Bill Text: NJ A3912 | 2010-2011 | Regular Session | Introduced
Bill Title: Provides sales and use tax exemption for services performed to certain prewritten computer software delivered electronically.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2011-03-14 - Introduced, Referred to Assembly Budget Committee [A3912 Detail]
Download: New_Jersey-2010-A3912-Introduced.html
Sponsored by:
Assemblyman LOUIS D. GREENWALD
District 6 (Camden)
SYNOPSIS
Provides sales and use tax exemption for services performed to certain prewritten computer software delivered electronically.
CURRENT VERSION OF TEXT
As introduced.
An Act providing an exemption from the sales and use tax for services performed to certain prewritten computer software delivered electronically, amending P.L.2005, c.126.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 15 of P.L.2005, c.126 (C.54:32B-8.56) is amended to read as follows:
15. a. Receipts from sales of, and any services performed to, prewritten computer software delivered electronically and used directly and exclusively in the conduct of the purchaser's business, trade or occupation are exempt from the tax imposed under the "Sales and Use Tax Act", P.L.1966, c.30 (C.54:32B-1 et seq.).
b. The exemption provided by this section shall not apply to receipts from sales of, and any services performed to, prewritten computer software delivered by a load and leave method.
c. For purposes of this section:
"Computer" means an electronic device that accepts information in digital or similar form and manipulates it for a result based on a sequence of instructions.
"Computer software" means a set of coded instruction designed to cause a computer or automatic data processing equipment to perform a task.
"Delivered electronically" means delivered to the purchaser by means other than tangible storage media.
"Electronic" means relating to technology having electrical, digital magnetic, wireless, optical, electromagnetic, or similar capabilities.
"Load and leave" means delivery to the purchaser by the use of a tangible storage medium where the tangible storage medium is not physically transferred to the purchaser.
"Prewritten computer software" means computer software, including prewritten upgrades, which is not designed and developed by the author or other creator to the specifications of a specific purchaser. The combining of two or more prewritten computer software programs or prewritten portions thereof shall not cause the combination to be other than prewritten computer software. "Prewritten computer software" includes software designed and developed by the author or other creator to the specifications of a specific purchaser when it is sold to a person other than such purchaser. If a person modifies or enhances computer software of which that person is not the author or creator, the person shall be deemed to be the author or creator only of such person's modifications or enhancements. Prewritten software or a prewritten portion thereof that is modified or enhanced to any degree, where such modification or enhancement is designed and developed to the specifications of a specific purchaser, shall remain prewritten software; provided, however, that if there is a reasonable, separately stated charge or an invoice or other statement of the price given to the purchaser for such modification or enhancement, such modification or enhancement shall not constitute pre-written computer software.
(cf: P.L.2008, c.123, s.11)
2. This act shall take effect immediately and apply to services performed on or after January 1, 2012.
STATEMENT
This bill provides a sales and use tax exemption for services performed to certain prewritten computer software delivered electronically.
Under current law, sales of prewritten, or so-called "canned," computer software are exempt from the sales and use tax if the software is delivered electronically and is used directly and exclusively in the conduct of the purchaser's business, trade, or occupation. This exemption ensures computer software applications, which run everything from operating systems to individual computer applications, are permitted to be purchased tax-free by eligible business users.
However, the exemption provided by current law does not apply to services performed to prewritten computer software. Purchasers who, for instance, pay a fee or are assessed a charge by a technician for the installation, repair, or maintenance of the tax-exempt prewritten computer software delivered electronically must pay the applicable sales tax or use tax on the sales price paid to purchase the service.
This bill broadens the existing exemption to ensure that both the initial sale of, and any one-time or recurring services performed to, prewritten computer software delivered electronically are exempt from the sales and use tax. Similar to the provisions of the existing exemption, services performed to prewritten computer software delivered electronically are only exempt from tax if the services are performed to software used directly and exclusively in the conduct of the purchaser's business, trade, or occupation.
