New Jersey: No Exemption for Some Computer Software
- Aug 20, 2013 | Gail Cole
New Jersey lawmakers created legislation that would exempt from sales tax certain electronically delivered prewritten computer software. They presented it to Governor Chris Christie (R) for his signature, and instead, the governor gave it his Absolute Veto.
The governor gave the following reason for the veto:
"I return this bill without my approval because it was passed outside of the budget process. As I have repeatedly stated, legislation with a fiscal impact should be considered in the context of negotiating a balanced budget in order to maintain fiscal discipline."
Governor Christie refused to comment on "the merits of this bill." However, he also refused to support it.
The act would have provided an exemption for "receipts from sales of, and any services performed to, prewritten computer software delivered electronically and used directly and exclusively in the conduct of the purchaser's business, trade or occupation…"
As defined by the act, prewritten computer software includes "software designed and developed by the author or other creator to the specifications of a specific purchaser when it is sold to a person other than such a purchaser."
Under the act, the exemption would not have applied to "receipts from sales of, and any services performed to, prewritten software delivered by a load and leave method."
For now, certain electronically delivered computer software remains subject to sales tax in New Jersey. As for cloud computing services in New Jersey, some are exempt from sales tax, and some are not. Read about New Jersey and the taxation of software services here.
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