Effect of Colorado’s Sales & Use Tax on purchases from Arca Noae

If you are a resident of Colorado, or your business is located in Colorado, a recent Tenth Circuit decision Portable Document Format concerning the requirement for out-of-state retailers to notify you of your responsibility to report and remit use tax to the State may have caught your eye. The Court has held that this requirement is constitutional and remanded further proceedings to a lower court. (See more, here.)

While it is not Arca Noae’s position to provide any kind of tax advice, we can provide links to various Colorado Department of Revenue documents to help clarify the nature of transactions between Arca Noae and you.

FYI Sales 89 Portable Document Format defines standardized computer software as:

  • Computer software, including prewritten upgrades that is not designated or developed to the specifications of a specific purchaser.
  • Computer software designed and developed to the specifications of a specific purchaser but then sold to another purchaser.
  • Software that is modified or enhanced even if such modification or enhancement is designed and developed to the specification of a purchaser.

This would generally describe software offerings provided by Arca Noae as available from our online store. Further, the above FYI states:

SALES TAX ON COMPUTER SOFTWARE ON OR AFTER JULY 1, 2012
Computer software will be subject to sales or use tax if it meets all of the following criteria:

  • The software is pre-packaged for repeated sale or license;
  • The use of the software is governed by a tear-open non-negotiable license agreement;
  • The software is delivered to the customer in a tangible medium. Software is not delivered to the customer in a tangible medium if it is provided through an application service provider, delivered by electronic software delivery, or transferred by load and leave software delivery.

Mandatory maintenance agreements. Charges for maintenance agreements that the retailer requires buyers to purchase as part of their purchase of taxable computer software are subject to sales tax, regardless of whether the charge for the maintenance agreement is separately stated on the customer’s invoice or maintenance contract.

Optional maintenance agreements. Charges for maintenance agreements that the buyer has the option to purchase as part of a purchase of taxable computer software are not subject to tax if the maintenance charges are separately stated on the customer’s invoice. […]

Currently, all Arca Noae software and subscription content licensing sold through our online store is delivered by electronic software delivery, only, and not on tangible media. As of this writing, Arca Noae does not ship physical goods anywhere in the world.

Further concerns should be directed toward either the Colorado Department of Revenue or your tax professional.