N.J. Admin. Code § 18:24-25.7

Current through Register Vol. 56, No. 21, November 4, 2024

Section 18:24-25.7 - Computer software maintenance contracts

(a) Computer software maintenance contracts are taxed as follows:

1. A computer software maintenance contract that only provides upgrades and updates is treated as a sale of prewritten computer software and is subject to tax regardless of whether the computer software is delivered on tangible storage media (for example, disk, CD-ROM) or electronically; however, if the upgrades and updates are delivered only electronically and for use directly and exclusively in the conduct of the purchaser's business, trade, or occupation, the computer software maintenance contract is not taxable.

2. A computer software maintenance contract that only provides customer support services is treated as a sale of non-enumerated services and is not subject to sales tax.

3. A computer software maintenance contract that includes both taxable and nontaxable or exempt products that are not separately itemized on the invoice or similar billing document is a bundled transaction and shall be treated as taxable unless the seller can demonstrate, using a reasonable and verifiable method based on its books and records as of the time of sale, the portion of the contract that is for nontaxable or exempt products. The method selected by the seller shall be binding on the purchaser.

N.J. Admin. Code § 18:24-25.7

Amended by 46 N.J.R. 2375(a), effective 12/1/2014

Amended by 48 N.J.R. 824(a), effective 5/16/2016