Teens and Taxes Home Teens and Everyday Taxes Filing Your Ohio Inocome Taxes Young Entreprenurs Tax History

Computer Services

 

 

Computer repair 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.

Systems software is that which controls the basic operation of the computer.

Application software is that which controls business functions or monitors processes.

Computer 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 computer service.

Example: 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.