Does a company have to pay sales tax on software that it obtains over the Internet?
In order to establish the tax treatment of the software license, a determination must be made whether the transaction is a lease of the software or a nontaxable data processing service. • Software Lease – The sale, lease, or license of computer software, except custom computer software, in Wisconsin is subject to Wisconsin sales or use tax unless an exemption applies, regardless of how it is delivered to the customer (diskette vs. electronically). For the sale, lease, or license of computer software to be subject to Wisconsin sales or use tax, the software, except custom software, must be situated in Wisconsin when used by the customer. If the software at all times is located on the server outside Wisconsin (that is, it is not downloaded or in some other way transferred to the customer’s computer but, instead, the customer uses the software at the physical location of the server outside Wisconsin), a Wisconsin tax will not apply. Note: If, instead of a license of tangible personal prop
