| WAC 155 |
Information
and computer services. |
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| SOURCE |
DOCUMENT |
DETER. NO |
DATE OF ISSUE |
DESCRIPTION |
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| WAC: |
458-20-155 |
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09/20/1985 |
Information and computer
services. |
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| RCW: | |
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82.04.040 |
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1961 |
"Sale," casual or
isolated sale." |
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82.04.050 |
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1997 |
Sale at retail,"
"retail sale." |
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82.04.060 |
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07/01/1998 |
"Sale
at wholesale," "wholesale sale" |
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82.04.070 |
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1935 |
"Gross proceeds of sales." |
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82.04.120 |
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2003 |
"To manufacture" |
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82.04.190 |
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07/01/1998 |
Consumer" |
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82.04.215 |
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07/01/1998 |
Definitions |
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82.04.290 |
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7/1/93 |
Tax on selected business
services, financial businesses, or other business or service activities.
(Effective until 7/1/98) |
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82.04.250 |
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1993 |
Tax on retailers. |
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82.04.29001 |
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07/01/1998 |
Creation
and distribution of custom software--Customization of canned software. |
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82.04.2907 |
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07/01/1998 |
Tax
on royalties from granting intangible rights. Royalty tax rate is 0.484
percent. "Royalties" means compensation for the use of intangible
property, such as copyrights, patents, licenses, franchises, trademarks,
trade names, and similar items. |
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82.04.440 |
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1994 |
Persons taxable on multiple
activities--Credits. |
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82.04.450 |
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1983 |
Value of products, how
determined. |
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82.04.4452 |
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07/01/1998 |
Credit-Research and development
spending (Effective July 1, 1998 until December 31, 2004) |
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82.04.44525 |
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07/01/1998 |
Credit--New
employment for international service activities in eligible areas-- |
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82.04.4456 |
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08/01/1999 |
Credit--software programming or
manufacturing. |
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82.04.4457 |
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08/01/1999 |
Credit--Information technology
help desk services conducted from rural county. |
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82.12.020 |
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07/01/1998 |
Use tax
imposed |
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82.12.0284 |
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1983 |
Use Tax - Exemptions--Use of
computers or computer components, accessories, or software donated to schools
or colleges. |
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82.12.02595 |
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5/1/95 |
Tangible personal property and
certain services donated to nonprofit organization or government entity |
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82.32.070 |
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1999 |
Records to be
preserved--Examination--Estoppel to question assessment--Unified business
identifier account number records. |
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82.63 |
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1/1/95 |
Tax Deferrals For High
Technology Businesses |
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82.08.705 |
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2007 |
Exemption- electronically
transmitted financial data |
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| ETA: |
3143.2009 |
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2/2/09 |
Computer programs: Retail or service |
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455.04.155 |
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7/31/73 |
COMPUTER PROGRAMS: RETAIL OR SERVICE Revised 2/2/09 See ETA 3143.2009 |
