Path: utzoo!utgpu!watmath!att!pacbell!ames!mailrus!purdue!gatech!hubcap!ncrcae!ncr-sd!sceard!mrm
From: mrm@sceard.com (M.R.Murphy)
Newsgroups: comp.misc
Subject: Re: Software: why does sales tax apply?
Message-ID: <901@sceard.com>
Date: 7 Aug 89 14:49:35 GMT
References: <5050@ucdavis.ucdavis.edu>
Reply-To: mrm@sceard.com (0040-M.R.Murphy)
Organization: Sceard Systems, Inc.  San Marcos, CA  92069
Lines: 38

In article <5050@ucdavis.ucdavis.edu> cck@deneb.ucdavis.edu (Earl H. Kinmonth) writes:
>I was installing a piece of software today, and in reading through the
>copyright claim, it asserted that the publisher retained ownership and
>the user was only ~renting~.  Nevertheless, my colleague was charged
>~sales~ tax by the vendor, although in California, ~sales~ tax is not
>(as far as I know) collected on ~rent~.
>
>Has anyone tried refusing to pay ~sales~ tax on software where the
>publisher claims that no sale is involved?
>
>It's a shame there is no foundation to support legal tests of the
>hypocritical claims of software vendors and publishers.
>
>My employer could save a rather large amount of money (6-7 percent of
>software costs) if software acquistion by individual faculty was
>actually a rent rather than sales situation.

Prof. Kinmonth is mistaken in his understanding of the sales tax in the
State of California. The sales tax is charged by the State of California,
not the vendor. The State of California gives the vendor the privilege of
collecting the tax for the State Board of Equalization (newspeak:-). The
vendor also gets to fill out the paperwork for the State. The exact definition
of taxable software depends on current interpretation by the State Board of
Equalization of legislation passed by the legislature of the State of
California. This is a moving target. Try and get a written determination from
the State Board of Equalization on the taxability of a particular sales
transaction. The basic philosophy of the tax is the State gets the money,
whether the transaction is called a sale, a license, a lease, ...
The (6-7 percent) range mentioned in the posting above is caused by taxes
that vary based on the source and destination of the sale. What a pain.

BTW, the University of California has at least one RESALE certificate from
the State of California. Sometimes they use it to avoid the tax, sometimes
they don't.  Near as we can tell, the determination for use is based on the
last digit of the shoe size of the buyer involved.
---
Mike Murphy  Sceard Systems, Inc.  544 South Pacific St. San Marcos, CA  92069
mrm@Sceard.COM        {hp-sdd,nosc,ucsd,uunet}!sceard!mrm      +1 619 471 0655