Ezel / Tax Rulings / NE
NE 01-02-5 Sales and Use Tax 2002-09-30

Is what I pay a software retailer for training on how to use the software subject to Nebraska sales tax?

Short answer: Yes, effective October 1, 2002. Under Revenue Ruling 01-02-5, Laws 2002, LB 1085 repealed the sales and use tax exemption for the amount a software retailer charges for training customers in the use of the software. The training charges are taxable whether the training is conducted by the software retailer or by another person on the retailer's behalf, whether the training is an optional or mandatory part of the sale, lease, rental, or licensing of the software, and whether the training is provided at a different time than the actual sale of the software. This supersedes Sales and Use Tax Regulations 1-007.02(G) and 1-088.02.

Apply this to your situation

This page answers the general question as of 2002. Ezel answers yours, under current Nebraska tax law, with citations.

Currency note: this ruling is from 2002
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Revenue Ruling of the Nebraska Department of Revenue, a guidance document stating the Department's interpretation of how Nebraska tax law applies. Each Nebraska guidance document carries the notice that it 'is advisory in nature but is binding on the Nebraska Department of Revenue until amended.' Unlike a private letter ruling, a Revenue Ruling is a general statement of Department policy rather than advice to a single taxpayer, but it can be amended, superseded, or made obsolete by a later ruling or a change in statute or regulation, many rulings in this series have been rescinded or superseded, so confirm it is still in effect before relying on it. Nebraska's local option sales and use taxes are administered by the Department, not self-collected by home-rule cities. This summary is informational only and is not legal or tax advice. Consult a licensed Nebraska tax professional about your situation.
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

Before October 2002, Nebraska exempted the charge a software retailer made for training customers to use the software. Nebraska's 2002 tax bill LB 1085 repealed that exemption, so effective October 1, 2002, software-training charges by a software retailer are subject to sales and use tax.

The tax applies broadly. The training charge is taxable:

  • whether the training is conducted by the software retailer or by someone else on the retailer's behalf;
  • whether the training is an optional or mandatory part of the sale, lease, rental, or licensing of the software; and
  • whether the training is provided at a different time than the actual sale of the software.

This supersedes Sales and Use Tax Regulations 1-007.02(G) and 1-088.02.

What this means for you

A software retailer that also offers training

From October 1, 2002, charge and remit sales tax on your software-training fees. You can't avoid the tax by billing training separately, making it "optional," scheduling it on a later date, or hiring a third party to deliver it on your behalf.

A business buying software plus training

Expect the training line on the invoice to carry sales tax, just like the software itself.

Common questions

Q: Is software training taxable if it's billed separately from the software?
A: Yes. Separating the charge doesn't matter — training by a software retailer is taxable effective October 1, 2002.

Q: What if a third party delivers the training instead of the retailer?
A: Still taxable when the training is provided on the retailer's behalf.

Q: Does it matter whether the training is required or optional?
A: No. The charge is taxable whether the training is a mandatory or optional part of the software transaction.

Citations and references

  • Laws 2002, LB 1085 — repealed the exemption for software-retailer training charges, effective October 1, 2002.
  • Regs 1-007.02(G) and 1-088.02 — superseded by LB 1085.

Source

Original ruling text

REVENUE RULING 1-02-5
September 30, 2002
Sales and Use Tax - Training on Computer Software. AMOUNTS PAID TO A RETAILER OF
SOFTWARE FOR COMPUTER SOFTWARE TRAINING ARE SUBJECT TO TAX EFFECTIVE
OCTOBER 1, 2002.
Laws 2002, LB 1085, repealed the sales and use tax exemption for the amount charged by a
retailer of computer software for training customers in the use of the software. The training can be
conducted by the retailer of the software or on the retailer’s behalf by another person. The charges
for training are taxable whether the training is an optional or mandatory part of the sale, lease,
rental or licensing of computer software, or whether the training is provided at a different time than
the actual sale of the software.
Sales and Use Tax Regulations 1-007.02(G) and 1-088.02 are superseded by the provisions of
Laws 2002, LB 1085.
APPROVED:

Mary Jane Egr
State Tax Commissioner
September 30, 2002

Nebraska Department of Revenue, P.O. Box 94818, Lincoln, Nebraska 68509-4818

Get today's answer for your situation

You just read a 2002 ruling on this question. Ezel checks current Nebraska tax law and answers your specific situation, with citations.

Opens in Ezel Pro. Every answer cites the authority it relies on.