of
prewritten computer software, which is defined to be tangible
personal property by division (YY) of R.C. 5739.01. Such a
sale will be considered taxable unless the consumer has a
claim of exemption.
Effective: 11/29/2010
R.C. 119.032 review dates: Exempt
Promulgated Under: 5703.14
Statutory Authority: 5703.05
Rule Amplifies: 5739.01, 5739.012, 5739.02, 5741.02