Specific charges for technical support or for adapting prewritten software to a user's needs are exempt if they are separately stated and identified on the invoice.
Michigan's 6% sales and use tax applies to "tangible personal property," which the state defines to include (canned) computer software. Maintenance agreements follow these specific triggers: Michigan Sales Tax On Software Maintenance
In Michigan , the taxability of software maintenance agreements depends heavily on whether the contract is or optional , and the nature of the software it supports. Key Taxability Rules for Maintenance Specific charges for technical support or for adapting
If a maintenance agreement is required as part of the purchase of taxable prewritten software and includes future updates or enhancements, the entire cost is generally taxable . Optional Agreements: Key Taxability Rules for Maintenance If a maintenance
Are you currently reviewing a or trying to determine if a specific SaaS product with a desktop agent is taxable?
Always break out installation, support, and training charges from the software license fee to preserve exemptions.
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: