Like many other states, Missouri has attempted to help Taxpayers understand the complexities of software sales and services.
For sales or use tax determinations, an out of state corporation’s sales of canned computer software are subject to the state’s sales or use tax. If the order is taken and approved outside of Missouri and the software is shipped via common carrier to customers in Missouri, the transaction is subject to use tax. On the other hand, if the order is taken and approved in Missouri, or delivered in Missouri, then the canned software is subject to sales tax.
Sales of customized software developed by the Taxpayer are not subject to either sales or use tax, as the real object of the transaction by the purchaser is the services of the seller in developing the customized software, not the tangible personal property produced from the service.
To further clarify the taxability, custom work on canned software the Taxpayer purchases and installs for the customer is subject to sale tax if the custom work makes the software compatible with the customer’s equipment. However, charges for custom work on canned software purchased by the Taxpayer’s customer and installed by the Taxpayer under a separate contract are not subject to sales or use tax. Similarly, charges for custom work on canned software purchased and installed by the customer are not subject to sales or use tax.
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