(251) 299-0101

Sales Tax - Purchase of Software

Ex parte Russell County Community Hospital, [Ms. 1180204, May 17, 2019] __ So. 3d __ (Ala. 2019). This plurality decision (Sellers, J.; Mendheim, J., concurs; Parker, C.J., and Bolin, Shaw, Stewart, and Mitchell, JJ., concur in the result; Bryan, J., dissents) affirms on certiorari review the decision of the Court of Civil Appeals affirming the Russell Circuit Court’s judgment that transactions involving the sale of computer software were subject to sales tax.

The plurality opinion concluded that

[T]here is no distinction for Alabama sales-tax purposes between canned or custom software. All software is tangible personal property and thus subject to sales tax. The pertinent distinction is how the transaction is documented and invoiced, and that is left strictly in the hands of the seller and purchaser. To the extent a seller tenders an invoice for computer software, the gross amount allocated to that software is subject to sales tax. However, a seller’s invoice for services such as those identified above, when separately stated, is not subject to sales tax.

Ms. *10-11.

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