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Sales of are exempt from the sales tax in California. Sales of parts purchased for use in performing service under optional maintenance contracts are subject to sales tax in California.
California Sales and Use Taxability of Software & Tax. Code Section 6010.9(d) as computer software held or existing for general or repeated sale or lease and not developed for an individual customer, are generally taxable under CA Code Regs. Title 18, Section 1502(f)(1).
SaaS is not considered taxable in California when there is no transfer of tangible personal property. This means that if you simply allow your Californai customers to remotely access your SaaS software then you are not required to register for a sales tax permit and collect California sales tax.
Entities (including consumers) in California are taxed on their purchases or consumption of various physical products, such as cleaning supplies, clothing, school supplies, and so on. However, they don't pay taxes for using the services of a lawyer, a dentist, or a plumber.
The charge for a software maintenance contract, which provides updates and future releases, is a contract for the sale of tangible personal property and is taxable.
Under California sales tax rules, cleaning or janitorial services are exempt from having to charge sales tax even when certain products (cleaning products and supplies) are used incidentally in connection with the services.
Repair labor is not taxable.
In February 2011, the California superior court held that royalties for licensing of computer software to California licensees constituted receipts from the sale of tangible personal property, and sales of tangible property are sourced to the state the property is shipped to (Microsoft Corporation v.