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Sales of canned software - downloaded are subject to sales tax in Minnesota. Sales of custom software - delivered on tangible media are exempt from the sales tax in Minnesota. Sales of custom software - downloaded are exempt from the sales tax in Minnesota.
A multiple-use license for prewritten computer software is taxable. A custom computer software program is not taxable. A custom program is one that is prepared to the special or- der of the customer. It generally requires consultation and an analysis of the customer's requirements.
In addition, licenses for the use of software accessed electronically are not considered sales of tangible personal property, and therefore are not subject to state sales tax, as long as no transfer of tangible personal property occurs as a part of the transaction.
Why does Minnesota not require sales tax on Software-as-a-Service (SaaS)? Minnesota states that the making available of a computer on a time-sharing basis for use by customers shall not be considered the granting of a license to use for sales tax purposes so long as it is only accessed by remote facilities.
Sales of canned software - downloaded are subject to sales tax in Minnesota. Sales of custom software - delivered on tangible media are exempt from the sales tax in Minnesota. Sales of custom software - downloaded are exempt from the sales tax in Minnesota.
Minnesota likely does not require sales tax on Software-as-a-Service. Why does Minnesota not require sales tax on Software-as-a-Service (SaaS)?
Any custom software that is delivered through electronic means or via the load and leave method is not considered tangible personal property nor subject to sales tax. However, it is only tax-exempt if separately stated on the invoice from charges for manuals, disks, CDs or other tangible property, which is taxable.
Materials used or consumed in the industrial production of a retail product, including digital products, are exempt from Minnesota Sales Tax. To buy these materials exempt from tax, the purchaser must provide a completed Form ST3, Certificate of Ex- emption.
Canned software, also referred to as prewritten, "shrink-wrapped" or standards software, is computer software that is designed for and distributed "as is" for multiple persons who can use it without modifying its code and which is not otherwise considered custom software.
Sales of canned software - downloaded are subject to sales tax in Mississippi. Sales of custom software - delivered on tangible media are subject to sales tax in Mississippi. Sales of custom software - downloaded are subject to sales tax in Mississippi.