It’s key to determine the precise nature of software, either as a buyer or a seller, and that includes IT services.
Consult with IT personnel and examine software/service contracts carefully. Can you unbundle them and consider separately stating the various software/service components to minimize tax modifications to prewritten programs. For vendors, nexus determinations are critical for sales and income tax purposes. State statutes of limitation do not run unless a return is filed. This creates the potential for material exposure for the prior year tax, penalties and delinquent interest. This video covers vendor strategies and buyer considerations, as well as income and franchise tax issues.
Runtime: 7 minutes
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