If an optional agreement for prewritten software includes future updates or "tangible deliverables" (like new code versions), it may become subject to tax .
Maintenance contracts for custom software (designed for a specific user's needs) are generally considered non-taxable services. Critical Factors and Exemptions Michigan Sales Tax On Software Maintenance
Are you currently reviewing a or trying to determine if a specific SaaS product with a desktop agent is taxable? If an optional agreement for prewritten software includes
When a transaction includes both taxable software and exempt services, Michigan uses this test to determine if the primary "object" of the sale is a service or a product. If the software is merely incidental to a professional service, the whole transaction may be exempt. Compliance Tips To protect against audit risks, businesses should: Michigan Sales Tax On Software Maintenance