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| INDUSTRY GUIDES: |
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Sep 2010 |
Internet-based Businesses cancelled |
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| SPECIAL
NOTICES: |
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| Subject
Title Reference: |
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| Software
Sales |
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06/08/1998 |
Taxation of Computer Software
Services and Canned Software Sales or Licensing (Reissued
April 2002) |
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07/30/1999 |
Tax Incentives for Rural
Counties |
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| Incentives/
International Service Districts |
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04/23/2000 |
Questions and Answers about the
International Services Districts Business and Occupation Tax Credit |
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01/10/2002 |
Use Tax Obligation
of Computer-Related Businesses |
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| Incentives/
Rural County Incentives |
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05/19/2004 |
Rural County Tax Incentives:
Deferral/Waiver Program Extended & Revised Software Manufacturing,
Programming, & Help Desk B&O Tax Credits Reestablished |
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| DIRECTIVE: |
8155.1 |
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06/02/1988 |
Software License Agreements Repealed 6/30/2000 - WAC 458-20-155
currently addresses this issue, and the instructions as they apply to periods
prior to August 7, 1985, are no longer needed. |
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| RPM: |
None |
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| WTD: |
1 WTD 9 |
86-214 |
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MANUFACTURING TAX --
OUT-OF-STATE SALES OF COMPUTER SOFTWARE -- ESTOPPEL. Manufacturing tax
sustained on out-of-state sales of computer software sold under licensing
agreements.Taxpayer had listed its
income from such sales under retailing taking a corresponding deduction for
interstate and foreign sales. Relief not warranted on grounds taxpayer had
asked the Department to check its return when it first filed and error in
reporting was not corrected or because of the Department's prior position
that license to use agreements were professional services. Taxpayer had not
relied on the previous position. |
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1 WTD 415 |
85-308A,86-20A |
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SERVICE B&O TAX -- COMPUTER
SERVICES -- ALLOCATION OF COMPUTER SERVICES -- APPORTIONMENT.Amounts derived from allocating computer
services between affiliated companies within and outside this state are
apportionable based upon the locations where such services are performed, in
order to determine Service B&O tax measure. |
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3 WTD 333 |
87-222 |
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RETAIL SALE -- MICROFILM SERVICE
-- SOFTWARE.A taxpayer who, for a set
monthly charge, sells microfilm updates to pharmacies is engaging in retail
sales.The microfilm is not customized
software.Rather, it is in the nature
of "canned" or "off-the-shelf" software and, thus, a
retail sale. |
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3 WTD 447 |
86-250 |
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USE TAX -- INTERVENING USE --
CUSTOM SOFTWARE -- INTERACTIVE COMPONENTS -- INTEGRATED SYSTEM OF COMPUTER
HARDWARE AND CUSTOM SOFTWARE.Use tax
not due on computer systems and similar electronic hardware which is purchased
for resale and becomes part of a final manufactured product, even though the
items also are used throughout the development process to store data,
develop, test and modify the software that is incorporated into the final
product. |
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4 WTD 327 |
87-359 |
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RETAIL SALE --
"CANNED" SOFTWARE -- MODIFICATION OF -- CUSTOM SOFTWARE
DISTINGUISHED.Payments for the
license to use standard, prewritten software are subject to retail sales tax."Canned" software does not become
"custom" software, as that term is used in Rule 155, if the
software is adapted to meet a customer's needs and/or because a customer
spends a substantial fee to have the software installed. |
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4 WTD 327 |
87-359 |
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RETAIL
SALE -- "CANNED" SOFTWARE -- PAYMENT FOR REVISION AND MAINTENANCE
OF.Where payment for license to use
"canned" software include maintenance and additions or improvements
of or to the standard software functions, the total payment is subject
toretail sales tax. |
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5 WTD 265 |
88-170 |
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RETAIL SALE -- CREDIT BUREAU
BUSINESS -- CHECK GUARANTEE AND VERIFICATION -- INFORMATION SERVICES
DISTINGUISHED.A business's check
guarantee and reporting service on bank checks for its merchant subscribers
and its account screening service for depository customers both fall within
