Since most businesses utilize software in their operations, it is important for tax and accounting professionals to recognize how the Georgia sales tax exemption for software impacts their business. GA Comp. R. & Regs. 560-12-2-.111(3)(b) provides a sales tax exemption on the sale, lease, rental, license or use of custom computer software. Custom computer software is defined as, “computer software, including custom updates, which is designed and developed by the author to the specifications of a specific purchaser” per GA Comp. R. & Regs. 560-12-2-.111(2)(e) This Georgia sales tax exemption for custom computer software will apply regardless of how the purchase obtains the software. A purchaser can receive the custom computer software through a tangible medium and it will not affect the taxability of the software since the tangible medium is considered incidental to the sale.
The real essence of the transaction with custom computer software is the professional service provided by the seller in the creation and development of the custom software program. If a software program that is developed to the specifications of a specific purchaser is then distributed for widespread use to different purchasers, the software ceases to be considered custom and would become subject to sales tax as prewritten computer software. However, the original purchaser can obtain multiple copies or license agreements of the custom software that was developed to their specifications and this would meet the criteria for the sales tax exemption.
In the state tax world, the beginning of the year means new legislation goes into effect. Are you curious about which laws changed at the beginning of the month? Keep reading for eight states with new and updated sales tax laws you won’t want to miss.
Georgia: 529 Plan State Tax Update
For Georgia residents using a 529 Plan to save for college expenses, state tax deductions will double to be:
- $4,000 per child for single taxpayers
- $8,000 per year for those filing jointly with a spouse
This deduction will be available beginning with the 2020 tax year.
Georgia will require online retailers to file sales tax compliance returns beginning January 1, 2019, if their annual Georgia revenues exceed $250,000 or if they have more than 200 separate retail transactions within the state per calendar year.
As an alternative to collecting Georgia sales tax from its customers and filing sales tax compliance returns, the retailer may instead send “tax due” notices to all Georgia customers who purchased more than $500 of taxable goods during the year. The law, which originated as House Bill 61 and became Act 365, was signed by Governor Nathan Deal on May 8, 2018.
Georgia sales tax exemptions for healthcare providers, including hospital, clinics, and medical practice groups include several categories of purchases. One Georgia sales tax exemption for healthcare providers that a sales tax consultant from Agile Consulting Group has been recovering a significant amount of refunds for relates to prosthetic devices. Georgia Code Ann. § 48-8-3(54) states that prosthetic devices that are sold or used pursuant to a prescription are exempt from Georgia sales and use tax. Our sales tax consultant has learned that the prosthetic device may be purchased exempt from Georgia sales and use tax by a hospital, clinic, or medical practice group if it is sold or used pursuant to a prescription under federal or state law and title and possession is permanently transferred to a natural person to whom a prescription for the device is issued, per Georgia Comp. Rules & Regulations § 560-12-2-.30(5)(a). Read More
North Carolina sales and use tax law provides an exemption for sales of mill machinery, machinery parts and manufacturing accessories, however these items are subject to a 1% privilege tax with a maximum tax of $80 per article until June 30, 2018. The 1% privilege tax has been repealed effective June 30, 2018 by Senate Bill 257 from the 2017 Legislative Session. Beginning July 1, 2018 purchases of qualifying mill machinery, machinery parts and manufacturing accessories will be exempt from both North Carolina sales and use tax as well as the privilege tax. Read More
The New Jersey sales and use tax exemption for manufacturers enables machinery, apparatuses, or equipment to be purchased without paying New Jersey sales and use tax. New Jersey Revenue Statute 54:32B-8.13(a) further clarifies the sales and use tax exemption by stating that the machinery, apparatuses or equipment must be for use or consumption directly and primarily in the production of tangible personal property by manufacturers, processors, assemblers or refineries. This New Jersey sales and use tax exemption for manufacturers applies to any such machinery, apparatus, or equipment regardless of whether the item is purchased, rented or leased. Read More
Washington sales and use tax law considers hospitals and health care facilities to be the consumers of the medical supplies and equipment used in providing medical services to patients. The Washington sales and use tax exemptions that apply to certain purchases do so based upon the use of the item in question.
Prescription drugs for human consumption are exempt from Washington sales and use tax. There is a three-pronged definition a substance must meet in order to be defined as a “drug” under Washington sales and use tax law.
First, it must be a substance that is listed in the official United States pharmacopoeia. Second, it must be intended for use during the diagnosis, cure, mitigation, treatment or prevention of disease. Third, the substance must affect the structure or function of the body. Read More
There are many Georgia sales and use tax exemptions available to manufacturers operating within the state. In recent years, Georgia’s sales and use tax exemptions for manufacturers have broadened through the integrated plant theory with respect to manufacturing machinery and equipment. The integrated plant theory as it relates to Georgia sales and use tax exemptions has evolved in stages beginning in 2009.
The last of the original thirteen colonies is Georgia, the Peach State. Georgia is also known as the Empire State of the South. The state has varied terrain with mountains and natural rock in the northwest, urban areas, forest in the southern part and farmland.