A career in computer services can encompass a wide
variety of different careers such as computer
consulting, computer programming, computer software
engineering, etc. Depending on the nature of the
service, it may or may not be taxable and you may or
may not need an Ohio vendor’s license.
The Ohio Revised Code Section 5739.01(Y)(1)(b) defines
the meaning of “computer services” as:
Computer services means providing services
consisting of specifying computer hardware configurations
and evaluating technical processing characteristics,
computer programming, and training of computer
programmers and operators, provided in conjunction with
and to support the sale, lease, or operation of taxable
computer equipment or systems.
Taxable here are a wide range of services provided in
conjunction with and to support the sale, lease or operation
of taxable computer equipment. This relates to hardware
and systems software, but not application software.
software is that which controls the basic
operation of the computer.
software is that which controls business
functions or monitors processes.
services are often minor pieces of more
extensive consulting contracts or other, nontaxable personal
or professional services (discussed below). The most
common computer service is computer training. Even then, the
only computer training that is taxable is that of computer
programmers and operators if such training is provided in
conjunction with the sale, lease, or operation of computer
equipment or systems. Computer training that a new
employee takes to learn how to use a database or spreadsheet
would not be subject to tax since it would be training on
application software and not systems software “provided in
conjunction with and to support the sale, lease, or operation
of taxable computer equipment or systems.”
Generally speaking, “computer consulting” is not a taxable
Joe's Burger Barn has decided to expand nationwide. They
contract with Expert Food Consulting to recommend the
best configuration for their nationwide restaurant
package. Expert provides Joe's with recommendations for
the building and equipment configurations needed. This
includes the type of computers and software alternatives
needed to track the operation at each location. Expert
does not sell any equipment. In this case, the computer
consulting would be non-taxable.