Canned Software – Delivered on Tangible Media
TAXABLE
Sales of canned software delivered on tangible media are subject to sales tax in Georgia.
Canned Software – Downloaded
EXEMPT
In the state of Georgia, any documentation created must show the method utilized for delivery.
If software is delivered both electronically and through the use of a tangible medium, the transaction will be treated as a taxable sale of tangible personal property, with the exemption of any software which would qualify as custom software.
Custom Software
Delivered on Tangible Media
EXEMPT
Sales of custom software delivered on tangible media are exempt from the sales tax in Georgia.
Downloaded
EXEMPT
Sales of custom software downloaded are exempt from the sales tax in Georgia.
Customization of Canned Software
TAXABLE
In the state of Georgia, any rewritten computer software, whether it is modified to the specifications of a customer or not, is still deemed prewritten computer software.
However, so long as there is a separately stated charge on the dealer’s invoice for the modification or enhancement, the charge will not be subject to tax.
Digital Products
EXEMPT
Sales of digital products are exempt from the sales tax in Georgia.
Frequently Asked Questions
What is the difference between canned and custom software for tax purposes in Georgia?
Canned (or prewritten) software is typically taxable when delivered on tangible media, while custom software is exempt from tax regardless of delivery method. The key distinction lies in whether the software is designed specifically for a customer (custom) or mass-produced (canned).
Is downloaded canned software taxable in Georgia?
No. Downloaded canned software is exempt from sales tax in Georgia. However, proper documentation showing the delivery method is required to support the exemption.
If software is delivered both digitally and on tangible media, is it taxable?
Yes. When software is delivered using both methods, the transaction is treated as a taxable sale of tangible personal property, unless the software qualifies as custom.
Are charges for customizing canned software taxable?
The base canned software is taxable. However, separately stated charges for modifications or enhancements on the dealer’s invoice are not subject to tax.
Are digital products taxed in Georgia?
No. Sales of digital products are exempt from Georgia sales tax. This includes products that are delivered electronically without any physical medium.