Georgia ~ Sales and Use Tax: Taxability of Bundled Software Transactions Discussed

CCH Tax Day Report

A letter ruling issued by the Georgia Department of Revenue discusses how sales and use tax applied to a taxpayer’s sale of bundled software and software-related services. The software and services were designed to prevent cyber-attack in messaging environments. The software-related services included implementation, installation, upgrades, updates, and technical support. The department stated that because sales and use tax does not apply to sales of software delivered electronically, and because the software-related services involved are not specified as taxable under Georgia law, the charges for these products and services were not subject to sales and use tax regardless of how they were itemized on customer invoices. However, tax would apply to any sale of software in a tangible medium or sale of the right to software in a tangible medium. Finally, the department stated that if the taxpayer delivered software exclusively in an electronic format, the invoice or supporting documentation needed to indicate that fact.

Letter Ruling LR SUT-2016-09, Georgia Department of Revenue, March 30, 2016, released June 2016, ¶201-077



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