We provide here a written summary of answers provided by the Department of Revenue to the committee at periodic question and answer sessions. These documents are classified as Revenue information issued for informational purposes only for the convenience of PICPA members. Pursuant to 61 Pa. Code Section 3.4, these documents should not be relied upon for any purpose or used in tax appeals. Taxpayers requiring a binding opinion on a specific fact situation may request a written letter ruling under 61 Pa. Code Section 3.3.
Q&A with the Pennsylvania Department of Revenue
What criteria does the DOR use to determine how and when a taxpayer is accessing taxable canned software vs. a non-taxable service?
Information retrieval services, where the vendor maintains a database which the purchaser may search for information, are not subject to tax as the purchaser is buying access to that database or information. This would include services such as CCH, RIA or LexisNexis.
Where the vendor is supplying access to canned software through which a purchaser may manipulate data either supplied by purchaser or the vendor this is a taxable transaction. In this case the purchaser is buying software used to manipulate data as opposed to the purchasing data.