the definition of a "credit bureau business" as that term is used
in RCW 82.04.050. |
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5 WTD 327 |
88-188 |
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SALES/USE TAX -- TANGIBLE
PERSONAL PROPERTY -- EFFECTIVE DATE OF RULE 155 -- COMPUTER SOFTWARE --
LICENSE TO USE.Payments for a license
to use computer software were subject to Service B&O tax prior to the
amendment of Rule 155, effective August 7, 1985. After that date, such
licenses are deemed retail sales subject to Retailing B&O and Retail
Sales or Use Tax. Accord: Det. No. 87-359, WTD ____ (1987). |
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6 WTD 255 |
88-303 |
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B&O TAX -- MANUFACTURING --
CONTRACTING WITH OTHERS -- SOFTWARE DISKS AND PACKAGING.The duplicating of software disks and their
packaging with documentation into a consumer-useful product results in
"a new, different or useful…article of tangible personal property"
and is thus manufacturing. |
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6 WTD 453 |
88-382 |
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B&O TAX -- RETAILING --
COMPUTER SYSTEM -- CUSTOMIZED SOFTWARE. Out-of-state taxpayer manufactures
telecommunication equipment and the computer system out-of-state to operate
the equipment. The taxpayer designs and installs customized software into the
computer system which is sold as a complete unit and delivered to a
Washington customer.The sale of a
computer system with its associated software is subject to Retailing B&O
tax. Rule 155. |
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7 WTD 43 |
88-440 |
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USE TAX -- STANDARD, PREWRITTEN
SOFTWARE --INCIDENTAL MODIFICATION.Incidental customization of standard, prewritten software does not
transform it into custom software.Use
tax applies to the use of such software.4 WTD 327 (1987). |
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7 WTD 130-1 |
89-43 |
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RETAIL SALES TAX -- USE TAX --
SOFTWARE -- PROGRAM MODIFICATION -- ALTERATIONS TO CANNED PROGRAM.Payments to an independent, programmer to
modify a taxpayer's canned program for the taxpayer's specific use are subject
to sales or use tax. |
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7 WTD 130-1 |
89-43 |
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RETAIL SALES TAX -- USE TAX --
COMPUTER TRAINING -- EMPLOYEES -- CANNED PROGRAM.Payments to a vendor of canned computer
programs for the training of employees to use those programs are not subject
to sales or use tax when separately negotiated and severable from purchase of
the canned program. |
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8 WTD 5 |
89-43A |
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RETAIL SALES TAX -- USE TAX --
SOFTWARE -- PROGRAM MODIFICATIONS -- ALTERATIONS TO CANNED PROGRAMProgramming activities which combine
alterations to "canned" programs and the writing of new,
one-of-a-kind programs can be segregated for tax reporting purposes. |
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9 WTD 51 |
90-51 |
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RETAIL SALES TAX -- INFORMATION
SERVICES -- LIST MAINTENANCE.Charges
for "list maintenance" or the imputing, storing, and processing of
names into a client's computer data base constitutes "data processing"
within the meaning of WAC 458-20-155 (Rule 155). If these services are
separately billed, they are not subject to retail sales tax. |
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9 WTD 51 |
90-51 |
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B&O & RETAIL SALES TAXES
-- COMPUTER SERVICES -- MAILING LABELS & BULK LETTERS.Charges for sheets of imprinted labels, or
bulk customized form letters are sales of tangible personal property, and are
properly subject to Retailing B&O and retail sales tax. |
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9 WTD 276-1 |
90-113 |
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USE TAX - COMPUTER SOFTWARE -
LICENSE TO USE.Payments for a license
to use computer software were subject to B&O tax under the service
classification prior to the amendment of Rule 155, effective August 7, 1985.After that date, such licenses are deemed
to be retail sales subject to Retailing B&O tax and retail sales or use
tax. |
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9 WTD 280-1 |
90-128 |
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INFORMATION AND COMPUTER
SERVICES -- FURNISHING TELEPHONE LINES FOR DATA TRANSMISSION -- SERVICE
B&O TAX.Charges to customers for
"dedicated" telephone lines furnished by taxpayers for use in
connection with on-line data processing services rendered by taxpayer are
subject to Service B&O tax.Providing telephone lines is incidental to service activity and is not
"network telephone service" as defined by RCW 82.04.065 and Rule
245. |
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10 WTD 123 |
90-342 |
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B&O TAX -- SOFTWARE --
PROCESSING FOR HIRE -- 20% RULE.A
seller of software who hires third parties to copy diskettes and manual will
be deemed the party furnishing the original diskettes and manuals notwithstanding
the fact that the originals may have been shipped directly to the third
parties by the parent company of the seller. |
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10 WTD 123 |
90-342 |
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B&O TAX -- SOFTWARE --
PROCESSING FOR HIRE -- 20% RULE.In
determining if one who employs a processor for hire furnishes more than 20%
of the value of the materials or ingredients manufactured so as to be subject
to Manufacturing B&O tax, intangible contributions such as the
intelligence on an original computer diskette are to be taken into account. |
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11 WTD 219 |
91-177 |
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SALES
TAX -- USE TAX -- B&O TAX -- INFORMATION SERVICES-- COMPUTERS -- MAILING LISTS .The computer retrieval and transfer to a
mailing bureau of name and address information on magnetic tape for the
purpose of printing mailing lists is not a sale of tangible personal property
subject to the retail sales tax or use tax.It is an information service, exempt from such taxes. |
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11 WTD 547 |
92-340 |
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B&O TAX - MANUFACTURING -
CONTRACTING WITH OTHERS - SOFTWARE DISKS AND PACKAGING.The production of software disks and their
packaging results in "a new, different or useful . . . article of
tangible personal property" and is thus manufacturing. |
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12 WTD 57 |
92-015 |
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USE AND/OR DEFERRED SALES TAX --
CANNED VS CUSTOM SOFTWARE -- CUSTOMIZED.Where standard, prewritten software is combined with other standard,
prewritten software and some original programming, it does not become custom
software just because it may be unique or one-of-a-kind. ACCORD: Det. No.
87-359, 4 WTD 327 (1987). |
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12 WTD 253 |
92-393 |
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USE TAX -- LICENSING FEE FOR
SOFTWARE -- VALUE OF ARTICLE USED.The
use of standard, pre-written software is subject to the use tax if the retail
sales tax has not been paid for the software.The value of the software is readily determined by the amount of the
lease paid for its use. |
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12 WTD 493 |
92-340 |
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RETAIL SALES --
"CANNED" SOFTWARE -- ANNUAL OR MONTHLY FEES FOR SUPPORT SERVICE,
UPGRADES, ADDITIONS, MODIFICATIONS TO CANNED SOFTWARE.A separate package of goods and services
purchased to assist in effective use of a "canned" software program
is subject to use tax, because the upgrades and modifications are to canned
software and are themselves retail sales. This is so, even though the
contract is separate from the original canned software purchase and is
renewed on an annual or monthly basis either by an action of the taxpayer or
by no action followed by payment for the next contract term. |
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13 WTD 302 |
93-158 |
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RETAIL
SALE -- USE/DEFERRED SALES TAX -- CANNED VERSUS CUSTOM SOFTWARE -- CUSTOMIZED
-- INCIDENTAL MODIFICATION. "Canned"
software does not become "custom" software, as that term is used in
Rule 155, simply because it is adapted to meet a customer's needs. |
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13 WTD 302 |
93-158 |
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RETAIL
SALE -- USE/DEFERRED SALES TAX -- CANNED SOFTWARE -- COMPUTER TELEPHONE
SUPPORT SERVICES -- COMPUTER TRAINING -- WARRANTY -- MAINTENANCE --MIXED AGREEMENTS -- SEGREGATION OF CHARGES.Payments to a vendor of canned software for
the training of employees are not subject to sales tax if separately stated
from the charges for software maintenance.However, charges for maintenance of canned software are subject to
use/deferred sales tax. Where payments are not adequately segregated, the
combined charge will be subject to use/deferred sales tax. |
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14 WTD 191 |
94-023 |
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SERVICE B&O TAX --
APPORTIONMENT -- COMPUTER SERVICES.Out-of-state corporation may apportion monthly fees it receives from
Washington subscribers who pay for the right to access its out-of-state
computer facilities in case of failures of the subscribers' own computer
systems.The apportionment of gross
income is to occur between Washington and other states where it has places of
business which contribute to the performance of services rendered in
Washington. |
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16 WTD 29 |
95-093 |
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DATA ENTRY -- SELECTIVE BUSINESS
SERVICE.Posting raw data from charge
slips onto a computer for billing constitutes data entry taxable under the
selective business services classification. |
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16 WTD 56 |
95-252 |
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"CANNED" SOFTWARE --
DATABASE -- MODIFICATION.Charges for
