As discussed in prior posts, Sales and Use Tax Ruling No. SUT-17-001, issued by the Pennsylvania Department of Revenue in February, raised concerns that the Department’s interpretation of the term “support” in Act 89 of 2016 exceeded the scope of the taxing statute. In response to complaints that its original ruling was overbroad, the Department retracted its original ruling and issued a revised ruling on April 4, 2017. The revised ruling (A5700684) defines software support to include “identifying the source of problems affecting the usability” of the software and/or attempting to restore it to a useable state, as well as troubleshooting and providing direction as to the implementation or use of the software (i.e., help desk and call center support, whether delivered verbally or online).
“Training” services and certain “consulting” services were removed from the scope of “support” services subject to tax under current law. Since the term “consulting” can be used to describe various types of activities, the ruling states, however, that it “may not be interpreted as a definitive determination of the taxability of what taxpayers may describe as consulting.” That is, if services described as “consulting” fall within the definition of “support” contained in the ruling, the Department would view such services as taxable “support” services.