Michigan Sales Tax On — Software Maintenance

Software delivered via physical media or downloaded in full is taxable as tangible property. Conversely, Software as a Service (SaaS) accessed purely via a web browser (with no downloaded code) is typically exempt .

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.

Agreements that strictly provide services like troubleshooting, technical assistance, or helpdesk access are generally exempt from tax. Michigan Sales Tax On Software Maintenance

When claiming an exemption, ensure Michigan Form 3372 (Sales and Use Tax Certificate of Exemption) is correctly executed.

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: Software delivered via physical media or downloaded in

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: Optional Agreements: Always break out installation

Are you currently reviewing a or trying to determine if a specific SaaS product with a desktop agent is taxable?