modifications to standard, prewritten software are retail sales.However, applications written from "scratch"
to run with database programs constitute separate custom programs rather than
modifications if the original program was not altered. |
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17 WTD 112 |
97-236 |
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B&O
TAX CREDITS -- MANUFACTURING -- DISTRESSED AREAS -- INTERNET SERVICES.Merely providing Internet services, such as
creating Web pages, without producing tangible personal property for sale, or
for commercial or industrial use does not qualify a person for the B&O
tax credits program for distressed areas. |
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17 WTD 247 |
98-012 |
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RETAIL SALES TAX -- COMPUTER
TRAINING -- DATA RETRIEVAL -- INFORMATION SERVICES.Charges for data retrieval, conversion, and
transfer are not subject to retail sales tax if they are separately
negotiated and severable from contracts for the purchase of canned software
and its installation, in the same manner as training charges. |
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18 WTD 74 |
98-151E |
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RETAIL SALES TAX -- B&O TAX
-- COMPUTER SERVICES -- COMBINED BILLINGS.A computer system company's receipts from billings, which include
charges for updates and modifications to "canned software" are taxable under
the retailing classification and subject to retail sales tax unless records
adequately segregate charges for software and services taxable under the
retailing classification from other services normally taxed under other
classifications, ACCORD: Det. No. 93-158, 13 WTD 302 (1994); Det. No. 89-43A,
8 WTD (1989). |
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18 WTD 285 |
98-067 |
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B&O TAX -- SELECTED BUSINESS
SERVICES; CANNED SOFTWARE TRAINING.Classroom training in the use of canned software is taxable under the
service and other activities B&O tax classification, not under the selected
business services classification. |
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18 WTD 342 |
98-195 |
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B&O
TAXES - SERVICE & OTHER ACTIVITIES - CANNED SOFTWARE - PAYMENTS --
ORIGINAL EQUIPMENT MANUFACTURER.Payments for licensing rights from an original equipment manufacturer
to the owner of copyrighted software programs are subject to B&O taxes
under the service and other activities tax classification. |
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19 WTD 316 |
98-049R |
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MANUFACTURING
B&O - VALUE OF CANNED SOFTWARE - LEASED - LICENSED -- OUT-OF-STATE.A company that produces canned software in
Washington, which leases or licenses the software to out-of-state users is
subject to manufacturing B&O tax measured by the gross proceeds of sales,
the total realized in lease or license fees from its customers for the
software. |
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19 WTD 618 |
99-345 |
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RETAIL
SALE -- USE/DEFERRED SALES TAX -- CANNED SOFTWARE -- COMPUTER TELEPHONE
SUPPORT SERVICES -- COMPUTER TRAINING -- WARRANTY -- MAINTENANCE --MIXED AGREEMENTS -- SEGREGATION OF CHARGES.Charges for mixed services to canned
software are subject to use/deferred sales tax.Software maintenance includes
"extended warranty" of installed software; annual software releases
to fix "bugs"; new codes, security records, and tables; written
documentation on the changes made, including installation instructions; and
testing and distribution of system software upgrades.These services include both warranty and
maintenance services.Under Rules 107
and 257, mixed agreements are taxed as maintenance agreements, subject to
sales or use tax.Where payments are
not adequately segregated, the combined charge will be subject to
use/deferred sales tax. |
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19 WTD 618 |
99-345 |
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SERVICE B&O TAX -- LEASE
VERSUS LICENSE TO USE REAL ESTATE - COMPUTER EQUIPMENT CO-LOCATION
SERVICE.Income from providing space
for customers solely to locate their equipment on taxpayer's secure premises
or to pair the co-location with a range of internet-access services is
subject to service B&O tax where the taxpayer retains control over the
space and how its customers are permitted to use it. |
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19 WTD 771 |
98-202 |
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RETAIL
SALES TAX -SERVICE B&O --
COMPUTER SERVICES - INFORMATION SERVICES -- ON-LINE ACCESS - TELEPHONE LINE
CHARGES.Charges for having on-line
access to a reservation system are a service activity even though a portion
of the charges is for the telephone lines used to convey the information or
service to the customer. |
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19 WTD 777 |
98-213 |
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SERVICE B&O TAX -- SOFTWARE
-- ROYALTY v. SALES - OEM.Payments
made by Original Equipment Manufacturers (OEMs) and resellers for the right
