Canned computer software is considered to be tangible personal property regardless of the form in which it is. While illinois sales tax generally applies to most transactions, certain items have special treatment in many states when it comes to sales taxes. The itc offers illinois settlors the opportunity to create a socalled silent trust, by permitting a settlor, directly in the trust instrument, to 1 waive the trustees duty to account or provide information about the trust to beneficiaries under age 30, and 2 nominate or authorize any one or more persons to nominate a designated representative, a fiduciary to whom the trustee must account and provide required trust information on behalf of the represented beneficiary. Under illinois law, it also includes the presence of any agent or representative of the seller. Sales of canned computer software are taxable as retail sales in illinois. St 180010plr 09262018 computer software this letter. Illinois provides guidance on computer software licensing. Illinois state tax exemption for software licenses requires, among other things, that. For example, in illinois, canned computer software is treated as tangible. In more recent years, however, the dor has taken the position on audit and in response to corporate income tax nexus questionnaires that softwareeven if delivered via tangible mediumis an intangible, and solicitation within wisconsin for sales of canned software or the licensing of canned software exceeds the protections of p. Sales of offtheshelf or canned computer software are taxable unless certain criteria are met.
Which states require sales tax on downloadable custom software. As such, the sale at retail, or transfer, of canned software intended for general or repeated use is taxable emphasis mine. Idaho statute 633616b states that custom computer programs are not. Updating the database of the illinois compiled statutes ilcs is an ongoing. This site is maintained for the illinois general assembly by the legislative information system, 705 stratton building, springfield, illinois 62706 2177823944 2177822050 tty.
Regardless of the form in which it is transferred or transmitted, including disc or electronic means, canned software is treated as tangible personal property3. Sales of canned software are taxable regardless of the means of delivery. Even when software is canned, rot only applies when an actual sale occurs. Generally, sales of canned computer software are taxable retail sales in illinois. The departments definition of canned software offers little insight. See illinois administrative code, title 86, section. Under illinois law, canned software is considered to be tangible personal property no matter how it is transmitted or transferred. This act shall be known and may be cited as the use tax act. Sales of custom computer software are not taxable as long as certain criteria are met. Sales of custom software, which is prepared to the special order of the. This page describes the taxability of software and digital products in illinois, including canned software delivered on tangible media, canned software downloaded, custom software delivered on tangible media, custom software downloaded, customization of canned software and digital products. Are software and digital products taxable in illinois. Illinois considers all custom computer programs to be taxexempt so. Illinois compiled statutes illinois general assembly.
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