Changes to how Massachusetts Taxes Software for Sales Tax
The Massachusetts Department of Revenue (DOR) has issued an update on how it treats corporations that produce and sell standardized software. Standardized software is a type of software that allows customers to perform specific processes without the help of the corporation or its employees.
According to the DOR update, corporations that produce and sell standardized software may now be considered manufacturers of tangible personal property. This means they can get some tax benefits like an exemption from sales and use taxes on certain property. In all, the DOR also said that it will look at each case individually to decide if a corporation is selling standardized software or services, which are taxed differently.
The update was issued after a court ruling that disagreed with the DOR’s previous position that a software company called Akamai Technologies was not a manufacturer but a service provider.