In January 2011 the Californian Court of Appeal, Second Appellate District, Division Two held that most computer software was exempt from California sales/use tax. In April 2011 the California State Supreme Court refused to hear the appeal and they agreed that most computer software is now exempt.

As a result, intangible personal property sold with tangible personal property in any technology transfer agreement (TTA) is exempt from tax.  TTA’s include most canned computer software.  Because of this ruling you have an opportunity to not pay sales/use tax on any sales of computer programs upon which you have not yet paid the tax and if you have already paid the tax you can receive a refund of the tax if you have paid it during the period open to the statute of limitations.

To receive a reduction or refund you need to determine if your computer programs qualify for the exemption, bring the issue the attention of the Board and file a Claim for Refund (Claim) or file a Petition for Redetermination (Petition) or other documents.

We believe the State Legislature will re-write the State Law and make future sales of computer software taxable. The statute of limitations is running and the law could be modified soon. The time to act and file your Claim is now. Delaying action will only reduce any reduction or refund you will get.

Contact us today to see how we can help you get the refund that is rightfully yours.