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Tax Law

Software + Services = No Tax: Bundles of Electronically-Transferred Software and Related Services Not Subject to Georgia Sales and Use Tax

By Nick Kump and Marc Simonetti

The Georgia Department of Revenue (Department) released a letter ruling stating that a taxpayer’s sales of computer software and related services were not subject to sales and use tax. The taxpayer sold bundled packages for a single price that included electronically transferred computer software with corresponding updates and upgrades, as well as professional services and technical support. The Department explained the state imposes a tax on the sale and use of tangible personal property and certain enumerated services. The taxpayer’s bundled packages were not subject to tax because the software was not tangible personal property, and the related services were not enumerated services. Ga. Letter Ruling SUT-2016-09, Ga. Dep’t of Revenue (issued March 30, 2016).