to reproduce and distribute copyrighted software programs are "in the nature
of royalties" and subject to B&O taxes under the service and other
activities tax classification. |
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20 WTD 372 |
00-159E |
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RETAILING B&O AND RETAIL
SALES TAX -- NETWORK TELEPHONE SERVICE -- DEFINITION-- TRUE OBJECT.Where Taxpayer's network provided a
computer data protocol conversion service in addition to transmitting data
and information over its network to another computer, the true object of the
service was found to be the transmission of data and information. |
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20 WTD 372 |
00-159E |
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SERVICE B&O TAX OR RETAIL
SALES TAX -- NETWORK TELEPHONE SERVICE -- INFORMATION SERVICE -- INTERNET
SERVICE.The term "internet service"
was held to not include a protocol conversion and transmission service that
acted upon only the protocols of the transmitted data or information. |
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21 WTD 13 |
01-036 |
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RADIO AND TELEVISION
BROADCASTING -- INTERNET.Providing
access to pre-recorded programs over the Internet does not constitute radio
or television broadcasting because the signal is not delivered over the
airwaves. |
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21 WTD 13 |
01-036 |
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CLARIFYING ACT - DEFINITION OF
INTERNET SERVICES.When the
legislature adopts a clarifying act, the act will apply retroactively.RCW 82.04.297 is a clarifying act,
therefore the definition of Internet Services contained therein, applies
retroactively. |
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21 WTD 13 |
01-036 |
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AMBIGUOUS STATUTE -LEGISLATIVE
INTENT.RCW 82.04.297's definition of
Internet Services is ambiguous in that it can be read to have two conflicting
meanings.The legislative history
shows that the legislature intended one specific meaning.Specifically, Internet Services as defined
in RCW 82.04.297 include only those persons who provide access to the
Internet, not those who maintain sites on the Internet. |
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21 WTD 13 |
01-036 |
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Wa. Const., art. 2 § 19, RCW
82.04.297:SUBJECT OF BILL.The subject of a bill may not be broader
than its title.The title of SB5763,
which was codified as RCW 82.04.297, prohibited treating internet service
providers as network telephone service providers.Because persons who maintain homepages but
do not provide access to the Internet could not have been construed to have
provided network telephone services, they cannot be construed to provide
Internet Services. |
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21 WTD 13 |
01-036 |
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DEFINITION OF INTERNET SERVICES
- CONTEMPORANEOUS CONSTRUCTION.The
purpose of RCW 82.04.297 was to ratify the department's treatment of Internet
Services.The Department's public
statement that RCW 82.04.297 applied to Internet Services Providers is
entitled to significant weight. |
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21 WTD 258 |
01-177 |
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RCW
82.04.2907: SERVICE B&O TAX -- SALES OF RIGHTS TO PHOTOGRAPHS. Prior to
July 1, 1998, income derived from a transfer or sale of a copyright or other
intangible property interest is subject to service B&O tax. Effective
July 1, 1998, RCW 82.04.2907 created a special classification for "income
from royalties or charges in the nature of royalties for the granting of
intangible rights, such as copyrights, licenses, patents, or franchise
fees." |
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21 WTD 298 |
00-154ER |
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RCW 82.04.320: B&O TAX -
EXEMPTIONS - RENTALS - LICENSES.The
labeling of payments as royalties or rents is not controlling in determining
whether the payments are for the rental of real property or for a license or
other right involving the use of real property. |
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21 WTD 298 |
00-154ER |
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RCW 82.04.320: B&O TAX -
EXEMPTIONS - RENTALS - LICENSES - MINERAL LEASES.In general, royalties received under a
mineral lease are for the grant of the right to extract natural products and
are treated as a license, a profit a prendre, or an incorporeal heriditament,
not as the rental of real property. |
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22 WTD 182 |
02-0144 |
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RETAIL SALES TAX -- INTERNET SERVICE - WEB-SITE.Fees to access the taxpayer's web-site for
retrieval of information are for internet services, which are not telephone
services subject to retail sales tax. |
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22 WTD 182 |
02-0144 |
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SERVICE B&O TAX - INTERNET SERVICES - APPORTIONMENT.
