Appendix: Software Maintenance 

  1. Basic Information
  2. Sales and Use Tax
  3. Tax Witholding and Reporting
  4. Where to Get Help
What to KnowFilter
Basic Information

The information in this guide applies to software maintenance contracts covering the following types of software applications:

  • Custom software application – software application prepared or modified by a vendor to the specifications of a campus customer, and owned by the University.
  • Prewritten software application – software application owned by the vendor and used without modification under a license purchased by a campus customer
Sales and Use Tax

Custom software application maintenance contract fee

  • Sales tax does not apply
Prewritten software application maintenance contract payment fee
  • The chart below summarizes sales tax applicability to specific costs associated with prewritten software maintenance contracts:
Type of Transaction CA Sales Tax?
Charge for a software update received through electronic means only No
Charge for a software update received on physical media, such as disk, tape, CD or DVD. Yes
Vendor consultation fee included as part of a maintenance agreement that is required to be purchased with a prewritten software application Yes
Vendor consultation fees that are separately billed as part of a maintenance agreement that is voluntarily purchased No
Vendor consultation fees that are billed with a maintenance agreement fee as a single amount, in a situation in which the maintenance agreement was voluntarily purchased Yes
Optional software maintenance contract where all charges billed as a lump sum Yes-50% of applicable tax rate

Please refer to the other appendixes for general information about sales and use tax.

Tax Withholding and Reporting

Important things to know.

  • Refer to the other appendix for general tax withholding and reporting information.

Where to get help

Contact the Financial Administrative Services and Transactions/Accounts Payable Office (FAST/AP) for assistance with delivery-related questions.