Wyoming: Taxable and Exempt Computer Products and Services
- Jul 17, 2014 | Gail Cole
Computers and computer hardware are considered tangible personal property and are therefore subject to Wyoming sales tax. That’s pretty straightforward. More complex is the taxation of the various products and services required to make computers do what we want them to do.
As a result, the Wyoming Department of Revenue has issued a notice explaining the taxability of computer related sales and services.
Custom computer software
The sale of custom computer software is not subject to Wyoming sales tax, be it delivered electronically or “otherwise.” Charges for the creation of custom computer software (a service) are also exempt. The person who performs the service of creating custom software is considered by the state to be the consumer of anything purchased to perform the service.
Prewritten computer software
Prewritten computer software is considered tangible personal property in Wyoming and is therefore subject to sales tax. The delivery method (via CD-ROM, internet download, etc) does not impact taxability. Examples of prewritten computer software include but are not limited to:
- Microsoft Office
- Turbo Tax
In general, sales of modifications or enhancements of prewritten computer software are also taxable, although some exceptions are allowed. To be eligible for an exemption, charges for modifications or enhancements must be separately stated.
Computer repair and installation services
Some services are subject to sales tax in Wyoming, including those that “repair, alter, or improve computer hardware or canned/prewritten software.” Services for installing software packages are also taxable. The method of delivery does not impact taxability, nor does the location of the service provider (remote or on-site).
Read about a recent change to how services are sourced in Wyoming.
Cloud and the Acronyms
The most common cloud computing service models are the acronyms:
- SaaS (Software-as-a-Service)
- PaaS (Platform-as-a-Service)
- IaaS (Infrastructure-as-a-Service)
Cloud computing services rely on an external hosted site and generally are not subject to sales tax in Wyoming. However, sales tax may apply if the “customer receives tangible personal property or an enumerated service embedded within the service [or] the customer must purchase the seller’s app in order to use the cloud service.” Monthly or annual fees paid to gain access to essential information on the service provider’s web hosted site are exempt “when the web hosted site maintains control over the housed information.”
Which brings us to…
Web hosted sites
So long as the user/customer does not take possession or control of tangible personal property, fees to access web hosted sites are exempt from Wyoming sales tax.
Professional services are not subject to sales tax in Wyoming, and training services fall under this category. Separately stated training services, whether provided on-site or via the internet, are exempt. Training packages that include course materials (manuals, downloaded materials, etc) are also exempt from Wyoming sales tax. In this situation, the service provider must pay sales tax on the purchase of all materials used/provided in the training packages.
However, sales of separately stated course materials are subject to tax.
- Computer monitoring and IT support services when the service results in a repair, alteration and/or improvement to tangible personal property. This occurs when a technician is the one who resolves an issue (either on-site or having taken control remotely).
- Annual license fees for possession or use of software.
- Sales of consulting or designer byproducts (spreadsheets, schematics, etc) sold separate from exempt consulting or designer services.
- Online data storage fees when the sale, lease or service transpires “within Wyoming’s taxing jurisdiction….” There “must be an exchange of property or service for consideration.”
- Computer monitoring and IT support services that do not result in a repair, alteration and/or improvement to tangible personal property.
- Consulting and graphic designing services that do not include any sales of or repairs, alterations or improvements to tangible personal property.
- The creation of consulting or designer concepts (and their tangible personal property byproducts).
- Online data storage fees, “provided the host provider does not perform any data manipulation and does not have the ability to access individual computers in Wyoming for the purpose of alteration.”
Exempt charges must be separately stated from taxable charges on customer invoices. Additional information is available on the department’s notice, Computer Sales and Services.
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