Charges taxable under the other business or service activities classification
for internet services provided from locations in Washington as well as places
of business outside the state may be apportioned. |
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22 WTD 218 |
02-0174 |
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B&O
TAX - CREDIT - HELP DESK SERVICES TO THIRD PARTIES - INTERNET SERVICE
PROVIDER.An internet service provider
that provided help desk services to its own subscribers was not entitled to
the help-desk services credit under RCW 82.04.4457 because it was not
providing those services to third parties. |
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23 WTD 121 |
01-015 |
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USE TAX - COMPUTER TRAINING -
SEPARATELY NEGOTIATED AND SEVERABLE.Training costs, of payments to a vendor of canned computer programs
for the training of employees to use those programs, are not subject to sales
or use tax when separately negotiated and severable from purchase of the
canned program. |
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24 WTD 102 |
01-124 |
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ADVERTISING
AGENCY - ADVERTISING TEMPLATES - MEDIUM DELIVERED.When an advertising agency "burns" its
advertising templates to a compact disc and transfers the compact disc to its
client, the advertising agency is selling its advertising services not
tangible personal property.The
compact disc is just the medium through which the advertising agency delivers
its services.Rule 155, concerning
computer software, does not apply to transfer of the compact discs. |
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24 WTD 269 |
04-0284 |
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RETAIL
SALES TAX - PREPAID CONTRACT FOR HOURS OF UNSPECIFIED SERVICES - REFUND OF
RETAIL SALES TAX.A taxpayer who
purchases a prepaid service contract for a set number of hours of computer
services, under which it may use the hours for either retail or non-retail
services, and is charged retail sales tax on the entire sales price, may not
obtain a refund of retail sales tax when it actually uses some or all of the
prepaid hours for non-retail services. |
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24 WTD 393 |
03-0170 |
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SERVICE
INCOME -- ROYALTIES -- INTERNET VENDORS.Income from referring customers to other internet vendors' websites
through the use of tabs or links on the taxpayer's internet website and from
enhancing the product selection and purchase processes is taxed as service
income and not as royalty income. |
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27 WTD 51 |
05-0377 |
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RULE 155, RULE 245; RCW
82.04.065; ETA 544:RETAILING B&O
TAX VS. SERVICE B&O TAX -- CLASSIFICATION OF INCOME -- SATELLITE-BASED
COMMUNICATION NETWORK -- PRIMARY NATURE -- TRANSMISSION OF DATA FOR HIRE VS.
USE OF COMPUTER HARDWARE OR SOFTWARE TO FURNISH INFORMATION OR DATA. In determining the proper classification of a taxpayer's
income, we will consider the 'primary nature' of the taxpayer's activities.
