Suzy Ageton George Karakehian KC Becker Tim ... - City of Boulder

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
K:\FIAD\0-software definition amendment(t)-.doc
ORDINANCE NO. _______
AN ORDINANCE AMENDING SECTION 3-1-1, “GENERAL
DEFINITIONS, B.R.C. 1981 REGARDING DEFINITION OF
“COMPUTER SOFTWARE” AND “TAXABLE SERVICES”
AND SETTING FORTH RELATED DETAILS.
Section 1. Findings: The City Council finds as follows:
ATTACHMENT A
A. Section 1. Section 3-1-1, B.R.C. 1981 defines computer software as a taxable
service upon which the city imposes a sales and use tax on such software purchased and used in
the city of Boulder as follows:
"Computer software" means computer instructions as described in the definition
of "taxable services" in this section. Computer software is subject to taxation in
accordance with that definition and the provisions of chapter 3-2, "Sales and Use
Tax," B.R.C. 1981.
Under the definition of “taxable services” computer software is included as follows:
“Taxable service” means
…
(f) Computer software contained on cards, tapes, discs, coding sheets, or other
machine-readable or human-readable form, including software that has been
modified, so long as the price of the modifications does not exceed twenty-five
percent of the price of the unmodified software and excluding software created
specifically for the user.
B. The provision regarding taxable services including computer software was
adopted on July 7, 1981 and the definition of “computer software” was adopted on August 3,
1999 as a “housekeeping measure that will clarify code interpretation for taxpayers” and “to add
an explicit definition of the term ‘computer software;’”
C. In 2009 A taxpayer challenged the city’s taxation of computer software
downloaded from the internet arguing that because it was not contained on a card, tape, disc or
coding sheet, the city did not mean to tax it as a taxable service;
D. On August 24, 2011, the Boulder County District Court issued a ruling agreeing
with the taxpayer and holding that the intent of the council of defining computer software
contained on “cards, discs, tapes, coding sheets, or other human-readable or machine-readable
form” was to limit computer software subject to the city’s tax as only that software “contained
on” a physical media, and not software downloaded from the internet;
Agenda Item 3M Page 5