California – Proposed Revisions to Audit Manual

SALT Report 3069 – The Sales and Use Tax Department of the California State Board of Equalization issued a notice regarding proposed amendments to the Department’s Audit Manual.  The amendments include the addition of section 0421.00, Audit of Nontaxable Electronic Sales and Purchases of Computer Software.  This section clarifies the audit verification procedures that will be used to establish nontaxable sales of prewritten programs via electronic download and load-and-leave transactions.

Also, the manual provides that to qualify as a nontaxable transaction, there can be no transfer of tangible personal property.  However, a software vendor may electronically transfer software or periodic software upgrades or updates directly to a purchaser’s computer over the Internet, or by a “load and leave” process and remain nontaxable.

If you would like to submit a comment or suggestion regarding the proposed Audit Manual revisions, they can be directed to and must be received no later than December 6, 2013.

For Further Information

California State Board of Equalization – Proposed Revisions to Audit Manual