If the primary nature of the taxpayer's activities was the transmission for
hire of data via a telephone network or similar transmission system,
including a satellite transmission system, the taxpayer's income would be
subject to retailing B&O tax, and the taxpayer would be required to
collect retail sales tax from its customers. In contrast, if the primary
nature of the taxpayer's activities was the use of computer hardware or
software to furnish information or data, the taxpayer's income would be
subject to service B&O tax. Where the furnishing of the satellite-based
communication network is the "real object" of the transaction, and
positioning information is merely incidental to the communication service
being rendered, the income is properly classified under the retailing
classification. |
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27 WTD 61 |
05-0377R |
|
RULE 155; RULE 245; RCW
82.04.065; ETA 544:RETAILING B&O
TAX VS. SERVICE B&O TAX -- CLASSIFICATION OF INCOME - PRIMARY NATURE
-TRANSMISSION OF DATA FOR HIRE VS. USE OF COMPUTER HARDWARE OR SOFTWARE TO
FURNISH INFORMATION OR DATA.In determining the proper classification of a taxpayer's
income, we will consider the "primary nature" of the taxpayer's
activities.If the primary nature of
the taxpayer's activities was the transmission for hire of data via a
telephone network or similar transmission system, including a satellite
transmission system, the taxpayer's income would be subject to retailing
B&O tax, and the taxpayer would be required to collect retail sales tax
from its customers.In contrast, if
the primary nature of the taxpayer's activities was the use of computer
hardware or software to furnish information or data, the taxpayer's income
would be subject to service B&O tax.Although a taxpayer's service may provide some information, this fact
does not negate its classification as network telephone service. |
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27 WTD 61 |
05-0377R |
|
RULE 155; RCW 82.04.297:INTERNET SERVICE - ACTIVITIES QUALIFYING
AS.Because the
primary nature of the taxpayer's activity was network telephone service, its
activity was not an "internet service."Internet service includes only those persons who provide access to the
internet.In this case, the taxpayer
did not provide access to the internet; its customers could simply use the
internet to access the data the taxpayer transmitted. |
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27 WTD 99 |
05-0325 |
|
RULE 155, RULE 245; RCW
82.04.065; ETA 544:RETAILING B&O
TAX VS. SERVICE B&O TAX -- CLASSIFICATION OF INCOME - PRIMARY NATURE-- ELECTRONIC INSURANCE CLAIMS PROCESSING.In determining the
proper classification of a taxpayer's income, we will consider the "primary
nature" of the taxpayer's activities.If the primary nature of a taxpayer's activities was the transmission
for hire of data via a telephone network or similar transmission system, the
taxpayer's income would be subject to retailing B&O tax, and the taxpayer
would be required to collect retail sales tax from its customers.In contrast, if the primary nature of the
taxpayer's activities was information or internet services, the taxpayer's
income would be subject to service B&O tax. Taxpayers, who provided
electronic insurance claims processing services were providing information
services subject to service B&O tax; however, separate charges for
telephone lines, and canned software were properly classified under the
retail classification and subject to retail sales tax. |
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27 WTD 109 |
07-0120 |
|
Rule 155; RCW 82.04.050(6), RCW
82.08.020:RETAIL SALE TAX --
PREWRITTEN COMPUTER SOFTWARE -- MULTIPLE USE LICENSING.Washington imposes
sales tax on the retail sale of prewritten computer software that is
delivered to the buyer in this state.Sales tax is owed on the selling price of the prewritten software even
though the software could lawfully be copied and used simultaneously in more
than one state. |
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30 WTD 94 |
10-0333 |
12/20/2011 |
RCW 82.04.065; RCW 82.04.297; RCW 82.04.050(5); Title 47 U.S.C. Sec. 151: INTERNET SERVICE PROVIDER (ISP) – DIGITAL SUBSCRIBER LINE INTERNET SERVICE (DSL) - An ISP selling DSL internet service is taxable as an ISP. It should pay Service & Other B&O tax on its income received as an ISP. For Washington State tax purposes, a DSL ISP’s internet service charges should not be bifurcated into a Service & Other B&O internet service component, and a retailing telephone line transmission component |
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