Indiana Software Maintenance Agreement
Description
How to fill out Software Maintenance Agreement?
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FAQ
The contract for providing updates and future releases is a contract for the sale of tangible personal property. The charges for such a software maintenance contract are subject to sales tax regardless that the maintenance contract may be optional with the purchaser.
Does Indiana require sales tax on Software-as-a-Service (SaaS)? Indiana does not require sales tax on Software-as-a-Service.
New features, products and functions are launched every day and new cyber threats to IT systems occur daily. That is why software systems requires on-going technical support. A software maintenance agreement is an agreement signed between the software vendor and the software user to provide technical support.
The contract for providing updates and future releases is a contract for the sale of tangible personal property. The charges for such a software maintenance contract are subject to sales tax regardless that the maintenance contract may be optional with the purchaser.
Optional warranty contracts are not subject to sales/use tax as long as there is no substantive provision or certainty that tangible personal property will be provided under the contract.
Charges for computer program repair, maintenance, or restoration by a person who sold the computer program are taxable. Computer program repair, maintenance, or restoration includes error correction, technical fixes, and technical support, whether provided over the Internet or over the phone.
California is one of the few states to tax only physical goods. This means that digital goods and services, including SaaS, are generally not taxable in the state, unless the service includes creating a physical item. The way digital products are categorized can change from state to state and city to city.
Neither sales nor use tax applies to non-recurring engineering fees with respect to services rendered by the company to develop software which is not part of a sale of tangible personal property.