GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

H	1 

HOUSE BILL 14

Short Title:  Update Custom Computer Software.	(Public)

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Sponsors: Representatives Cansler, Blue, Capps, Church, Neely; Beall, Creech, Davis, Hall, McComas, McMahan, and Rayfield.

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Referred to:  Finance.

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February 3, 1997

A BILL TO BE ENTITLED
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. –  Personal property that may be seen, weighed, measured, felt, or touched or is in any other manner perceptible to the senses. The term ”does not include stocks, bonds, notes, insurance, or other obligations or securities, nor does it include water delivered by or through main lines or pipes either for commercial or domestic use or consumption. The term includes ”
	 ””	 ”	 ”			 ”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 does not include prewritten software that is held or exists for general or repeated sale or lease, even if the prewritten program was initially developed on a custom basis or for in-house use.
	Modification of a prewritten program to meet a customer's needs is custom computer software only to the extent of the modification, unless the charge for modifying the program exceeds fifty percent (50%) of the total charge for the program.  If the charge for modifying the program exceeds this threshold, the entire program is considered to be custom computer software.  To be exempt from tax, a charge for modifying a prewritten program must be separately stated."
Section 3.  This act becomes effective October 1, 1997, and applies to sales made on or after that date.