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WAC 15502 Taxation of Computer Software
WAC: 458-20-15502 02/25/13 Taxation of Computer Software
The Department engaged in this rule making to amend WAC 458-20-15501, and adopt two new rules (WAC 458-20-15502 and 15503) to explain the impacts of 2009 and 2010 legislation, and to address other tax issues related to computer hardware, computer software, and computer services below.  WAC 458-20-155 is being repealed.
Chapter 535, Laws of 2009 (ESHB 2075), made major changes to the taxation of certain products and services provided or furnished electronically (commonly referred to as "digital products"). This legislation specifically imposed sales and use tax on digital products such as: Digital goods, including digital audio works, digital audio-visual works, and digital books; digital automated services; digital codes used to obtain digital goods or digital automated services; and remote-access software. The legislation also provided a number of sales and use tax exemptions.
Chapter 111, Laws of 2010 (SHB 2620), clarified ambiguities and corrected unintended consequences related to the 2009 legislation. 
ETA: 9002.2009 09/03/2013 Taxation of digital songs, movies, books, and online games transferred electronically.
ETA 9002.2009 addresses the proper interpretation the taxation of digital songs, digital movies, digital books, and online games. This ETA is being cancelled because the matter it addresses is now covered by WAC 458-20-15502 and WAC 458-20-15503.  This cancellation is effective September 3, 2013.
Subject Title Reference:      
WTD: 34 WTD 492 (2015) 15-0034 10/30/2015 RULE 15502; RCW 82.04.215: BUSINESS AND OCCUPATION TAX – RETAIL SALES TAX – RETAILING – SALES OF PREWRITTEN COMPUTER SOFTWARE – SALES OF CUSTOM SOFTWARE – CUSTOMIZATION OF PREWRITTEN COMPUTER SOFTWARE – ROUTINE INSTALLATION OF COMPUTER SOFTWARE.  The taxpayer appealed a letter ruling from the Department that the taxpayer’s sales constitute sales of prewritten computer software subject to Retailing B&O tax and retail sales tax.  The Department determined that, because the taxpayer customizes an already existing base software program for specific customers, but bills the customers for the framework, customizations, and installations in one charge, the sales are retail sales subject to Retailing B&O tax and retail sales tax.  To be taxable under the Service & Other Activities B&O tax classification, the charges for customization must be separately stated from charges for sales of prewritten computer software.