Utah ~ Sales and Use Tax: Software Interfaces Were Nontaxable Custom Software

A medical testing company’s purchases of software interfaces were not subject to Utah sales and use tax because the interfaces were custom computer software. Sales of prewritten computer software are taxable, while sales of custom computer software are exempt as sales of personal services. Prewritten software is software not designed and developed to a purchaser’s specifications. The purchased software interfaces allowed the company and to share testing information and communicate between its medical records system and the systems of its customers. The company used different records systems than its customers, so different interfaces were developed by different vendors to accommodate the unique programming language of each customer’s system. Thus, the software interfaces were not prewritten software, but were custom software.

Private Letter Ruling, Opinion No. 15-004, Utah State Tax Commission, September 28, 2015, ¶401-111



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