Bills Exempting Prewritten Software From Tax Clear Committee

LANSING – Legislation that would exempt prewritten computer software from the sales and use taxes in Michigan were reported from the House Tax Policy Committee on Wednesday.

The bills (SB 142 and SB 143 ) would exclude using prewritten software from another person’s server from both the sale and use tax. The software is defined as prewritten upgrades delivered by any means, and it was not designed or developed for a specific purchaser.

The bills won approval 10-0, with all Democrats abstaining. Rep. Jon Switalski (D-Warren) offered amendments to ensure the lost revenue would not negatively affect the School Aid Fund. Both amendments were defeated.

The House Fiscal Agency analysis says the lost revenue could be between $10 million and $15 million in the 2013-14 fiscal year, along with a possible $12 million to $15 million in the first year because of an enacting provision making the bills curative.

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