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We have a software development company in Illinois. We sell both custom and off-the-shelf software. Are we obligated to collect sales tax on all software sales?
ANSWER
Expert Edward Wilmsen's Answer:
Generally, a company that sells off the shelf or "canned" computer software, needs to collect sales tax in Illinois. However, if the software consists of custom programs, then the sales may not be taxable. This type of software is typically developed by special order to a specific customer.
References: Illinois Administrative Code Section 130.1935
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