California Code of Regulations › Title 18 - Public Revenues › Division 2 - California Department of Tax and Fee Administration- Business Taxes (State Board of Equalization- Business Taxes, See Ch. 6 and 9.9) › Chapter 4 - Sales and Use Tax › Article 1 - Service Enterprises › Section 1502 - Computers, Programs, and Data Processing

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) In General. "Automatic data processing
				  services" are those rendered in performing all or part of a series of data
				  processing operations through an interacting assembly of procedures, processes,
				  methods, personnel, and computers.
Automatic data processing services may be provided by
					 manufacturers of computers, data processing centers, systems designers,
					 consultants, software companies, etc. In addition, there are banks and other
					 businesses which own or lease computers and use them primarily for their own
					 purposes but occasionally provide services to others. Businesses rendering
					 automatic data processing services will be referred to herein as "data
					 processing firms."
(b)
				  Definition of Terms.
(1) Application. The
				  specific job performance by an automatic data processing installation. For
				  example, data processing for a payroll may be referred to as a payroll
				  application.
(2) Coding. The list,
				  in computer code, of the successive computer instructions representing
				  successive computer operations for solving a specific problem.
(3) Computer. A computer is an electronic
				  device (including word processing equipment and testing equipment) or
				  combination of components, which is programmable and which includes a processor
				  (central processing unit or microprocessor), internal memory, and input and
				  output connections. Manufacturing equipment which incorporates a computer is a
				  computer for purposes of this regulation. However, the term does not include
				  manufacturing equipment which operates under the control of mechanical or
				  electronic accessories, the attachment to the equipment of which is required
				  for the machine to operate. An electronic device otherwise qualifying as a
				  computer remains a computer even though it may be used for information
				  processing, data acquisition, process control or for the control of
				  manufacturing machinery or equipment.
(4) Custom Computer Program and Programming.
				  A computer program prepared to the special order of the customer. A program
				  prepared to the special order of the customer qualifies as a custom program
				  even though it may incorporate preexisting routines, utilities or similar
				  program components. It includes those services represented by separately stated
				  charges for modifications to an existing prewritten program which are prepared
				  to the special order of the customer.
(5) Data Entry (including Encoding).
				  Recording information in or on storage media by punching the holes or inserting
				  magnetic bits to represent letters, digits, and special characters.
(6) Digital Pre-Press Instruction. The
				  creation of original information in electronic form by combining more than one
				  computer program into specific instructions or information necessary to prepare
				  and link files for electronic transmission for output, within the printing
				  industry, to film, plate, or direct to press, which is then transferred on
				  electronic media such as tape or compact disc.
(7) Input. The information or data
				  transferred, or to be transferred, from storage media into the internal storage
				  of the computer.
(8) Output. The
				  information transferred from the internal storage of the computer to storage
				  media or tabulated listing.
(9)
				  Prewritten Program. A program held or existing for general or repeated sale or
				  lease. The term also includes a program developed for in-house use which is
				  subsequently offered for sale or lease as a product.
(10) Program. "Program" is the complete plan
				  for the solution of a problem, i.e., the complete sequence of automatic data
				  processing equipment instructions necessary to solve a problem, and includes
				  both systems and application programs and subdivisions thereof. "Subdivision"
				  includes, without limitation, assemblers, compilers, generators, procedures,
				  functions, routines, and utility programs. "Problem" means and includes any
				  problem that may be addressed or resolved by a program or subdivision; and the
				  "problem" addressed need not constitute the full array of a purchaser's or
				  user's problems, requirements, and desired features. "Problem" further
				  includes, without limitation, any problem associated with: information
				  processing; the manipulation or storage of data; the input or output of data;
				  the transfer of data or programs, including subdivisions; the translation of
				  programs, including subdivisions, into machine code; defining procedures,
				  functions, or routines; executing programs or subdivisions that may be invoked
				  within a program; and the control of equipment, mechanisms, or special purpose
				  hardware.
(11) Proof Listing. A
				  tabulated listing of input.
(12)
				  Source Documents. A document supplied by a customer of a data processing firm
				  from which basic data are extracted (e.g., sales invoice).
(13) Storage Media. Includes hard disks,
				  floppy disks, diskettes, magnetic tape, cards, paper tape, drums and other
				  devices upon which information is recorded.