Electronic Software Programs Not Subject to Missouri Sales or Use Tax

A new Missouri regulation and recent private letter ruling has established which software types are subject to sales or use tax, and which are not. The regulation and ruling declared that software programs delivered electronically are not subject to sales or use taxes.

The listings below clarify exactly what types of software fall under the regulation.

Not Subject to Sales/Use Tax:

  • Customized software programs (tangible and electronic)
  • Multiple licenses bought for canned software programs that may be copied based on number of licenses purchased
  • Mandatory and optional software maintenance/support delivered electronically through the Internet or remotely by phone
  • Optional maintenance/support delivered electronically for canned software that was purchased in tangible form (vendor must separately state each item on one invoice or invoice separately)
  • “Load and Leave” Software programs installed by the vendor at the taxpayer’s physical location in Missouri and then taken away by the vendor upon installation. Although, this was not specifically addressed in the new regulation a recent private letter ruling states that these transactions are not taxable.
  • Purchase of licensed software installed by the vendor at the vendor’s location onto servers or hardware already owned by the taxpayer

Subject to Sales/Use Tax:

  • Canned software delivered in a tangible medium (not electronically)
  • Licenses for previously purchased software delivered in a tangible medium and part of the original sale of the software

To find out more about the sales or use tax of electronic software programs, please contact an Anders advisor.