Michigan Software Maintenance Agreement
Description
How to fill out Software Maintenance Agreement?
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FAQ
Sales of custom software - delivered on tangible media are exempt from the sales tax in Michigan. Sales of custom software - downloaded are exempt from the sales tax in Michigan. In the state of Michigan, it is considered to be exempt if it was separately stated and separately identified.
Software maintenance is the process of changing, modifying, and updating software to keep up with customer needs. Software maintenance is done after the product has launched for several reasons including improving the software overall, correcting issues or bugs, to boost performance, and more.
A service maintenance contract is a legal agreement between a company and a maintenance service provider. It specifies the terms and conditions of the agreement between the two parties.
AMC is a maintenance contract or an insurance policy for your technological advancement. It is a software update service for which your company has to pay annually, to the software provider.
A software maintenance agreement, or SMA, is a legal contract that obligates the software vendor to provide technical support and updates for an existing software product for their customers. It may also extend the expiration date of certain features, such as new releases or upgrades.
If the contract is optional and separately itemized, it is not taxable upon sale to a customer. The servicer under the contract, however, must pay tax on any tangible personal property used to fulfill the maintenance contract. Michigan Letter Ruling 88-30.
Maintenance agreements provide routine maintenance, access to emergency repairs, and constant upgrades to software and your system's hardware. More importantly, the agreement make you a priority and allows you to build a relationship with your maintenance provider.
Groceries, prescription medicine, and gasoline are all tax-exempt. Some services in Michigan are subject to sales tax.
Sales of parts purchased for use in performing service under optional maintenance contracts are subject to sales tax in Michigan.
In the state of Michigan, services are not generally considered to be taxable.
