Sales tax on software activated options

[CameronB]

Did a few searches but didn't see this covered elsewhere -- although I have a suspicion it probably has been!

In any event, if it's covered elsewhere feel free to link me to an answer in another thread.

Question is: For software activated features (examples: EAP, FSD, High rate charging) that can be paid for an activated later, is there any additional sales tax charged or do you literally pay just the amount quoted on the configurator if you want to activate these features later?

Thanks

 

[st50maint]

i had auto pilot activated at a service center in November 2015.
I was charged sales tax.

 

[cpa]

Tricky area in California. Sales tax is charged on tangible personal property. Software falls into a gray area. If you buy software that comes on a medium, the vendor must collect sales tax. If you download software off the internet, the transaction is exempt.

I think the line is blurred for a Tesla. I would presume that it would be subject to sales tax, because it is part of the automobile, and automobile sales are considered a single unit. There is no split between non-taxable labor to assemble the car and the component parts. I think that opting to activate a software feature at a later date is irrelevant under the Revenue and Taxation Code. I am willing to be proved wrong.

On the other hand, if Tesla charged for its periodic updates that are received in the car, I think that those hypothetical charges would be exempt.

That said, I confess that I have not researched this topic. However, you can always write a letter to the State Board of Equalization, and one of their lawyers will reply with a carefully constructed letter that cites the relevant code sections and regulations.

 

[Snerruc]

Did a few searches but didn't see this covered elsewhere -- although I have a suspicion it probably has been!

In any event, if it's covered elsewhere feel free to link me to an answer in another thread.

Question is: For software activated features (examples: EAP, FSD, High rate charging) that can be paid for an activated later, is there any additional sales tax charged or do you literally pay just the amount quoted on the configurator if you want to activate these features later?

Thanks

You pay sales tax in a sales tax state. If you get to where you put in your credit card, you will see sales tax added.

 

[CameronB]

You pay sales tax in a sales tax state. If you get to where you put in your credit card, you will see sales tax added.

Thanks guys. So I guess the conclusion is that in sales tax states (such as CA) we are charged sales taxes on the software to activate the features. My initial thinking was perhaps it might have been tax free given it is a OTA download of software and no physical hardware being "purchased" after the fact (for things like EAP and FSDC). But I guess, alas, that's not the case.