Wisconsin Sales and Use Tax Treatment of Computer Software Changes on March 6, 2009

Beginning March 6, 2009, Wisconsin sales and use taxes will apply to all "prewritten computer software" sold or used in Wisconsin. The definition of tangible personal property is amended to include prewritten computer software, regardless of how it is delivered to the purchaser. Under prior law, tangible personal property included computer programs except custom computer programs.

As a result of these changes, the effect of the Wisconsin Supreme Court's decision in the case of Wisconsin Department of Revenue vs. Menasha Corporation (No. 2004AP3239, July 11, 2008), on similar transactions occurring on or after March 6, 2009 is reversed. In the Menasha decision, the Wisconsin Supreme Court upheld the ruling of the Wisconsin Court of Appeals that the Wisconsin Tax Appeals Commission properly determined that software modules purchased by Menasha Corporation constituted "custom computer programs" and were not subject to sales or use taxes, where the software modules purchased could not be used by Menasha Corporation without a substantial amount of resources, time and effort to make them usable to Menasha Corporation. Therefore effective March 6, 2009 and thereafter, the sale or purchase of "prewritten computer software," regardless of how it is delivered to the purchaser, is subject to Wisconsin sales or use tax as a sale or purchase of tangible personal property, unless an exemption applies (e.g., the purchaser is exempt from paying Wisconsin sales and use taxes).

Detailed information regarding how the law change affects the tax treatment of sales of computer software and computer software maintenance contracts is available on the Wisconsin Department of Revenue's website at: March 2009 Sales & Use Tax Report and Wisconsin Sales and Use Tax Treatment of Computer Software.

Page last updated March 16, 2009