Missouri: Software as a Service is Exempt
- May 30, 2014 | Gail Cole
Proposed amendments to Missouri Department of Revenue. They take effect on July 30, 2014.
The changes to 12 CSR §10-109.050 accommodate technological changes since 2000 and are detailed in the February 18 volume of the Missouri Register. To summarize:
- The sale of canned software is subject to sales tax.
- The sale of customized software is exempt from sales tax.
The Missouri Department of Revenue considers the “true object sought by a purchaser of customized software” to be “the service of the seller and not the property produced by the service of the seller.”
It should be noted that software meeting the following criteria do not qualify as custom software, and are therefore subject to sales tax.
- Canned software with minor changes;
- Software “unique to a special industry;” and
- Software “sold in modules.”
Exempt from sales tax is software as a service that “is a model for enabling ubiquitous, convenient, and on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.” Software as a service includes the following:
- Platform as a service model;
- Infrastructure as a service model;
- And similar service models.
Software as a service does not include “any service model that gives the purchaser the right to use specifically identified tangible personal property.”
Find the full text of the amendment, along with examples, in the Missouri Register.
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