Virginia Software Sales and Use Tax Exempt With Proper Documentation

By Keiter CPAs

Virginia Software Sales and Use Tax Exempt With Proper Documentation

Former Keiter State and Local Tax team leader, Terry Barrett, shares her insights on Virginia’s retail sales and use tax exemption for certain types of software and the importance of retaining tax documents in the November/December 2018 issue of VSCPA’s Disclosures Magazine article, “Purchasing software? Document, document, document.”


Purchasing Software? Document, Document, Document Excerpt:

“Software is a routine purchase for most businesses. Fortunately,Virginia (and some other states) provide an exemption from retail sales and use tax for certain types of software. This can be a much-appreciated cost-saver, whether you are implementing a costly new enterprise resource planning system or just getting started with Quickbooks. However, unwary taxpayers may find themselves denied an exemption due to documentation issues.

Software Exemption Definitions

Exempt software falls into two categories: custom computer programs and prewritten software delivered electronically (or in other than tangible format). Custom programs are generally defined as those that are specifically designed and developed only for one customer. Virginia law goes further in its distinction between prewritten and custom software by including within the definition of “custom programs”  the statements “[t]he combining of two or more prewritten programs does not constitute a custom computer program.”

Access full article.


Questions on this topic? We can help. Contact a member of the State and Local Tax team or Email | 804.747.0000

Source: VSCPA Disclosures Magazine

Additional Sales and Use Tax Resources:

Remote Sales Tax Collection After the Wayfair Decision

Terry Barrett Talks Online Sales Tax Decision and Small Businesses with Inc. Magazine

Potential Sales Use Tax Changes Impact on Virginia Businesses

“Supreme Court’s Wayfair Case Will Impact Virginia Businesses”

Virginia Businesses Are Facing Potential Sales and Use Tax Changes in 2018

State Efforts to Collect Sales Use Tax

Share this Insight:

About the Author


Keiter CPAs

Keiter CPAs

Driven by our core values of innovation, collaboration, relationships, and accountability, we serve as trusted Opportunity Advisors, providing tailored advice to help you make confident, forward-looking decisions.

Our comprehensive services include audit and assurancetax, cybersecurity, risk advisory, valuation and forensic services, and transaction advisory services. We specialize in supporting entrepreneurs, private business owners, and organizations across industries such as financial servicesconstruction, healthcare and medical servicesreal estatemanufacturingretail & distribution, private equity and institutional investors, technology and nonprofits.

More Insights from Keiter CPAs

The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.

Categories

Contact Us