Could a government contractor buy canned-software media for resale under an accelerated federal title clause despite publisher end-user limitations?

Short answer Yes. The memorandum treated the federal title clause as passing the software package to the United States before contractor use despite the publisher's recitals.

State

Ruling

Annotation 565.1190

Tax type

Sales and Use Tax

Issued

1992-01-14

Issued by

California State Board of Equalization

Requested by

Internal Board staff

Topics

federal contracts canned software title passage resale exemption

Source

View Original PDF

Apply this to your situation

This page answers the general question as of 1992. Ask about yours and see what current California tax law says, with citations.

Disclaimer: This short January 14, 1992 memorandum broadly addresses retail canned-software media packages under typical government contracts with accelerated title clauses. It does not quote the clauses, describe the publisher's end-user restrictions, or address leased software. CDTFA says statutory law controls if it conflicts with an annotation. Media ownership, sale-versus-lease status, publisher restrictions, agency supplements, clause language, title timing, contractor use, and current software tax law can change the result.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

The memorandum assumed a government contractor bought a canned-software media package for use in performing a United States contract with an accelerated title clause.

It concluded that the clause applied to the software package despite publisher recitals limiting end-user rights. The contractor could buy the item for resale, and the software was treated as sold to the United States before contractor use.

The source did not address leased software or provide the underlying contract and publisher language.

Common questions

Did publisher end-user recitals defeat federal title passage?

No, under this memorandum's stated conclusion.

Could the contractor buy the software package for resale?

Yes.

Did the memo analyze leased software?

No.

Citations and references

Accelerated title clause provisions in United States government contracts — basis stated by the memorandum

Source

Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/565-0000-all.html
Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/565-1190.pdf

Original ruling text

State of California

Board of Equalization

Memorandum
565.1190
To:

Mr. Glenn A. Bystrom

From:

Gary J. Jugum

Subject:

U. S. Government Supply Contracts –
Retail Canned Software Media Packages

Date:

January 14, 1992

This is in response to your memorandum of December 31, 1991. We understand that government contractors may purchase canned software programs for use in the performance of U. S. government contracts. These U. S. government contracts typically contain accelerated title clause provisions. It is our opinion that these accelerated title clause provisions would apply to canned software packages, notwithstanding recitals issued by the software publisher concerning end user limitations. Accordingly, the items may be purchased for resale by U. S. government contractors and would be considered to be sold to the U. S. prior to any use by the contractor.

GJJ:sr
Cc:

Mr. Ronald L. Dick
Mr. David H. Levine
Mr. John L. Waid

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