What should I do to avoid paying tax on future purchases of software and related service contracts that are not taxable based on the Menasha decision?
The seller should not charge sales tax if it knows the software is custom computer software at the time of sale of the software or related service. No exemption certificate is required. If the seller is uncertain as to whether the computer software would be considered custom computer software because of activities that may occur after the sale, the buyer should provide a properly completed Wisconsin Sales and Use Tax Exemption Certificate (Form S-211) to the seller at the time of purchase claiming that the software is custom under the Menasha decision. Example: Seller A sells computer software to Buyer B. Buyer B contracts with Service Provider C to make modifications to the software so that Buyer B can use the software in its business. Seller A does not know at the time of sale that significant modifications by Service Provide C or other factors would result in the software being considered custom software under the Menasha decision. Seller A should charge sales or use tax on the sale
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