GENERAL ASSEMBLY OF NORTH CAROLINA
1997 SESSION
S.L. 1997-370
AN ACT TO MODIFY THE SALES TAX DEFINITION OF CUSTOM COMPUTER SOFTWARE.
The General Assembly of North Carolina enacts:
Section 1. G.S. 105-164.3(20) reads as rewritten:
"(20) 'Tangible personal property' means
and includes personal property which Tangible personal property. -
Personal property that may be seen, weighed, measured, felt felt,
or touched or is in any other manner perceptible to the senses. The term "tangible
personal property"shall does not include stocks, bonds,
notes, insurance insurance, or other obligations or securities,
nor shall does it include water delivered by or through main
lines or pipes either for commercial or domestic use or consumption. The term
includes all "canned"or prewritten computer programs,
either in the form of written procedures or in the form of storage media on
which or in which the program is recorded, held, or existing for general or
repeated sale, lease, or license to use or consume. The term does not include
the design, development, writing, translation, fabrication, lease, license to
use or consume, or transfer for a consideration of title or possession of a
custom computer program, other than a basic operational program, either in the
form of written procedures or in the form of storage media on which or in which
the program is recorded, or any required documentation or manuals designed to
facilitate the use of the custom computer program. The term also does not include
access to a computer program or a database when the user of the computer
program or database receives a separately stated fee or other charge for the
access.
As used in this subdivision:
a. "Basic
operational program"or "control program"means a computer
program that is fundamental and necessary to the functioning of a computer. A
basic operational program is that part of an operating system, including
supervisors, monitors, executives, and control or master programs, which
consists of the control program elements of that system. A control or master
program, as opposed to a processing program, controls the operation of a
computer by managing the allocation of all system resources, including the
central processing unit, main storage, input/output devices, and processing
programs. A processing program is used to develop and implement the specific
applications the computer is to perform.
b. "Computer
program"means the complete plan for the solution of a problem, such
as the complete sequence of automatic data-processing equipment instructions
necessary to solve a problem, and includes both systems and application
programs and subdivisions, such as assemblers, compilers, routines, generators,
and utility programs.
c. "Custom
computer program"means a computer program prepared to the special
order of the customer. Custom computer programs include one of the following
elements:
1. Preparation
or selection of the programs for the customer's use requires an analysis of the
customer's requirements by the vendor; or
2. The
program requires adaptation by the vendor to be used in a particular make and
model of computer utilizing a specified output device.
d. "Storage
media"means punched cards, tapes, disks, diskettes, or drums.
computer software delivered on a storage medium, such as a cd rom, a disk, or a tape."
Section 2. G.S. 105-164.13 is amended by adding a new subdivision to read:
"(43) Custom computer software. - 'Custom computer software' is software written in accordance with the specifications of a specific customer. The term includes a user manual or other documentation that accompanies the sale of the software. The term does not include prewritten software that can be installed and executed with no changes to the software's source code other than changes made to configure hardware or software."
Section 3. This act becomes effective October 1, 1997, and applies to sales made on or after that date.
In the General Assembly read three times and ratified this the 28th day of July, 1997.
s/ Dennis A. Wicker
President of the Senate
s/ Harold J. Brubaker
Speaker of the House of Representatives
s/ James B. Hunt, Jr.
Governor
Approved 5:42 p.m. this 6th day of August, 1997