• For Immediate Release
• February 13, 2012

South Carolina – Department of Revenue Clarifies Software Taxability

Software delivered electronically to the customer’s location is not taxable.

The South Carolina Department of Revenue has ruled that the sale of software delivered electronically via the internet or wireless network from a connection between the seller’s laptop and the buyer’s computer at the buyer’s location is not taxable as long as no part of the software, such as back-up tapes, diskettes, or flash drives, is delivered by tangible means. Software delivered electronically does not fall within the definition of tangible personal property or within the scope of the statutory provisions taxing communications services.

However, the department advises that charges by an application service provider (ASP) to a customer for access to software on its website are taxable.

In addition, if a programmer brings a laptop to the customer’s location, establishes a connection between the laptop and the customer’s computer, and does not download software, but, instead, makes changes to the source code of the customer’s software, the transaction is not taxable. The programmer has performed a service, not the sale of software delivered by tangible or electronic means.

If you would like additional information on this topic or have any questions, please contact the taxdesk@ustaxrp.com